ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT, 485BPOS, 1997-04-15

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
485BPOS, 1997-04-15

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1997

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. 13 /X/

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

AMENDMENT NO. 14 /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, 1996 on February 28, 1997.

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

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, 1997 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

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

<TABLE>
<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) Performance Data.........................................
Performance Data
(c) 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) Fund Expenses............................................
Summary of Expenses; Dean Witter Variable
Investment Series Expenses
(f) 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........................................
Income Plans
-- Transfer..............................................

9. Death Benefit....................................................... Benefits Under the Contract
</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....................................................
Default
(e) Free Look................................................
Introduction
12. Taxes............................................................... Federal Tax Matters
13. Legal Proceedings................................................... N/A
14. SAI Contents........................................................ SAI; Table of Contents
15. Cover Page.......................................................... SAI; Cover Page
16. Table of Contents................................................... SAI; 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....................................
N/A
(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>

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<TABLE>
<CAPTION>
ITEM OF FORM N-4
PROSPECTUS CAPTION
- -------------------- ----------------------------------------------
<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
ONE ALLSTATE DRIVE
P.O. BOX 9095
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 18.

The Company has prepared and filed a Statement of Additional Information dated
May 1, 1997 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 25
of this Prospectus. Before ordering, you may wish to review the Table of
Contents of the Statement of Additional Information on page 23 of this
Prospectus. The Statement of Additional Information has been incorporated by
reference into this Prospectus.

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
ONE ALLSTATE DRIVE
P.O. BOX 9095
FARMINGVILLE, NEW YORK 11738
(516) 451-5170

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, 1997.

<PAGE>
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

Glossary.............................................................. 3
Introduction.......................................................... 5
Summary of Separate Account Expenses.................................. 7
Condensed Financial Information....................................... 9
Performance Data...................................................... 10
Financial Statements.................................................. 10
Allstate Life Insurance Company of New York and the Variable
Account.............................................................. 10
Allstate Life Insurance Company of New York......................... 10
Dean Witter Reynolds Inc............................................ 10
The Variable Account................................................ 11
The Dean Witter Variable Investment Series.......................... 11
The Contracts......................................................... 12
Purchase of the Contracts........................................... 12
Crediting of the Purchase Payments.................................. 12
Allocation of Purchase Payments..................................... 13
Value of Variable Account Accumulation Units........................ 13
Transfers........................................................... 13
Surrender and Withdrawals........................................... 14
Default............................................................. 14
Charges and Other Deductions.......................................... 14
Deductions from Purchase Payments................................... 14
Contract Maintenance Charge......................................... 14
Mortality and Expense Risk Charge................................... 15
Surrender Charge.................................................... 15
Taxes............................................................... 15
Dean Witter Variable Investment Series Expenses..................... 16
Benefits Under the Contract........................................... 16
Death Benefits Prior to the Income Starting Date.................... 16
Death Benefits After the Income Starting Date....................... 16
Income Payments....................................................... 16
Income Starting Date................................................ 16
Amount of Variable Annuity Income Payments.......................... 16
Annuity Options..................................................... 17
The Fixed Account..................................................... 18
General Description................................................. 18
Transfers, Surrender, and Withdrawals............................... 18
General Matters....................................................... 19
Owner............................................................... 19
Beneficiary......................................................... 19
Delay of Payments................................................... 19
Assignments......................................................... 19
Modification........................................................ 19
Customer Inquiries.................................................. 19
Federal Tax Matters................................................... 19
Introduction........................................................ 19
Taxation of Annuities in General.................................... 20
Tax Deferral...................................................... 20
Non-Natural Owners................................................ 20
Diversification Requirements...................................... 20
Ownership Treatment............................................... 20
Delayed Maturity Date............................................. 20
Taxation of Partial and Full Withdrawals.......................... 20
Taxation of Annuity Payments...................................... 20
Taxation of Annuity Death Benefits................................ 21
Penalty Tax on Premature Distributions............................ 21
Aggregation of Annuity Contracts.................................. 21
Tax Qualified Contracts............................................. 21
Restrictions Under 403(b) Plans................................... 21
Income Tax Withholding.............................................. 21
Voting Rights......................................................... 21
Sales Commission...................................................... 22
Statement of Additional Information: Table of Contents................ 24
Order Form............................................................ 26

2
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GLOSSARY
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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.

3
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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.

FUND--The Dean Witter Variable Investment Series.

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 thirteen Sub-Accounts of
the Variable Account constitute the fourteen 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 16. 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 thirteen
separate Portfolios: the Money Market Portfolio, the Quality Income Plus
Portfolio, the High Yield Portfolio, the Utilities Portfolio, the Income Builder
Portfolio, the Dividend Growth Portfolio, the Capital Growth Portfolio, the
Global Dividend Growth Portfolio, the European Growth Portfolio, the Pacific
Growth Portfolio, the Capital Appreciation 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.

4
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INTRODUCTION
- -----------------------------------------------------------

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. 13 and "Income Payments," pg. 16.

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 thirteen Portfolios: the Money Market Portfolio, the Quality Income
Plus Portfolio, the High Yield Portfolio, the Utilities Portfolio, the Income
Builder Portfolio, the Dividend Growth Portfolio, the Capital Growth Portfolio,
the Global Dividend Growth Portfolio, the European Growth Portfolio, the Pacific
Growth Portfolio, the Capital Appreciation 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. 12 and "Crediting of Purchase Payments," pg. 12.

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. 13.

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

Transfers can be made among the thirteen 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. 13.

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 of
any Owner. Partial withdrawals may also be taken automatically through monthly
Automatic Income withdrawals. See "Surrender and Withdrawals," pg. 14.

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.

5
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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. 14 and "Taxation of Annuities in General," pg. 19.

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. 14, 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. 15.

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. 16 and "Income Starting Date," pg. 16.

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. 17.

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 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. 16.

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. 21.

* * *
This Prospectus describes only the variable aspects of the Contract, except
where fixed aspects are specifically mentioned. See pg. 18 for a brief summary
of the Fixed Account.

6
<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, 1996.

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>
Mortality and Expense Risk Charges:................................................................. 1%
<S> <C>
Total Separate Account Annual Expenses:............................................................. 1%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
- ------------------------------------------------------------------------- ------------- ----------- ---------------
<S> <C> <C> <C>
Money Market............................................................. .50% .02% .52%
Quality Income Plus...................................................... .50%(1) .03% .53%
High Yield............................................................... .50% .01% .51%
Utilities................................................................ .65%(2) .02% .67%
Income Builder........................................................... .75%(3) .07% .82%
Dividend Growth.......................................................... .56%(4) .01% .57%
Capital Growth........................................................... .65% .08% .73%
Global Dividend Growth................................................... .75% .10% .85%
European Growth.......................................................... 1.00% .11% 1.11%
Pacific Growth........................................................... 1.00% .37% 1.37%
Capital Appreciation..................................................... .75%(3) .07% .82%
Equity................................................................... .50%(5) .04% .54%
Strategist............................................................... .50% .02% .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) Dean Witter Intercapital Inc. has undertaken to assume all expenses for
both the Income Builder Portfolio and the Capital Appreciation Portfolio
until such time as the pertinent Portfolio has $50 million of net assets or
until six months from the date of the Portfolio's commencement of
operations, whichever occurs first.

(4) The management fee will be 0.625% for net assets of up to $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%.

(5) 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%.

7
<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 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Money Market Sub-Account........................................... $ 63 $ 80 $ 97 $ 187
Quality Income Plus Sub-Account.................................... $ 63 $ 80 $ 97 $ 188
High Yield Sub-Account............................................. $ 63 $ 80 $ 96 $ 186
Utilities Sub-Account.............................................. $ 64 $ 85 $ 105 $ 204
Income Builder Sub-Account......................................... $ 66 $ 90 $ 113 $ 221
Dividend Growth Sub-Account........................................ $ 63 $ 82 $ 99 $ 193
Capital Growth Sub-Account......................................... $ 65 $ 86 $ 108 $ 210
Global Dividend Growth Sub-Account................................. $ 66 $ 90 $ 114 $ 223
European Growth Sub-Account........................................ $ 69 $ 98 $ 127 $ 251
Pacific Growth Sub-Account......................................... $ 71 $ 106 $ 141 $ 278
Capital Appreciation Sub-Account................................... $ 66 $ 90 $ 113 $ 221
Equity Sub-Account................................................. $ 63 $ 81 $ 99 $ 191
Strategist Sub-Account............................................. $ 63 $ 81 $ 98 $ 189
</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 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Money Market Sub-Account........................................... $ 16 $ 50 $ 86 $ 187
Quality Income Plus Sub-Account.................................... $ 16 $ 50 $ 87 $ 188
High Yield Sub-Account............................................. $ 16 $ 50 $ 86 $ 186
Utilities Sub-Account.............................................. $ 18 $ 55 $ 94 $ 204
Income Builder Sub-Account......................................... $ 19 $ 60 $ 103 $ 221
Dividend Growth Sub-Account........................................ $ 17 $ 52 $ 89 $ 193
Capital Growth Sub-Account......................................... $ 18 $ 57 $ 97 $ 210
Global Dividend Growth Sub-Account................................. $ 19 $ 60 $ 103 $ 223
European Growth Sub-Account........................................ $ 22 $ 68 $ 117 $ 251
Pacific Growth Sub-Account......................................... $ 25 $ 76 $ 141 $ 278
Capital Appreciation Sub-Account................................... $ 19 $ 60 $ 103 $ 221
Equity Sub-Account................................................. $ 16 $ 51 $ 88 $ 191
Strategist Sub-Account............................................. $ 16 $ 50 $ 87 $ 189
</TABLE>

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. The purpose of this summary is to assist the owner in
understanding the various costs and expenses that owners will bear directly or
indirectly.

- ------------------------
* 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.

8
<PAGE>
CONDENSED FINANCIAL INFORMATION
- -----------------------------------------------------------
<TABLE>
<CAPTION>
ACCUMULATION UNIT VALUES AND NUMBER
OF ACCUMULATION UNITS OUTSTANDING FOR
EACH SUB-ACCOUNT*
FOR THE PERIODS ENDING DECEMBER 31,
-------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- ------- -------
<S> <C> <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 $17.411
Accumulation Unit Value, End of Period......................... $14.532 $15.530 $16.260 $16.651 $16.940 $17.411 $18.215
Number of Units Outstanding, End of Period..................... 7,963 76,431 157,103 121,052 85,420 89,195 85,667
QUALITY INCOME PLUS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $10.843 $12.097 $12.798 $15.016 $16.096 $18.010 $16.648
Accumulation Unit Value, End of Period......................... $12.097 $12.798 $15.016 $16.096 $18.010 $16.648 $20.498
Number of Units Outstanding, End of Period..................... 3,462 48,198 134,798 151,095 150,179 95,868 87,651
HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $17.977 $14.993 $10.864 $17.064 $20.008 $24.609 $23.759
Accumulation Unit Value, End of Period......................... $14.993 $10.864 $17.064 $20.008 $24.609 $23.759 $27.055
Number of Units Outstanding, End of Period..................... 571 632 1,818 2,252 2,748 3,157 6,184
UTILITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... -- $10.000 $10.365 $12.372 $13.797 $15.804 $14.235
Accumulation Unit Value, End of Period......................... -- $10.365 $12.372 $13.797 $15.804 $14.235 $18.132
Number of Units Outstanding, End of Period..................... -- 130,055 211,125 205,071 204,333 168,808 143,537
INCOME BUILDER SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... -- -- -- -- -- -- --
Accumulation Unit Value, End of Period......................... -- -- -- -- -- -- --
Number of Units Outstanding, End of Period..................... -- -- -- -- -- -- --
DIVIDEND GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... -- $10.000 $ 9.143 $11.564 $12.383 $14.019 $13.425
Accumulation Unit Value, End of Period......................... -- $ 9.143 $11.564 $12.383 $14.019 $13.425 $18.128
Number of Units Outstanding, End of Period..................... -- 231,500 321,598 348,132 350,305 330,200 316,921
CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... -- -- $10.000 $12.735 $12.814 $11.799 $11.533
Accumulation Unit Value, End of Period......................... -- -- $12.735 $12.814 $11.799 $11.533 $15.177
Number of Units Outstanding, End of Period..................... -- -- 51,643 58,830 55,497 50,378 48,100
GLOBAL DIVIDEND GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... -- -- -- -- -- $10.000 $ 9.942
Accumulation Unit Value, End of Period......................... -- -- -- -- -- $ 9.942 $12.012
Number of Units Outstanding, End of Period..................... -- -- -- -- -- 28,567 34,628
EUROPEAN GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... -- -- $10.000 $12.735 $10.347 $14.433 $15.484
Accumulation Unit Value, End of Period......................... -- -- $10.050 $12.814 $14.433 $15.484 $19.299
Number of Units Outstanding, End of Period..................... -- -- 11,103 58,830 18,436 25,704 19,230
PACIFIC GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... -- -- -- -- -- $10.000 $ 9.248
Accumulation Unit Value, End of Period......................... -- -- -- -- -- $ 9.248 $ 9.682
Number of Units Outstanding, End of Period..................... -- -- -- -- -- 23,032 26,915
CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... -- -- -- -- -- -- --
Accumulation Unit Value, End of Period......................... -- -- -- -- -- -- --
Number of Units Outstanding, End of Period..................... -- -- -- -- -- -- --
EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $16.368 $18.580 $17.728 $27.916 $27.681 $32.807 $30.885
Accumulation Unit Value, End of Period......................... $18.580 $17.728 $27.916 $27.681 $32.807 $30.885 $43.585
Number of Units Outstanding, End of Period..................... 15,551 15,033 19,279 26,610 28,032 23,571 24,927
STRATEGIST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $11.324 $12.284 $12.351 $15.684 $16.651 $18.199 $18.728
Accumulation Unit Value, End of Period......................... $12.284 $12.351 $15.684 $16.651 $18.199 $18.728 $20.284
Number of Units Outstanding, End of Period..................... 56,148 94,204 113,342 138,065 153,920 160,992 137,461

1996
-------
<S> <C>
MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $18.215
Accumulation Unit Value, End of Period......................... $18.955
Number of Units Outstanding, End of Period..................... 47,979
QUALITY INCOME PLUS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $20.498
Accumulation Unit Value, End of Period......................... $20.608
Number of Units Outstanding, End of Period..................... 73,100
HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $27.055
Accumulation Unit Value, End of Period......................... $29.993
Number of Units Outstanding, End of Period..................... 3,599
UTILITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $18.132
Accumulation Unit Value, End of Period......................... $19.509
Number of Units Outstanding, End of Period..................... 85,924
INCOME BUILDER SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... --
Accumulation Unit Value, End of Period......................... --
Number of Units Outstanding, End of Period..................... --
DIVIDEND GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $18.128
Accumulation Unit Value, End of Period......................... $22.248
Number of Units Outstanding, End of Period..................... 217,872
CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $15.177
Accumulation Unit Value, End of Period......................... $16.760
Number of Units Outstanding, End of Period..................... 42,448
GLOBAL DIVIDEND GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $12.012
Accumulation Unit Value, End of Period......................... $13.984
Number of Units Outstanding, End of Period..................... 34,174
EUROPEAN GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $19.299
Accumulation Unit Value, End of Period......................... $24.837
Number of Units Outstanding, End of Period..................... 15,262
PACIFIC GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $ 9.682
Accumulation Unit Value, End of Period......................... $ 9.957
Number of Units Outstanding, End of Period..................... 19,437
CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... --
Accumulation Unit Value, End of Period......................... --
Number of Units Outstanding, End of Period..................... --
EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $43.585
Accumulation Unit Value, End of Period......................... $48.483
Number of Units Outstanding, End of Period..................... 29,450
STRATEGIST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period................... $20.284
Accumulation Unit Value, End of Period......................... $23.098
Number of Units Outstanding, End of Period..................... 117,180
</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. The Income Builder and Capital Appreciation
Sub-Accounts commenced operations on January 21, 1997. The Accumulation Unit
Value for each of these Sub-Accounts was initially set at $10.000. The
Accumulation Unit Values in this table reflect a Mortality and Expense Risk
Charge of 1%.

9
<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. 25).

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"). 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.

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, 10048. 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

10
<PAGE>
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.

On February 5, 1997, Dean Witter Discover and Morgan Stanley Group Inc.
announced that they had entered into an Agreement and Plan of Merger, with the
combined company to be named Morgan Stanley, Dean Witter, Discover & Co. The
business of Morgan Stanley Group Inc. and its affiliated companies is providing
a wide range of financial services for sovereign governments, corporations,
institutions and individuals throughout the world. Dean Witter Discover is the
direct parent of InterCapital and Dean Witter Distributors Inc., the Fund's
distributor. It is currently anticipated that the transaction will close in
mid-1997. Thereafter, InterCapital and Dean Witter Distributors Inc. will be
direct subsidiaries of Morgan Stanley, Dean Witter, Discover & Co.

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 thirteen 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 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 high-yield securities, 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 thirteen portfolios: the Money Market Portfolio, the Quality Income
Plus Portfolio, the High Yield Portfolio, the Utilities Portfolio, the Income
Builder Portfolio, the Dividend Growth Portfolio, the Capital Growth Portfolio,
the Global Dividend Growth Portfolio, the European Growth Portfolio, the Pacific
Growth Portfolio, the Capital Appreciation 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,

11
<PAGE>

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 Income Builder Portfolio seeks, as its primary objective, reasonable income
by investing primarily in common stock of large-cap companies which have a
record of paying dividends and the potential for maintaining dividends, in
preferred stock and in securities convertible into common stocks of small and
mid-cap companies and, as its secondary objective, growth of capital.

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 Capital Appreciation Portfolio seeks long-term capital appreciation by
investing primarily in common stocks of U.S. companies that offer the potential
for either superior earnings growth and/or appear to be undervalued.

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

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

12
<PAGE>
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 fourteen 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. 13).

For a brief summary of how Purchase Payments allocated to the Fixed Account are
credited to the Contract, see "The Fixed Account" on pg. 18.

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).

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 fourteen 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)
451-5170 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

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<PAGE>
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. 18.

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. 19. For withdrawals from the Fixed Account, see pg. 18.

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.

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.
Withdrawals taken to satisfy IRS Required Minimum Distribution rules will have
any applicable withdrawal charges waived. This waiver is permitted only for
withdrawals which satisfy distributions resulting from this Contract. 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. 19.

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

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<PAGE>
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
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. 19.

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

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<PAGE>
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-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

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<PAGE>
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 sum of 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 lesser 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.

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.

17
<PAGE>
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.

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 December 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.

18
<PAGE>
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. 18.

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

19
<PAGE>
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 non-natural
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.

OWNERSHIP TREATMENT. In connection with the issuance of the regulations on the
adequate diversification standards, the Department of the Treasury announced
that the regulations do not provide guidance concerning the extent to which
contract owners may direct their investments among sub-accounts of a Variable
Account. The Internal Revenue Service has previously stated in published rulings
that a variable contract owner will be considered the owner of separate account
assets if the owner possesses incidents of ownership in those assets such as the
ability to exercise investment control over the assets. At the time the
diversification regulations were issued, the Treasury Department announced that
guidance would be issued in the future regarding the extent that owners could
direct their investments among sub-accounts without being treated as owners of
the underlying assets of the Variable Account. As of the date of this
prospectus, no such guidance has been issued.

The ownership rights under this contract are similar to, but different in
certain respects from, those described by the Service in rulings in which it was
determined that contract owners were not owners of separate account assets. For
example, the owner of this contract has the choice of more investment options to
which to allocate premiums and contract values, and may be able to transfer
among investment options more frequently than in such rulings. These differences
could result in the contract owner being treated as the owner of the Variable
Account. In those circumstances, income and gain from the Variable Account
assets would be includible in the Contract Owner's gross income. In addition,
the Company does not know what standards will be set forth in the regulations or
rulings which the Treasury Department has stated it expects to issue. It is
possible that Treasury Department'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. However, the Company makes no guarantee that such modification to the
contract will be successful.

DELAYED MATURITY DATE. If the contract's scheduled maturity date is at a time
when the annuitant has reached an advanced age, e.g., past age 85, it is
possible that the contract would not be treated as an annuity. In that event,
the income and gains under the contract would be currently includible in the
owner's income.

TAXATION OF PARTIAL AND FULL WITHDRAWALS. In the case of a partial withdrawal
under a Non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, 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

20
<PAGE>
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)
Savings Incentive Match Plans for Employees (SIMPLE) Plans under Section 408(p)
of the Code; (4) Tax Sheltered Annuities under Section 403(b) of the Code; (5)
Corporate and Self Employed Pension and Profit Sharing Plans; and (6) 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

21
<PAGE>
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.

22
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23
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

TABLE OF CONTENTS

Introduction................................................ 3
Allstate Life Insurance Company of New York............... 3
Dean Witter Reynolds Inc.................................. 3
Additions, Deletions or Substitutions of Investments...... 3
Reinvestment.............................................. 4
The Contract................................................ 4
Value of Variable Account Accumulation Units.............. 4
Performance Data.......................................... 4
Standardized Total Returns.................................. 5
Other Total Returns....................................... 5
Transfers................................................. 6
Tax-Free Exchanges (1035 Exchanges, Rollovers and
Transfers)............................................... 6
General Matters............................................. 7
Incontestability.......................................... 7
Settlements............................................... 7
Safekeeping of the Variable Account's Assets.............. 7
Experts................................................... 7
Legal Matters............................................. 7
Federal Tax Matters......................................... 7
Introduction.............................................. 7
Taxation of Allstate Life Insurance Company of New York... 8
Exceptions to the Non-Natural Owner Rule.................. 8
Penalty Tax on Premature Distributions.................... 8
IRS Required Distribution at Death Rules.................. 8
Qualified Plans........................................... 9
Types of Qualified Plans.................................... 9
Individual Retirement Annuities........................... 9
Simplified Employee Pension Plans......................... 9
Savings Incentive Match Plans for Employees (SIMPLE
Plans)................................................... 9
Tax Sheltered Annuities................................... 9
Corporate and Self-Employed Pension and Profit Sharing
Plans.................................................... 10
State and Local Government and Tax-Exempt Organization
Deferred Compensation Plans.............................. 10
Voting Rights............................................... 10
Sales Commissions........................................... 10
Financial Statements........................................ F-1

24
<PAGE>
(This Page Left Intentionally Blank)

25
<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.

<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

26
<PAGE>
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27
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT

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, 1997, has been filed with the United States
Securities and Exchange Commission.

DATED MAY 1, 1997

<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 Investments.......................................................... 3
Reinvestment.................................................................................................. 4
The Contract...................................................................................................... 4
Value of Variable Account Accumulation Units.................................................................... 4
Performance Data................................................................................................ 4
Standardized Total Returns........................................................................................ 5
Other Total Returns............................................................................................. 5
Transfers....................................................................................................... 6
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers).................................................... 6
General Matters................................................................................................... 7
Incontestability................................................................................................ 7
Settlements..................................................................................................... 7
Safekeeping of the Variable Account's Assets.................................................................... 7
Experts......................................................................................................... 7
Legal Matters................................................................................................... 7
Federal Tax Matters............................................................................................... 7
Introduction.................................................................................................... 7
Taxation of Allstate Life Insurance Company of New York......................................................... 8
Exceptions to the Non-Natural Owner Rule........................................................................ 8
Penalty Tax on Premature Distributions.......................................................................... 8
IRS Required Distribution at Death Rules........................................................................ 8
Qualified Plans................................................................................................. 9
Types of Qualified Plans.......................................................................................... 9
Individual Retirement Annuities................................................................................. 9
Simplified Employee Pension Plans............................................................................... 9
Tax Sheltered Annuities......................................................................................... 9
Corporate and Self-Employed Pension and Profit Sharing Plans.................................................... 10
State and Local Government and Tax-Exempt Organization Deferred Compensation Plans.............................. 10
Voting Rights..................................................................................................... 10
Sales Commissions................................................................................................. 10
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.

3
<PAGE>
REINVESTMENT

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

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.

4
<PAGE>
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 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).

STANDARDIZED TOTAL RETURNS

The standardized average annual total returns for the Sub-Accounts for the
one-year, five-year and since inception periods ending December 31, 1996 are
presented below:

<TABLE>
<CAPTION>
ONE-YEAR FIVE-YEAR SINCE INCEPTION*
------------ ----------- -----------------
<S> <C> <C> <C>
Capital Growth..................................................................... 5.35% 5.39% 9.02%
Dividend Growth.................................................................... 17.03% 13.71% 12.36%
Equity............................................................................. 6.12% 11.41% 14.82%
European Growth.................................................................... 22.70% 19.56% 16.62%
Global Dividend Growth............................................................. 11.03% N/A 10.93%
High Yield......................................................................... 5.76% 11.68% 6.69%
Money Market....................................................................... N/A N/A N/A
Pacific Growth..................................................................... (1.85)% N/A (1.49)%
Quality Income Plus................................................................ (4.04)% 6.28% 8.49%
Strategist......................................................................... 8.62% 7.79% 9.48%
Utilities.......................................................................... 2.66% 9.28% 10.22%
</TABLE>

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

* The Money Market, High Yield, Equity, Quality Income Plus and Strategist
Sub-Accounts commenced operation on March 1, 1989. The Utilities and Dividend
Growth Sub-Accounts commenced operation on March 1, 1990. The Capital Growth
and European Growth Sub-Accounts commenced operation on March 1, 1991. The
Global Dividend Growth and Pacific Growth Sub-Accounts commenced operation on
February 23, 1994. The Income Builder and Capital Appreciation Sub-Accounts
commenced operation on January 21, 1997.

5
<PAGE>
OTHER TOTAL RETURNS

From time to time, sales literature or advertisements may also quote average
annual total returns that do not reflect the Surrender Charge. These are
calculated in exactly the same way as the average annual total returns described
above, except that the ending redeemable value of the hypothetical account for
the period is replaced with an ending value for the period that does not take
into account any charges on amounts surrendered.

Such average annual total return information for the Sub-Accounts (not
including deduction of the Surrender Charge) is as follows:

<TABLE>
<CAPTION>
ONE-YEAR FIVE-YEAR SINCE INCEPTION*
------------ ----------- -----------------
<S> <C> <C> <C>
Capital Growth..................................................................... 10.43% 5.65% 9.24%
Dividend Growth.................................................................... 22.72% 13.98% 12.40%
Equity............................................................................. 11.24% 11.67% 14.85%
European Growth.................................................................... 28.69% 19.84% 16.85%
Global Dividend Growth............................................................. 16.41% N/A 12.46%
High Yield......................................................................... 10.86% 11.94% 6.75%
Money Market....................................................................... 4.06% 3.11% 4.30%
Pacific Growth..................................................................... 2.85% N/A (0.15)%
Quality Income Plus................................................................ 0.54% 6.54% 8.54%
Strategist......................................................................... 13.87% 8.05% 9.52%
Utilities.......................................................................... 7.59% 9.54% 10.26%
</TABLE>

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

* The Money Market, High Yield, Equity, Quality Income Plus and Strategist
Sub-Accounts commenced operation on March 1, 1989. The Utilities and Dividend
Growth Sub-Accounts commenced operation on March 1,1990. The Capital Growth
and European Growth Sub-Accounts commenced operation on March 1, 1991. The
Global Dividend Growth and Pacific Growth Sub-Accounts commenced operation on
February 23, 1994. The Income Builder and Capital Appreciation Sub-Accounts
commenced operation on January 21, 1997.

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.

6
<PAGE>
TAX-FREE EXCHANGES (1035 EXCHANGES, ROLLOVERS AND TRANSFERS)

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 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 Allstate Life of New York Variable Annuity Account of Allstate
Life Insurance Company of New York) 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.

7
<PAGE>
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
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.

8
<PAGE>
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 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.

SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE PLANS)

Sections 408(p) and 401(k) of the Code allow employers with 100 or fewer
employees to establish SIMPLE retirement plans for their employees. SIMPLE plans
may be structured as a SIMPLE retirement account using an employee's IRA to hold
the assets or as a Section 401(k) qualified cash or deferred arrangement. In
general, a SIMPLE plan consists of a salary deferral program for eligible
employees and matching or nonelective contributions made by employers. Employers
intending to use the contract in conjunction with SIMPLE plans should seek
competent tax and legal advice.

9
<PAGE>
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 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.

10
<PAGE>
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.

11
<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 (the "Company") as of December 31, 1996 and
1995, and the related Statements of Operations, Shareholder's Equity and Cash
Flows for each of the three years in the period ended December 31, 1996. 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, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996 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.

/s/ Deloitte & Touche LLP
Chicago, Illinois

February 21, 1997

F-1
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
----------- -----------
($ IN THOUSANDS)
<S> <C> <C>
Assets
Investments
Fixed income securities, at fair value (amortized cost
$1,378,155 and $1,219,418)............................. $ 1,500,783 $ 1,424,893
Mortgage loans.......................................... 84,657 86,394
Policy loans............................................ 25,359 22,785
Short-term.............................................. 25,855 7,257
----------- -----------
Total investments................................... 1,636,654 1,541,329
Deferred acquisition costs................................ 61,559 53,944
Accrued investment income................................. 20,321 18,828
Reinsurance recoverables.................................. 2,566 3,331
Cash...................................................... 1,027 1,472
Other assets.............................................. 7,489 3,924
Separate Accounts......................................... 260,668 220,141
----------- -----------
Total assets........................................ $ 1,990,284 $ 1,842,969
----------- -----------
----------- -----------
Liabilities
Reserve for life-contingent contract benefits............. $ 911,457 $ 838,739
Contractholder funds...................................... 572,480 499,548
Deferred income taxes..................................... 3,692 23,659
Other liabilities and accrued expenses.................... 6,405 8,950
Net payable to affiliates................................. 2,515 1,865
Separate Accounts......................................... 260,668 220,141
----------- -----------
Total liabilities................................... 1,757,217 1,592,902
----------- -----------
Shareholder's Equity
Common stock, $25 par value, 80,000 shares authorized,
issued and outstanding................................... 2,000 2,000
Additional capital paid-in................................ 45,787 45,787
Unrealized net capital gains.............................. 36,852 74,413
Retained income........................................... 148,428 127,867
----------- -----------
Total shareholder's equity.......................... 233,067 250,067
----------- -----------
Total liabilities and shareholder's equity.......... $ 1,990,284 $ 1,842,969
----------- -----------
----------- -----------
</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,
-------------------------------
1996 1995 1994
--------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Life and annuity premiums (net of reinsurance ceded of
$2,273, $2,147 and $2,198)............................... $ 91,825 $ 126,713 $ 70,070
Contract charges.......................................... 25,281 21,603 18,490
Net investment income..................................... 112,862 104,384 96,911
Realized capital gains and losses......................... (1,581) (1,846) 778
--------- --------- ---------
228,387 250,854 186,249
--------- --------- ---------
Costs and expenses
Life and annuity contract benefits (net of reinsurance
recoveries of $2,827, $1,581 and $1,860)................. 172,772 198,055 137,434
Amortization of deferred acquisition costs................ 6,512 5,502 3,875
Operating costs and expenses.............................. 16,874 17,864 16,330
Early retirement program.................................. -- -- 1,210
--------- --------- ---------
196,158 221,421 158,849
--------- --------- ---------
Income from operations before income tax expense............ 32,229 29,433 27,400
Income tax expense.......................................... 11,668 9,911 9,179
--------- --------- ---------
Net income.................................................. $ 20,561 $ 19,522 $ 18,221
--------- --------- ---------
--------- --------- ---------
</TABLE>

See notes to financial statements.

F-3
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C>
Common stock................................................ $ 2,000 $ 2,000 $ 2,000
--------- --------- ---------
Additional capital paid-in.................................. 45,787 45,787 45,787
--------- --------- ---------
Unrealized net capital gains and losses
Balance, beginning of year................................ 74,413 (6,891) 25,391
Net (decrease) increase................................... (37,561) 81,304 (32,282)
--------- --------- ---------
Balance, end of year........................................ 36,852 74,413 (6,891)
--------- --------- ---------
Retained income
Balance, beginning of year................................ 127,867 108,345 90,124
Net income................................................ 20,561 19,522 18,221
--------- --------- ---------
Balance, end of year........................................ 148,428 127,867 108,345
--------- --------- ---------
Total shareholder's equity.................................. $ 233,067 $ 250,067 $ 149,241
--------- --------- ---------
--------- --------- ---------
</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,
----------------------------------
1996 1995 1994
---------- ---------- ----------
($ IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities
Net income................................................ $ 20,561 $ 19,522 $ 18,221
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation, amortization and other non-cash items..... (26,172) (22,348) (18,969)
Realized capital gains and losses....................... 1,581 1,846 (778)
Interest credited to contractholder funds............... 25,817 26,924 27,233
Increase in life-contingent contract benefits and
contractholder funds................................... 75,217 103,513 55,233
Increase in deferred acquisition costs.................. (6,859) (5,537) (6,850)
Increase in accrued investment income................... (1,493) (2,497) (102)
Change in deferred income taxes......................... 257 (2,677) (5,993)
Changes in other operating assets and liabilities....... (4,234) 3,897 (18,082)
---------- ---------- ----------
Net cash provided by operating activities............. 84,675 122,643 49,913
---------- ---------- ----------
Cash flows from investing activities
Proceeds from sales of fixed income securities............ 28,454 13,526 49,903
Investment collections
Fixed income securities available for sale.............. 72,751 30,871 54,796
Fixed income securities held to maturity................ -- 3,067 17,186
Mortgage loans.......................................... 12,508 6,499 9,744
Investment purchases
Fixed income securities available for sale.............. (236,252) (142,205) (137,684)
Fixed income securities held to maturity................ -- (32,046) (38,709)
Mortgage loans.......................................... (10,325) (9,864) (10,132)
Change in short-term investments, net..................... (18,598) (45) 41,528
Change in policy loans, net............................... (2,574) (859) (2,133)
---------- ---------- ----------
Net cash used in investing activities................. (154,036) (131,056) (15,501)
---------- ---------- ----------
Cash flows from financing activities
Contractholder fund deposits.............................. 115,420 76,534 57,468
Contractholder fund withdrawals........................... (46,504) (68,412) (92,574)
---------- ---------- ----------
Net cash provided by (used in) financing activities... 68,916 8,122 (35,106)
---------- ---------- ----------
Net decrease in cash........................................ (445) (291) (694)
Cash at beginning of year................................... 1,472 1,763 2,457
---------- ---------- ----------
Cash at end of year......................................... $ 1,027 $ 1,472 $ 1,763
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

See notes to financial statements.

F-5
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
($ IN THOUSANDS)

1. GENERAL

BASIS OF PRESENTATION

The accompanying financial statements include the accounts of Allstate Life
Insurance Company of New York (the "Company"). The Company is wholly owned by a
wholly owned subsidiary ("Parent") of Allstate Insurance Company ("AIC"), 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"). These financial statements have been prepared in conformity
with generally accepted accounting principles.

To conform with the 1996 presentation, certain items in the prior years'
financial statements and notes have been reclassified.

NATURE OF OPERATIONS

The Company markets a broad line of life insurance and annuity products in
the State of New York. Life insurance includes traditional products such as
whole life and term life insurance, as well as universal life and other
interest-sensitive life products. Annuities include deferred annuities, such as
variable annuities and fixed rate single and flexible premium annuities, and
immediate annuities such as structured settlement annuities. The Company
distributes its products using a combination of Allstate agents, banks and other
financial institutions, brokers and direct response marketing.

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 deferred annuity
contracts issued by the Company are subject to discretionary withdrawal or
surrender by the contractholder, subject to applicable surrender charges. 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 utilizes various modeling techniques in managing the
relationship between assets and liabilities. The fixed income securities
supporting the Company's obligations have been selected to meet, to the extent
possible, the anticipated cash flow requirements of the related liabilities. The
Company employs strategies to minimize its 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. There continues to be proposed federal
legislation and regulation that would allow banks greater participation in
securities and insurance businesses, which could present an increased level of
competition for sales of the Company's annuity contracts. Furthermore, the
market for deferred annuities and interest-sensitive life insurance is enhanced
by the tax incentives available under current law. Any legislative changes which
lessen these incentives are likely to negatively impact the market for these
products.

F-6
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVESTMENTS

Fixed income securities include bonds and mortgage-backed and asset-backed
securities. All fixed income securities are carried at fair value and may be
sold prior to their contractual maturity ("available for sale"). The difference
between amortized cost and fair value, net of deferred income taxes, certain
deferred acquisition costs and reserves for life-contingent contract benefits,
is reflected as a component of shareholder's equity. Provisions are recognized
for declines in the value of fixed income securities 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 expected future
market conditions and other factors.

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 and asset-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 utilizes futures contracts which are derivative financial
instruments. When futures meet specific criteria they may be designated as
accounting hedges and accounted for on a deferral basis, depending upon the
nature of the hedge strategy, and the method used to account for the hedged
item.

If, subsequent to entering into a hedge transaction, the future becomes
ineffective (including if the hedged item is sold or otherwise extinguished or
the occurrence of a hedged anticipatory transaction is no longer probable), the
Company terminates the derivative position. Gains and losses on these
terminations are reported in realized capital gains and losses in the period
they occur. The Company may also terminate the derivatives as a result of other
events or circumstances. Gains and losses on these terminations are either
deferred and amortized over the remaining life of the hedged item or are
reported in shareholder's equity, consistent with the accounting for the hedged
item.

When the Company uses futures as hedging instruments, the derivative must
reduce the primary market risk exposure on an enterprise basis in conjunction
with the hedge strategy; be designated as a hedge at the inception of the
transaction; and be highly correlated with the fair value of, or interest income
or expense associated with, the hedged item at inception and throughout the
hedge period.

F-7
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Under deferral accounting, gains and losses on derivatives are deferred on
the statement of financial position and recognized in earnings in conjunction
with earnings on the hedged item. The Company accounts for interest rate futures
as hedges using deferral accounting for anticipatory investment purchases and
sales when the criteria discussed above are met. In addition, anticipated
transactions must be probable of occurrence and their significant terms and
characteristics identified.

Changes in fair values of these derivatives are initially deferred as other
liabilities and accrued expenses. Once the anticipated transaction occurs, the
deferred gains or losses are considered part of the cost basis of the asset and
reported net of tax in shareholder's equity or recognized as a gain or loss from
disposition of the asset, as appropriate. The Company reports initial margin
deposits on futures in short-term investments. Fees and commissions paid on
these derivatives are also deferred as an adjustment to the carrying value of
the hedged item.

RECOGNITION OF PREMIUM REVENUES AND CONTRACT CHARGES

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 interest-sensitive life insurance 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 premium in excess of
the net premium on limited payment contracts, primarily structured settlement
annuities when sold with life contingencies, are deferred and recognized over
the contract period.

REINSURANCE

Certain premiums and contract benefits are ceded and reflected net of such
cessions in the statements of operations. Reinsurance recoverable and the
related reserves for life-contingent contract benefits are reported separately
in the statements of financial position. The Company continues to have primary
liability as the direct insurer for risks reinsured.

DEFERRED ACQUISITION COSTS

Certain costs of acquiring life and annuity business, principally agents'
remuneration, 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
interest-sensitive life insurance 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.

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
regulations. The principal assets and liabilities giving rise to such
differences are insurance reserves and deferred acquisition costs. Deferred
income taxes also arise from unrealized capital gains or losses on fixed income
securities carried at fair value.

F-8
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SEPARATE ACCOUNTS

The Company issues flexible premium deferred variable annuity contracts, the
assets and liabilities of which are legally segregated and reflected in the
accompanying statements of financial position as assets and liabilities of the
Separate Accounts. Assets and liabilities of the Separate Accounts represent
funds of Allstate Life of New York Variable Annuity Account, Allstate Life of
New York Variable Annuity Account II and Allstate Life of New York Separate
Account A ("Separate Accounts"), unit investment trusts registered with the
Securities and Exchange Commission.

Assets of the Separate Accounts are invested in funds of management
investment companies, and 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 Company's statements
of operations. Revenues to the Company from the Separate Accounts consist of
contract maintenance fees, administration fees and mortality and expense risk
charges.

RESERVES FOR LIFE-CONTINGENT CONTRACT BENEFITS

The reserve for life-contingent contract benefits, which relates to
traditional life insurance, group annuities and structured settlement annuities
with life contingencies, disability insurance and accident insurance, is
computed on the basis of assumptions as to future investment yields, mortality,
morbidity, terminations and expenses. These assumptions, which for traditional
life insurance are applied using the net level premium method, include
provisions for adverse deviation and generally vary by such characteristics as
type of coverage, year of issue and policy duration. Reserve interest rates
ranged from 4.0% to 9.51% during 1996. 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

Contractholder funds arise from the issuance of individual or group
contracts that include an investment component, including most annuities and
interest-sensitive life insurance contracts. Payments received are recorded as
interest-bearing liabilities. Contractholder funds are equal to deposits
received and interest credited to the benefit of the contractholder less
withdrawals, mortality charges and administrative expenses. Credited interest
rates on contractholder funds ranged from 3.1% to 9.75% for those contracts with
fixed interest rates and from 3.55% to 8.42% for those with flexible rates
during 1996.

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.

USE OF ESTIMATES

The preparation of 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. RELATED PARTY TRANSACTIONS

REINSURANCE

The Company cedes business to the Parent under reinsurance treaties to limit
aggregate and single exposures on large risks. Premiums and policy benefits
ceded totaled $1,383 and $1,662 in 1996, $1,259 and $278 in 1995, and $1,181 and
$1,877 in 1994, respectively. Included in the reinsurance recoverable at
December 31, 1996 and 1995 are amounts due from the Parent of $965 and $1,212.

STRUCTURED SETTLEMENT ANNUITIES

AIC, through an affiliate, purchased $15,610, $11,243, and $7,568 of
structured settlement annuities from the Company in 1996, 1995 and 1994,
respectively. Of these amounts, $8,517, $4,164 and $1,221 relate to structured
settlement annuities with life contingencies and are included in premium income
in 1996, 1995 and 1994, respectively. Additionally, the reserve for
life-contingent contract 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 AIC in conducting its business activities. The Company reimburses
AIC for the operating expenses incurred by AIC 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
$23,134, $21,288 and $17,320 in 1996, 1995 and 1994, respectively. A portion of
these expenses related to the acquisition of life and annuity business is
deferred and amortized over the contract period.

F-10
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

4. INVESTMENTS

FAIR VALUES

The amortized cost, gross unrealized gains and losses and fair value for
fixed income securities are as follows:

<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED -------------------- FAIR
AT DECEMBER 31, 1996 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C>
U.S. government and agencies................. $ 387,806 $ 54,349 $ (2,642) $ 439,513
Municipal.................................... 36,158 1,883 (406) 37,635
Corporate.................................... 734,500 68,022 (4,592) 797,930
Mortgage-backed securities................... 188,480 6,793 (1,106) 194,167
Asset-backed securities...................... 31,211 394 (67) 31,538
----------- --------- --------- -----------
Total fixed income securities............ $ 1,378,155 $ 131,441 $ (8,813) $ 1,500,783
----------- --------- --------- -----------
----------- --------- --------- -----------

AT DECEMBER 31, 1995
- ---------------------------------------------
<S> <C> <C> <C> <C>
U.S. government and agencies................. $ 336,331 $ 99,750 $ (526) $ 435,555
Municipal.................................... 36,002 2,831 (92) 38,741
Corporate.................................... 633,731 92,073 (767) 725,037
Mortgage-backed securities................... 189,436 11,600 (164) 200,872
Asset-backed securities...................... 23,918 770 -- 24,688
----------- --------- --------- -----------
Total fixed income securities............ $ 1,219,418 $ 207,024 $ (1,549) $ 1,424,893
----------- --------- --------- -----------
----------- --------- --------- -----------
</TABLE>

SCHEDULED MATURITIES

The scheduled maturities for fixed income securities are as follows at
December 31, 1996:

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- -----------

<S> <C> <C>
Due in one year or less................................................ $ 16,350 $ 16,842
Due after one year through five years.................................. 85,776 89,809
Due after five years through ten years................................. 228,717 240,079
Due after ten years.................................................... 827,621 928,348
----------- -----------
1,158,464 1,275,078
Mortgage-backed and asset-backed securities.......................... 219,691 225,705
----------- -----------
Total.............................................................. $ 1,378,155 $ 1,500,783
----------- -----------
----------- -----------
</TABLE>

Actual maturities may differ from those scheduled as a result of prepayments
by the issuers.

F-11
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

4. INVESTMENTS (CONTINUED)

NET INVESTMENT INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Fixed income securities...................................... $ 104,583 $ 95,212 $ 88,149
Mortgage loans............................................... 7,113 7,999 8,092
Other........................................................ 2,942 2,744 2,246
--------- --------- ---------
Investment income, before expense........................ 114,638 105,955 98,487
Investment expense....................................... 1,776 1,571 1,576
--------- --------- ---------
Net investment income.................................... $ 112,862 $ 104,384 $ 96,911
--------- --------- ---------
--------- --------- ---------
</TABLE>

REALIZED CAPITAL GAINS AND LOSSES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Fixed income securities...................................... $ (1,522) $ 422 $ 1,570
Mortgage loans............................................... (59) (2,268) (792)
--------- --------- ---------
Realized capital losses and gains.......................... (1,581) (1,846) 778
Income taxes............................................... (553) (646) 272
--------- --------- ---------
Realized capital losses and gains, after tax............... $ (1,028) $ (1,200) $ 506
--------- --------- ---------
--------- --------- ---------
</TABLE>

PROCEEDS FROM SALES OF FIXED INCOME SECURITIES

Proceeds from sales of investments in fixed income securities were $28,454,
$13,526 and $49,903 in 1996, 1995 and 1994, respectively. Gross gains of $480,
$172 and $1,743 and gross losses of $2,308, $105 and $973 were realized on sales
of fixed income securities during 1996, 1995 and 1994, respectively.

UNREALIZED NET CAPITAL GAINS

Unrealized net capital gains on fixed income securities included in
shareholder's equity at December 31, 1996 are as follows:

<TABLE>
<CAPTION>
COST/ UNREALIZED
AMORTIZED FAIR NET
COST VALUE GAINS
----------- ----------- -----------

<S> <C> <C> <C>
Fixed income securities................................. $ 1,378,155 $ 1,500,783 $ 122,628
----------- -----------
----------- -----------
Reserves for life insurance policy benefits............. (65,300)
Deferred income taxes................................... (19,844)
Deferred acquisition costs and other.................... (632)
-----------
Unrealized net capital gains........................ $ 36,852
-----------
-----------
</TABLE>

F-12
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

4. INVESTMENTS (CONTINUED)

CHANGE IN UNREALIZED NET CAPITAL GAINS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------

<S> <C> <C> <C>
Fixed income securities.................................... $ (82,847) $ 216,975 $ (52,740)
Reserves for life insurance policy benefits................ 24,300 (89,600) --
Deferred income taxes...................................... 20,224 (43,779) 17,382
Deferred acquisition costs and other....................... 762 (2,292) 3,076
--------- --------- ---------
Change in unrealized net capital gains................. $ (37,561) $ 81,304 $ (32,282)
--------- --------- ---------
--------- --------- ---------
</TABLE>

INVESTMENT LOSS PROVISIONS AND VALUATION ALLOWANCES

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 $208, $2,448 and $627 in 1996, 1995 and 1994,
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 Company had no impaired loans at December 31, 1996. The net carrying
value of impaired loans at December 31, 1995 was $9,647, measured at the fair
value of the collateral. The total investment in impaired mortgage loans before
valuation allowance at December 31, 1995 was $11,581 and the related allowance
on these impaired loans was $1,934.

Activity in the valuation allowance for all mortgage loans for the years
ended December 31, 1996 and 1995 is summarized as follows:

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Balance at January 1..................................................... $ 1,952 $ 1,179
Additions.............................................................. 207 1,930
Direct write-downs..................................................... (1,934) (1,157)
--------- ---------
Balance at December 31................................................... $ 225 $ 1,952
--------- ---------
--------- ---------
</TABLE>

Interest income is recognized on a cash basis for impaired loans carried at
the fair value of the 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 $281 and $1,398 on impaired loans during 1996 and
1995, respectively, of which $281 and $1,194 was received in cash during 1996
and 1995, respectively. The average recorded investment in impaired loans was
$5,154 and $8,900 during 1996 and 1995, respectively.

F-13
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

4. INVESTMENTS (CONTINUED)

INVESTMENT CONCENTRATION FOR MUNICIPAL BOND AND COMMERCIAL MORTGAGE
PORTFOLIOS 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 exceeded 2.7% of the carrying value of the
portfolio at December 31, 1996:

(% of municipal bond portfolio carrying value)

<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------
1996 1995
--- ---
<S> <C> <C>
Ohio..................................................................... 25.9% 26.8%
California............................................................... 24.3 23.1
Illinois................................................................. 19.0 19.7
Maryland................................................................. 7.8 7.6
Maine.................................................................... 5.7 5.7
New York................................................................. 5.3 5.3
Minnesota................................................................ 5.3 5.2
</TABLE>

The Company's mortgage loans are collateralized 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
states with the largest portion of the commercial mortgage loan portfolio are as
listed below. Except for the following, holdings in no other state exceed 2.3%
of the portfolio at December 31, 1996:

(% of commercial mortgage portfolio carrying value)

<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------
1996 1995
--- ---
<S> <C> <C>
California............................................................... 49.1% 56.7%
Illinois................................................................. 21.3 22.9
New York................................................................. 21.1 11.1
</TABLE>

F-14
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

4. INVESTMENTS (CONTINUED)

The types of properties collateralizing the commercial mortgage loans are as
follows:

(% of commercial mortgage portfolio carrying value)

<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Retail................................................................... 39.1% 39.5%
Warehouse................................................................ 24.2 32.1
Apartment complex........................................................ 14.6 4.5
Office buildings......................................................... 14.3 16.0
Industrial............................................................... 6.8 6.9
Other.................................................................... 1.0 1.0
--------- ---------
100.0% 100.0%
--------- ---------
--------- ---------
</TABLE>

SECURITIES ON DEPOSIT

At December 31, 1996, fixed income securities with a carrying value of
$1,829 were on deposit with regulatory authorities as required by law.

5. 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 and other off-balance-sheet 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. The disclosures that follow do not
reflect the fair value of the Company as a whole since a number of the Company's
significant assets (including deferred acquisition costs and reinsurance
recoverables) and liabilities (including reserve for life-contingent contract
benefits and deferred income taxes) are not considered financial instruments and
are not carried at fair value. Other assets and liabilities considered financial
instruments, including accrued investment income and cash, are generally of a
short-term nature. It is assumed that their carrying value approximates fair
value.

FINANCIAL ASSETS

<TABLE>
<CAPTION>
CARRYING
AT DECEMBER 31, 1996 VALUE FAIR VALUE
- ----------------------------------------------------------------- ------------- -----------
<S> <C> <C>
Fixed income securities.......................................... $ 1,500,783 $ 1,500,783
Mortgage loans................................................... 84,657 83,789
Short-term investments........................................... 25,855 25,855
Policy loans..................................................... 25,359 25,359
Separate Accounts................................................ 260,668 260,668
</TABLE>

F-15
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

5. FINANCIAL INSTRUMENTS (CONTINUED)

<TABLE>
<CAPTION>
CARRYING
AT DECEMBER 31, 1995 VALUE FAIR VALUE
- ----------------------------------------------------------------- ------------- -----------
<S> <C> <C>
Fixed income securities.......................................... $ 1,424,893 $ 1,424,893
Mortgage loans................................................... 86,394 89,517
Short-term investments........................................... 7,257 7,257
Policy loans..................................................... 22,785 22,785
Separate Accounts................................................ 220,141 220,141
</TABLE>

Carrying value and fair value include the effects of derivative financial
instruments where applicable.

Fair values 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 similar loans would be made to borrowers with similar
characteristics, using similar properties as collateral. Loans that exceed 100%
loan-to-value are valued at the estimated fair value of the underlying
collateral. Short-term investments are highly liquid investments with maturities
of less than one year whose carrying value approximates fair value. The carrying
value of policy loans approximates its fair value. Assets of the Separate
Accounts are carried in the statements of financial position at fair value.

FINANCIAL LIABILITIES

<TABLE>
<CAPTION>
CARRYING FAIR
AT DECEMBER 31, 1996 VALUE VALUE
- ------------------------------------------------------------------- ------------- ---------
<S> <C> <C>
Contractholder funds on investment contracts....................... $ 421,642 $ 430,696
Separate Accounts.................................................. 260,668 260,668
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
- -------------------------------------------------------------------
<S> <C> <C>
Contractholder funds on investment contracts....................... $ 366,481 $ 392,111
Separate Accounts.................................................. 220,141 220,141
</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 charges. The fair value of
immediate annuities and annuities without life contingencies with fixed terms is
estimated using discounted cash flow calculations based on interest rates
currently offered for contracts with similar terms and durations. Separate
Accounts liabilities are carried at the fair value of the underlying assets.

F-16
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

5. FINANCIAL INSTRUMENTS (CONTINUED)

DERIVATIVE FINANCIAL INSTRUMENTS

The Company primarily uses derivative financial instruments to reduce its
exposure to interest rate risk in conjunction with asset/liability management.
The Company does not hold or issue these instruments for trading purposes. The
following table summarizes the contract or notional amount, credit exposure,
fair value and carrying value of the Company's derivative financial instruments:

<TABLE>
<CAPTION>
CONTRACT/
NOTIONAL CREDIT CARRYING FAIR
AT DECEMBER 31, 1996 AMOUNT EXPOSURE VALUE VALUE
- --------------------------------------------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Financial futures contracts.................. $ 6,700 $ -- $ 266 $ 56
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
- ---------------------------------------------
<S> <C> <C> <C> <C>
Financial futures contracts.................. $ 22,900 $ -- $ 576 $ --
</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 for gain or loss on these agreements.

Credit exposure represents the Company's potential loss if all of the
counterparties failed to perform under the contractual terms of the contracts
and all collateral, if any, became worthless. This exposure is represented by
the fair value of contracts with a positive fair value at the reporting date
reduced by the effect, if any, of master netting agreements.

The Company manages its exposure to credit risk by utilizing highly rated
counterparties, establishing risk control limits, executing legally enforceable
master netting agreements and obtaining collateral where appropriate. To date,
the Company has not incurred any losses on derivative financial instruments due
to counterparty nonperformance.

Fair value is the estimated amount that the Company would receive (pay) to
terminate or assign the contracts at the reporting date, thereby taking into
account the current unrealized gains or losses of open contracts. Deal and
exchange quotes are available for the Company's derivatives.

Financial futures 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 manage its
market risk related to fixed income securities and anticipatory investment
purchases and sales. Futures used as 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 risk 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 the Company will incur losses due to adverse
changes in market rates and prices. Market risk exists for all of the derivative
financial instruments that the Company currently holds, as these instruments may
become less valuable due to adverse changes in market conditions. The Company
mitigates this risk through established risk limits set by senior management. In
addition, the change in the value of the Company's derivative financial
instruments designated as hedges are generally offset by the change in the value
of the related assets.

F-17
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (Continued)
($ in thousands)

5. FINANCIAL INSTRUMENTS (CONTINUED)

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS

Commitments to extend 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, 1996, the Company had $6,190 in mortgage loan commitments which
had a fair value of $62. No such commitments existed at December 31, 1995.

6. INCOME TAXES

Consolidated federal income tax returns are filed by the Corporation and its
eligible subsidiaries, including the Company. Tax liabilities and benefits
realized by the consolidated group are allocated as generated by the respective
entities.

Prior to the Distribution, the Corporation and all of its domestic
subsidiaries, including the Company, (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").
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
Company 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 recognized in a separate
return, were allocated according to the Tax Sharing Agreement.

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.

F-18
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

6. INCOME TAXES (CONTINUED)

The components of the deferred income tax assets and liabilities at December
31, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
DEFERRED ASSETS
Life-contingent contract reserves....................................... $ 27,951 $ 25,562
Difference in tax bases of investments.................................. 270 1,536
Loss on disposal of discontinued operations............................. 375 376
Other postretirement benefits........................................... 524 496
Other assets............................................................ 1,789 1,701
--------- ---------
Total deferred assets................................................. 30,909 29,671
--------- ---------
DEFERRED LIABILITIES
Unrealized net capital gains............................................ (19,844) (40,069)
Deferred acquisition costs.............................................. (14,020) (12,655)
Prepaid commission expense.............................................. (717) (578)
Other liabilities....................................................... (20) (28)
--------- ---------
Total deferred liabilities............................................ (34,601) (53,330)
--------- ---------
Net deferred liability................................................ $ (3,692) $ (23,659)
--------- ---------
--------- ---------
</TABLE>

The components of income tax expense are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Current........................................................ $ 11,411 $ 12,588 $ 15,172
Deferred....................................................... 257 (2,677) (5,993)
--------- --------- ---------
Total income tax expense..................................... $ 11,668 $ 9,911 $ 9,179
--------- --------- ---------
--------- --------- ---------
</TABLE>

The Company paid income taxes of $11,968, $11,000 and $27,682 in 1996, 1995
and 1994, respectively, to the Parent. The Company had an income tax recoverable
from the Parent of $105 at December 31, 1996, and an income tax payable of
$1,729 at December 31, 1995.

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, 1996,
approximately $389, will result in taxes payable of $136 if distributed by the
Company to the Parent. No provision for taxes has been made as the Company has
no plan to distribute amounts from this account. No further additions to the
account are allowed under the Tax Reform Act of 1984.

F-19
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

7. 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,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Balance per generally accepted accounting principles.......... $ 20,561 $ 19,522 $ 18,221
Deferred acquisition costs.................................. (6,859) (5,537) (6,850)
Deferred income taxes....................................... 257 (2,677) (5,993)
Non-admitted assets and statutory reserves.................. 6,224 12,786 6,900
Other postretirement and postemployment benefits............ (34) 71 105
Other....................................................... (2,004) (965) (1,442)
--------- --------- ---------
Balance per statutory accounting practices.................... $ 18,145 $ 23,200 $ 10,941
--------- --------- ---------
--------- --------- ---------
</TABLE>

<TABLE>
<CAPTION>
SHAREHOLDER'S EQUITY
---------------------
AT DECEMBER 31,
---------------------
1996 1995
--------- ----------
<S> <C> <C>
Balance per generally accepted accounting principles.......... $ 233,067 $ 250,067
Deferred acquisition costs.................................. (61,559) (53,944)
Deferred income taxes....................................... 3,692 23,659
Unrealized net capital gains................................ (57,102) (114,500)
Non-admitted assets and statutory reserves.................. 48,426 43,624
Other postretirement and postemployment benefits............ 968 1,058
Other....................................................... (2,473) (1,667)
--------- ----------
Balance per statutory accounting practices.................... $ 165,019 $ 148,297
--------- ----------
--------- ----------
</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
Department of Insurance. Prescribed statutory accounting practices 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.

F-20
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
($ IN THOUSANDS)

7. STATUTORY FINANCIAL INFORMATION (CONTINUED)

DIVIDENDS

The ability of the Company to pay dividends is dependent on business
conditions, income, cash requirements of the Company and other relevant factors.
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.

8. BENEFIT PLANS

PENSION PLANS

Defined benefit pension plans, sponsored by the Corporation, cover 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. The
Corporation'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 net income were $490, $446, and $344 for the pension
plans in 1996, 1995 and 1994, respectively.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Corporation provides certain health care and life insurance benefits for
retired employees. Qualified employees may become eligible for these benefits if
they retire in accordance with the Corporation's established retirement policy
and are continuously insured under the Corporation's group plans or other
approved plans for 10 or more years prior to retirement. The Corporation shares
the cost of the retiree medical benefits with retirees based on years of service
with the Corporation's share being subject to a 5% limit on annual medical cost
inflation after retirement. The Corporation's postretirement benefit plans
currently are not funded. The Corporation has the right to modify or terminate
these plans.

PROFIT SHARING FUND

Employees of the Corporation and its domestic subsidiaries are also eligible
to become members of The Savings and Profit Sharing Fund of Allstate Employees
("Allstate Plan"). The Corporation contributions are based on the Corporation's
matching obligation and performance. The Allstate Plan includes an Employee
Stock Ownership Plan ("Allstate ESOP") to pre-fund a portion of the
Corporation's anticipated contribution. The Allstate Plan and the Allstate ESOP
split from The Savings and Profit Sharing Fund of Sears Employees ("Sears Plan")
on the date of the Distribution. In connection with this, the Corporation paid
Sears $327 million, and in return received a note from the Allstate ESOP for a
like principal amount and 50% of the unallocated shares. The Corporation will
make contributions to the Allstate ESOP annually in the amount necessary to
allow the Allstate ESOP to fund interest and principal payments on the note
after considering the dividends paid on ESOP shares, which are available for
debt service. The Company's defined contribution to the Allstate Plan was $111
and $141 in 1996 and 1995, respectively. The cost to the Company prior to the
Distribution and the split from the Sears Plan was $123 in 1994.

F-21
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE IV--REINSURANCE
($ IN THOUSANDS)

YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
GROSS
AMOUNT CEDED NET AMOUNT
----------- --------- -----------
<S> <C> <C> <C>
Life insurance in force................................. $ 9,962,300 $ 553,628 $ 9,408,672
----------- --------- -----------
----------- --------- -----------
Premiums and contract charges:
Life and annuities.................................... $ 114,296 $ 1,398 $ 112,898
Accident and health................................... 5,044 834 4,210
----------- --------- -----------
$ 119,340 $ 2,232 $ 117,108
----------- --------- -----------
----------- --------- -----------
</TABLE>

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>

F-22
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
SCHEDULE V--VALUATION AND QUALIFYING ACCOUNTS
($ IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- --------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Year Ended December 31, 1996
Allowance for estimated losses on mortgage
loans..................................... $ 1,952 $ 207 $ 1,934 $ 225

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
</TABLE>

F-23
<PAGE>

(This page has been left blank intentionally.)

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, 1996, and
the related Statement of Operations for the year then ended and the Statement of
Changes in Net Assets for each of the two years in the period ended December 31,
1996 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, 1996. 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, 1996, 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 then ended, of each of the
portfolios comprising the Account, in conformity with generally accepted
accounting principles.

/s/ Deloitte & Touche LLP
Chicago, Illinois

February 21, 1997

F-25
<PAGE>
ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
STATEMENT OF NET ASSETS
DECEMBER 31, 1996

(Dollars and shares in thousands)

<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in the Dean Witter Variable Investment Series:
Money Market Portfolio
911 shares (cost: $911)........................................................... $ 911
High Yield Portfolio
17 shares (cost: $111)............................................................ 108
Equity Portfolio
54 shares (cost: $1,179).......................................................... 1,428
Quality Income Plus Portfolio
145 shares (cost: $1,455)......................................................... 1,507
Strategist Portfolio
197 shares (cost: $2,323)......................................................... 2,707
Dividend Growth Portfolio
264 shares (cost: $2,984)......................................................... 4,849
Utilities Portfolio
109 shares (cost: $1,233)......................................................... 1,677
European Growth Portfolio
18 shares (cost: $239)............................................................ 379
Capital Growth Portfolio
43 shares (cost: $487)............................................................ 712
Global Dividend Growth Portfolio
36 shares (cost: $408)............................................................ 478
Pacific Growth Portfolio
19 shares (cost: $188)............................................................ 193
---------
Total assets.................................................................... 14,949

LIABILITIES
Payable to Allstate Life Insurance Company of New York:
Accrued contract maintenance charges................................................ 5
---------
Net assets...................................................................... $ 14,944
---------
---------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

F-26
<PAGE>
ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
DEAN WITTER VARIABLE INVESTMENT SERIES
----------------------------------------------------------
QUALITY
MONEY HIGH INCOME
MARKET YIELD EQUITY PLUS STRATEGIST
(Dollars in thousands) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................................................. $ 44 $ 21 $ 171 $123 $115
Charges from Allstate Life Insurance Company of New York:
Mortality and expense risk.............................. (11) (2) (13) (16) (28)
--------- --------- --------- --- ---
Net investment income...................................... 33 19 158 107 87
--------- --------- --------- --- ---
REALIZED AND UNREALIZED (LOSSES)
GAINS ON INVESTMENTS
Realized (losses) gains from sales of investments
Proceeds from sales................................... 1,330 99 208 310 569
Cost of investments sold.............................. (1,330) (100) (166) (299) (513)
--------- --------- --------- --- ---
Net realized (losses) gains................................. -- (1) 42 11 56
--------- --------- --------- --- ---
CHANGE IN UNREALIZED (LOSSES) GAINS -- -- (60) (105) 212
--------- --------- --------- --- ---
Net (losses) gains on investments........................... -- (1) (18) (94) 268
--------- --------- --------- --- ---
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS................................................. $ 33 $ 18 $ 140 $ 13 $355
--------- --------- --------- --- ---
--------- --------- --------- --- ---
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

F-27
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
STATEMENT OF OPERATIONS
DECEMBER 31, 1996

<TABLE>
<CAPTION>
DEAN WITTER VARIABLE INVESTMENT SERIES
----------------------------------------------------------------------------
GLOBAL
DIVIDEND EUROPEAN CAPITAL DIVIDEND PACIFIC
GROWTH UTILITIES GROWTH GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TOTAL
-------- --------- -------- --------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Income
Dividends......................................... $ 269 $ 80 $ 18 $ 13 $ 20 $ 2 $ 876
Charges from Allstate Life Insurance Company of
New York:
Mortality and expense risk...................... (56) (22) (4) (8) (5) (2) (167)
-------- --------- --- --- -------- --------- -------
Net investment income........................... 213 58 14 5 15 -- 709
-------- --------- --- --- -------- --------- -------
REALIZED AND UNREALIZED (LOSSES)
GAINS ON INVESTMENTS
Realized (losses) gains from sales of
investments
Proceeds from sales........................... 2,286 1,138 127 108 255 129 6,559
Cost of investments sold (1,513) (870) (85) (77) (223) (127) (5,303)
-------- --------- --- --- -------- --------- -------
Net realized (losses) gains................... 773 268 42 31 32 2 1,256
-------- --------- --- --- -------- --------- -------
CHANGE IN UNREALIZED (LOSSES) GAINS 102 (220) 30 34 23 3 19
-------- --------- --- --- -------- --------- -------
Net (losses) gains on investments 875 48 72 65 55 5 1,275
-------- --------- --- --- -------- --------- -------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,088 $ 106 $ 86 $ 70 $ 70 $ 5 $ 1,984
-------- --------- --- --- -------- --------- -------
-------- --------- --- --- -------- --------- -------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

F-28
<PAGE>
ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
DEAN WITTER VARIABLE INVESTMENT SERIES
---------------------------------------------------------------------
QUALITY
MONEY HIGH INCOME DIVIDEND
(Dollars and Units in Thousands, MARKET YIELD EQUITY 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........................... $ 33 $ 19 $ 158 $ 107 $ 87 $ 213
Net realized (losses) gains..................... -- (1) 42 11 56 773
Net change in unrealized (losses) gains......... -- -- (60) (105) 212 102
--------- --------- --------- --------- --------- ---------
33 18 140 13 355 1,088
--------- --------- --------- --------- --------- ---------
FROM CAPITAL TRANSACTIONS
Deposits........................................ -- 9 82 -- 24 100
Benefit payments................................ 15 -- -- -- -- 2
Payments on termination......................... (853) (97) (204) (178) (471) (1,919)
Contract maintenance charges.................... (1) -- (1) (1) (1) (4)
Transfers among the portfolios and with the
Fixed Account, net............................. 143 12 323 (115) 11 (165)
--------- --------- --------- --------- --------- ---------
(696) (76) 200 (294) (437) (1,986)
--------- --------- --------- --------- --------- ---------
INCREASE (DECREASE) IN NET ASSETS................. (663) (58) 340 (281) (82) (898)
Net assets at beginning of period................. 1,573 166 1,088 1,787 2,788 5,744
--------- --------- --------- --------- --------- ---------
Net assets at end of period....................... $ 910 $ 108 $ 1,428 $ 1,506 $ 2,706 $ 4,846
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE PER UNIT AT END OF PERIOD......... $ 18.97 $29.99 $ 48.48 $ 20.61 $ 23.10 $ 22.25
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
UNITS OUTSTANDING AT END OF PERIOD................ 48 4 29 73 117 218
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

F-29
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
DEAN WITTER VARIABLE INVESTMENT SERIES
----------------------------------------------------------------------
GLOBAL
EUROPEAN CAPITAL DIVIDEND PACIFIC
(Dollars and Units in Thousands, UTILITIES GROWTH GROWTH GROWTH GROWTH
Except Value per Unit) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TOTAL
--------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income............................. $ 58 $ 14 $ 5 $ 15 $ -- $ 709
Net realized (losses) gains....................... 268 42 31 32 2 1,256
Net change in unrealized (losses) gains........... (220) 30 34 23 3 19
--------- --------- --------- --------- --------- ----------
106 86 70 70 5 1,984
--------- --------- --------- --------- --------- ----------
FROM CAPITAL TRANSACTIONS
Deposits.......................................... 50 1 5 21 13 305
Benefit payments.................................. 18 -- (9) (7) (6) 13
Payments on termination........................... (755) (102) (85) (217) (65) (4,946)
Contract maintenance charges...................... (1) -- -- -- -- (9)
Transfers among the portfolios and with the Fixed
Account, net..................................... (345) 16 1 195 (13) 63
--------- --------- --------- --------- --------- ----------
(1,033) (85) (88) (8) (71) (4,574)
--------- --------- --------- --------- --------- ----------
INCREASE (DECREASE) IN NET ASSETS................. (927) 1 (18) 62 (66) (2,590)
Net assets at beginning of period................. 2,603 379 730 416 260 17,534
--------- --------- --------- --------- --------- ----------
Net assets at end of period....................... $ 1,676 $ 380 $ 712 $ 478 $ 194 $ 14,944
--------- --------- --------- --------- --------- ----------
--------- --------- --------- --------- --------- ----------
Net asset value per unit at end of period......... $ 19.51 $ 24.84 $ 16.76 $ 13.98 $ 9.96
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
UNITS OUTSTANDING AT END OF PERIOD................ 86 15 42 34 19
--------- --------- --------- --------- --------- ----------
--------- --------- --------- --------- --------- ----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

F-30
<PAGE>
ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
DEAN WITTER VARIABLE INVESTMENT SERIES
---------------------------------------------------------------------
QUALITY
MONEY HIGH INCOME DIVIDEND
(Dollars and Units in Thousands, MARKET YIELD EQUITY 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........................... $ 71 $ 13 $ 1 $ 90 $ 234 $ 191
Net realized gains (losses)..................... -- -- 52 7 31 148
Net change in unrealized gains (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 the 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 at beginning of period................. 1,553 75 728 1,596 3,015 4,433
--------- --------- --------- --------- --------- ---------
Net assets at end of period....................... 1,573 166 1,088 1,787 2,788 5,744
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Net asset value per unit at end of period......... $ 18.22 $27.06 $ 43.59 $ 20.50 $ 20.28 $ 18.13
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
UNITS OUTSTANDING AT END OF PERIOD................ 86 6 25 88 137 317
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

F-31
<PAGE>

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

<TABLE>
<CAPTION>
DEAN WITTER VARIABLE INVESTMENT SERIES
----------------------------------------------------------------------
GLOBAL
EUROPEAN CAPITAL DIVIDEND PACIFIC
(Dollars and Units in Thousands, UTILITIES GROWTH GROWTH GROWTH GROWTH
Except Value per Unit) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TOTAL
--------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income............................. $ 84 $ 13 $ (3) $ 6 $ -- $ 700
Net realized gains (losses)....................... 92 28 9 -- -- 367
Net change in unrealized gains (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)
Transfer among the 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 at beginning of period................. 2,403 398 581 284 213 15,279
--------- --------- --------- --------- --------- ----------
Net assets at end of period....................... 2,603 379 730 416 260 17,534
--------- --------- --------- --------- --------- ----------
--------- --------- --------- --------- --------- ----------
Net asset value per unit at end of period......... $ 18.13 $ 19.30 $ 15.18 $ 12.01 $ 9.68
--------- --------- --------- --------- --------- ----------
--------- --------- --------- --------- --------- ----------
UNITS OUTSTANDING AT END OF PERIOD................ 144 19 48 35 27
--------- --------- --------- --------- --------- ----------
--------- --------- --------- --------- --------- ----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

F-32
<PAGE>
ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996

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"). The assets of the Account are legally
segregated from those of ALNY. ALNY is wholly owned by a wholly owned subsidiary
("Parent") of Allstate Insurance Company ("Allstate"), a wholly owned subsidiary
of The Allstate Corporation (the "Corporation").

ALNY writes certain annuity contracts, the proceeds of which are invested at
the direction of the contractholder. Contractholders primarily invest in units
of the portfolios comprising the Account, for which they bear all of the
investment risk, 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"). The Account accepts
additional deposits from existing contractholders, but is closed to new
customers. ALNY provides administrative and insurance services to the Account
for a fee.

Dean Witter Reynolds, Inc., a wholly owned subsidiary of Dean Witter,
Discover and Co., is a distributor of ALNY's flexible premium deferred variable
annuity contracts and certain single and flexible premium annuities. Dean Witter
InterCapital, Inc. ("InterCapital"), a wholly owned subsidiary of Dean Witter,
Discover and Co., is the investment manager for the Fund. InterCapital 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.

RECOGNITION OF 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 represent the difference between the proceeds from
sales of shares by the Account and the cost of such shares, which is determined
on a weighted average basis.

CONTRACT ACCOUNT ACTIVITY

Account activity is reflected in individual contractholder accounts on a
daily basis.

FEDERAL INCOME TAXES

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

ACCOUNT VALUE

Certain calculations that could be made in the financial statements may
differ from published amounts due to truncation of actual Account values.

F-33
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996

3. CONTRACT MAINTENANCE AND MORTALITY AND EXPENSE CHARGES
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.

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.

4. FINANCIAL INSTRUMENTS

The investments of the Separate Accounts are carried at fair value, based
upon quoted market prices. Accrued contract maintenance charges are of a
short-term nature. It is assumed that their carrying value approximates fair
value.

F-34
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996

5. UNITS ISSUED AND REDEEMED

Units issued and redeemed by the Account during 1996 were as follows:

<TABLE>
<CAPTION>
DEAN WITTER VARIABLE INVESTMENT SERIES
-----------------------------------------------------
QUALITY
MONEY HIGH INCOME
MARKET YIELD EQUITY PLUS STRATEGIST
(units in thousands) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
UNITS OUTSTANDING AT BEGINNING OF PERIOD.......... 86 6 25 88 137
Unit activity during 1996:
Issued.......................................... 33 1 9 -- 6
Redeemed........................................ (71 ) (3 ) (5 ) (15 ) (26 )
--------- --------- --------- --------- ---------
UNITS OUTSTANDING AT END OF PERIOD................ 48 4 29 73 117
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

UNITS REDEEMED INCLUDES UNITS DEDUCTED FOR ACCRUED CONTRACT MAINTENANCE CHARGES.
* * * * * *

F-35
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996

5. UNITS ISSUED AND REDEEMED (CONTINUED)

<TABLE>
<CAPTION>
DEAN WITTER VARIABLE INVESTMENT SERIES
----------------------------------------------------------------
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 AT BEGINNING OF PERIOD.......... 317 144 19 48 35 27
Unit activity during 1996:
Issued.......................................... 13 3 2 1 19 5
Redeemed........................................ (112 ) (61 ) (6 ) (7 ) (20 ) (13 )
--------- --------- --- --- --- ---
UNITS OUTSTANDING AT END OF PERIOD................ 218 86 15 42 34 19
--------- --------- --- --- --- ---
--------- --------- --- --- --- ---
</TABLE>

F-36
<PAGE>

PART C

OTHER INFORMATION

24A. FINANCIAL STATEMENTS

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

24B. EXHIBITS

The following exhibits:

The following exhibits 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*

(2) Not Applicable

(3) 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

(14) Financial Data Schedule*****

(99) Powers of Attorney*

_________________________
* Previously filed in Form N-4 Registration Statement No. 033-24228, dated
December 31, 1996.
** Previously filed in Form N-4 Registration Statement No. 33-24228 dated
September 12, 1988.
*** Previously filed in Form N-4 Registration Statement No. 33-65381 dated
September 20, 1996.
**** Previously filed in Form N-4 Registration Statement No. 33-24228 dated
April 30, 1996.
***** Previously filed in Depositor's Form 10-K filed March 31, 1997.

<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
Sharmaine M. Miller** Director and Chief Administrative Officer
Marcia D. Alazraki* Director
Joseph F. Carlino* Director
Cleveland Johnson, Jr.* Director
Phillip E. Lawson* Director
Gerard F. McDermott** Director
Joseph P. McFadden* Director
John R. Raben, Jr.* Director
Sally A. Slacke* Director
Kevin R. Slawin* Director and Vice President
Theodore A. Schnell* Director and Assistant Vice President
Timothy H. Plohg* Director and Vice President
Karen C. Gardner* Vice President
Peter H. Heckman* Vice President
Thomas A. McAvity* Vice President
Keith A. Hauschildt* Assistant Vice President and Controller
James P. Zils* Treasurer
Casey J. Sylla* Chief Investment Officer
Richard L. Baker* Assistant Vice President
Ralph A. Bergholtz* Assistant Treasurer
Mark A. Bishop* Assistant Treasurer
D. Steven Boger* Assistant Vice President
Barbara S. Brown* Assistant Treasurer
Adrian B. Corbiere* Assistant Treasurer
Dorothy E. Even* Assistant Vice President
Marla G. Friedman* Assistant Vice President
Judith P. Greffin* Assistant Vice President
John R. Hunter* Assistant Vice President
Peter S. Horos* Assistant Treasurer
Thomas C. Jensen* Assistant Treasurer
Robert T. Jostes* Assistant Treasurer
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
Ronald A. Mendel* Assistant Treasurer
Deborah K. Miller* Assistant Treasurer
Barry S. Paul* Assistant Vice President
Robert N. Roeters* Assistant Vice President
Brenda D. Sneed* Assistant Vice President
C. Nelson Strom* Assistant Vice President and Corporate Actuary
Louise J. Walton* Assistant Treasurer
Patricia W. Wilson* Assistant Vice President
Jerry D. Zinkula* Assistant Treasurer

* 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 February 28, 1997 there were in force 22 qualified and 260
non-qualified contracts. The Registrant began operations on March 1, 1989.

28. INDEMNIFICATION

The General Agent's Agreement (Exhibit 3) 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 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 Premier 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
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
Dean Witter Income Builder Fund
Dean Witter Special Value 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
TCW/DW Global Telecom Trust
TCW/DW Strategic Income 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, Chief Operating Officer
and Director, Dean Witter Capital

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

Stephen 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. Frohne 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

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

Michael T. Cunningham Senior Vice President

David Diaz Senior Vice President

Mary E. Curran Senior Vice President

Raymond F. 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

Birendra Kumar Senior Vice President and Treasurer

George R. Ross Senior Vice President

Robert P. Seass Senior Vice President

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

Michael H. Stone Senior Vice President

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

Lorena J. Kern Senior Vice President

Kathryn M. McNamara Senior Vice President and Director of
Governmental Affairs

Michael D. Browne Assistant Secretary

Linda M. Butler Assistant Secretary

Marilyn Cranney Assistant Secretary

Sheldon Curtis Assistant Secretary

Barry Fink Assistant Secretary

Sabrina Hurley Assistant Secretary

Barbara B. Kiley 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 $17,596
Reynolds Inc.

30. LOCATION OF ACCOUNTS AND RECORDS

Sharmaine M. Miller
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.

34. REPRESENTATION REGARDING EXPENSES

Allstate Life Insurance Company of New York ("ALIC NY") represents that
the fees and charges deducted under the Individual Variable Annuity Contracts
hereby registered by this Registration Statement, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risk assumed by ALIC NY.

<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 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 10th day of
April 1997.

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

(SEAL)
Attest /s/ BRENDA D. SNEED By: /s/ MICHAEL J. VELOTTA
--------------------------------- ------------------------------
Brenda D. Sneed Michael J. Velotta
Assistant Vice President Vice President, Secretary and
General Counsel

As required by the Securities Act of 1933, this Registration Statement has
been signed below by the following Directors and Officers of Allstate Life
Insurance Company of New York on this 10th day of April 1997.

*/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

*/SHARMAINE M. MILLER Director and Chief Administrative Officer
- ----------------------
Sharmaine M. Miller

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

*/KAREN C. GARDNER Vice President
- --------------------
Karen C. Gardner

*/THOMAS A. McAVITY, JR. Vice President
- -------------------------
Thomas A. McAvity, Jr.

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

*/KEVIN R. SLAWIN Director and Vice President
- ------------------ (Principal Financial Officer)
Kevin R. Slawin

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

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

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

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

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

*/JOSEPH 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

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

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

*/KEITH A. HAUSCHILDT Assistant Vice President and Controller
- ----------------------- (Principal Accounting Officer)
Keith A. Hauschildt

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

<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post-Effective Amendment No. 13 to Registration
Statement No. 033-24228 of Allstate Life of New York Variable Annuity Account of
Allstate Life Insurance Company of New York on Form N-4 of our report dated
February 21, 1997 relating to the financial statements and financial statement
schedules of Allstate Life Insurance Company of New York and our report dated
February 21, 1997 relating to the financial statements of Allstate Life of New
York Variable Annuity Account 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 15, 1997

<PAGE>

AL VA HIGH YIELD
NO. YEARS 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
<S> <C> <C> <C> <C> <C>
INIT DEPOSIT 29-Dec-95 1000.00 27.054944 36.96182
FEE 31-Dec-96 0.618 29.993293 0.02060

RESULTING VALUE 31-Dec-96 29.993293 36.94122 1107.9887

1.000
FORMULA: 1000*(1+T)= 1107.9887
= 1057.5893
T=Std Avg Ann Tot Return= 5.76%
R = 5.76%

AL VA EQUITY
NO. YEARS 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 29-Dec-95 1000.00 43.584604 22.94388
FEE 31-Dec-96 0.618 48.482659 0.01275

RESULTING VALUE 31-Dec-96 48.482659 22.93113 1111.7624

1.000
FORMULA: 1000*(1+T)= 1111.7624
= 1061.1743
T=Std Avg Ann Tot Return= 6.12%
R = 6.12%

AL VA QUALITY INCOME
NO. YEARS 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 29-Dec-95 1000.00 20.497516 48.78640
FEE 31-Dec-96 0.618 20.608465 0.02999

RESULTING VALUE 31-Dec-96 20.608465 48.75641 1004.7948

1.000
FORMULA: 1000*(1+T)= 1004.7948
= 959.5551
T=Std Avg Ann Tot Return= -4.04%
R = -4.04%

<PAGE>

AL VA STRATEGIST
NO. YEARS 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 29-Dec-95 1000.00 20.284229 49.29938
FEE 31-Dec-96 0.618 23.098424 0.02676

RESULTING VALUE 31-Dec-96 23.098424 49.27263 1138.1201

1.000
FORMULA: 1000*(1+T)= 1138.1201
= 1086.2141
T=Std Avg Ann Tot Return= 8.62%
R = 8.62%

AL VA DIVIDEND GROWTH
NO. YEARS 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 29-Dec-95 1000.00 18.128380 55.16213
FEE 31-Dec-96 0.618 22.247657 0.02778

RESULTING VALUE 31-Dec-96 22.247657 55.13435 1226.6101

1.000
FORMULA: 1000*(1+T)= 1226.6101
= 1170.2796
T=Std Avg Ann Tot Return= 17.03%
R = 17.03%

AL VA UTILITIES
NO. YEARS 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 29-Dec-95 1000.00 18.131828 55.15164
FEE 31-Dec-96 0.618 19.508713 0.03168

RESULTING VALUE 31-Dec-96 19.508713 55.11996 1075.3195

1.000
FORMULA: 1000*(1+T)= 1075.3195
= 1026.5535
T=Std Avg Ann Tot Return= 2.66%
R = 2.66%

<PAGE>

AL VA EUROPEAN GROWTH
NO. YEARS 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 29-Dec-95 1000.00 19.299488 51.81485
FEE 31-Dec-96 0.618 24.837037 0.02488

RESULTING VALUE 31-Dec-96 24.837037 51.78996 1286.3092

1.000
FORMULA: 1000*(1+T)= 1286.3092
= 1226.9938
T=Std Avg Ann Tot Return= 22.70%
R = 22.70%

AL VA CAPITAL GROWTH
NO. YEARS 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 29-Dec-95 1000.00 15.177296 65.88789
FEE 31-Dec-96 0.618 16.760477 0.03687

RESULTING VALUE 31-Dec-96 16.760477 65.85102 1103.6945

1.000
FORMULA: 1000*(1+T)= 1103.6945
= 1053.5097
T=Std Avg Ann Tot Return= 5.35%
R = 5.35%

AL VA PACIFIC GROWTH
NO. YEARS 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 29-Dec-95 1000.00 9.681504 103.28974
FEE 31-Dec-96 0.618 9.957264 0.06207

RESULTING VALUE 31-Dec-96 9.957264 103.22767 1027.8652

1.000
FORMULA: 1000*(1+T)= 1027.8652
= 981.4719
T=Std Avg Ann Tot Return= -1.85%
R = -1.85%

<PAGE>

AL VA GLOBAL DIVIDEND GROWTH
NO. YEARS 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 29-Dec-95 1000.00 12.012328 83.24781
FEE 31-Dec-96 0.618 13.983705 0.04419

RESULTING VALUE 31-Dec-96 13.983705 83.20362 1163.4948

1.000
FORMULA: 1000*(1+T)= 1163.4948
= 1110.3201
T=Std Avg Ann Tot Return= 11.03%
R = 11.03%

</TABLE>

<PAGE>

AL VA HIGH YIELD

NO. YEARS 5.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
<S> <C> <C> <C> <C> <C>
INIT DEPOSIT 31-Dec-91 1000.00 17.064481 58.60125
FEE 31-Dec-92 0.618 20.007584 0.03089
FEE 31-Dec-93 0.618 24.608790 0.02511
FEE 31-Dec-94 0.618 23.823494 0.02594
FEE 31-Dec-95 0.618 27.054944 0.02284
FEE 31-Dec-96 0.618 29.993293 0.02060

RESULTING VALUE 31-Dec-96 29.993293 58.47587 1753.8838

5.000
FORMULA: 1000*(1+T)= 1753.8838
= 1737.344938
T=Std Avg Ann Tot Return= 11.68%
R = 73.73%
AL VA EQUITY

NO. YEARS 5.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 31-Dec-91 1000.00 27.915861 35.82193
FEE 31-Dec-92 0.618 27.680533 0.02233
FEE 31-Dec-93 0.618 32.806752 0.01884
FEE 31-Dec-94 0.618 30.546323 0.02023
FEE 31-Dec-95 0.618 43.584604 0.01418
FEE 31-Dec-96 0.618 48.482659 0.01275

RESULTING VALUE 31-Dec-96 48.482659 35.73361 1732.4603

5.000
FORMULA: 1000*(1+T)= 1732.4603
= 1716.135722
T=Std Avg Ann Tot Return= 11.41%
R = 71.61%

<PAGE>

AL VA QUALITY INCOME

NO. YEARS 5.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 31-Dec-91 1000.00 15.015700 66.59696
FEE 31-Dec-92 0.618 16.096488 0.03839
FEE 31-Dec-93 0.618 18.009977 0.03431
FEE 31-Dec-94 0.618 16.606829 0.03721
FEE 31-Dec-95 0.618 20.497516 0.03015
FEE 31-Dec-96 0.618 20.608465 0.02999

RESULTING VALUE 31-Dec-96 20.608465 66.42690 1368.9565

5.000
FORMULA: 1000*(1+T)= 1368.9565
= 1356.266936
T=Std Avg Ann Tot Return= 6.28%
R = 35.63%
AL VA STRATEGIST

NO. YEARS 5.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 31-Dec-91 1000.00 15.683739 63.76031
FEE 31-Dec-92 0.618 16.650863 0.03712
FEE 31-Dec-93 0.618 18.198751 0.03396
FEE 31-Dec-94 0.618 18.742707 0.03297
FEE 31-Dec-95 0.618 20.284229 0.03047
FEE 31-Dec-96 0.618 23.098424 0.02676

RESULTING VALUE 31-Dec-96 23.098424 63.59904 1469.0375

5.000
FORMULA: 1000*(1+T)= 1469.0375
= 1455.347162
T=Std Avg Ann Tot Return= 7.79%
R = 45.53%

<PAGE>

AL VA DIVIDEND GROWTH

NO. YEARS 5.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 31-Dec-91 1000.00 11.564074 86.47471
FEE 31-Dec-92 0.618 12.383233 0.04991
FEE 31-Dec-93 0.618 14.018720 0.04408
FEE 31-Dec-94 0.618 13.498745 0.04578
FEE 31-Dec-95 0.618 18.128380 0.03409
FEE 31-Dec-96 0.618 22.247657 0.02778

RESULTING VALUE 31-Dec-96 22.247657 86.27307 1919.3738

5.000
FORMULA: 1000*(1+T)= 1919.3738
= 1901.180025
T=Std Avg Ann Tot Return= 13.71%
R = 90.12%
AL VA UTILITIES

NO. YEARS 5.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 31-Dec-91 1000.00 12.372150 80.82670
FEE 31-Dec-92 0.618 13.797394 0.04479
FEE 31-Dec-93 0.618 15.803852 0.03910
FEE 31-Dec-94 0.618 14.245641 0.04338
FEE 31-Dec-95 0.618 18.131828 0.03408
FEE 31-Dec-96 0.618 19.508713 0.03168

RESULTING VALUE 31-Dec-96 19.508713 80.63366 1573.0589

5.000
FORMULA: 1000*(1+T)= 1573.0589
= 1558.328273
T=Std Avg Ann Tot Return= 9.28%
R = 55.83%

<PAGE>

AL VA EUROPEAN GROWTH

NO. YEARS 5.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 31-Dec-91 1000.00 10.049828 99.50419
FEE 31-Dec-92 0.618 10.346815 0.05973
FEE 31-Dec-93 0.618 14.432504 0.04282
FEE 31-Dec-94 0.618 15.503343 0.03986
FEE 31-Dec-95 0.618 19.299488 0.03202
FEE 31-Dec-96 0.618 24.837037 0.02488

RESULTING VALUE 31-Dec-96 24.837037 99.30488 2466.4389

5.000
FORMULA: 1000*(1+T)= 2466.4389
= 2442.774487
T=Std Avg Ann Tot Return= 19.56%
R = 144.28%
AL VA CAPITAL GROWTH

NO. YEARS 5.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 31-Dec-91 1000.00 12.734508 78.52679
FEE 31-Dec-92 0.618 12.813629 0.04823
FEE 31-Dec-93 0.618 11.799106 0.05238
FEE 31-Dec-94 0.618 11.475754 0.05385
FEE 31-Dec-95 0.618 15.177296 0.04072
FEE 31-Dec-96 0.618 16.760477 0.03687

RESULTING VALUE 31-Dec-96 16.760477 78.29474 1312.2571

5.000
FORMULA: 1000*(1+T)= 1312.2571
= 1300.134561
T=Std Avg Ann Tot Return= 5.39%
R = 30.01%

</TABLE>

<PAGE>

AL VA HIGH YIELD

NO. YEARS 7.836

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE
<S> <C> <C> <C> <C> <C>
0 INIT DEPOSIT 01-Mar-89 1000.00 17.977253 55.62585
1 FEE 01-Mar-90 0.618 14.078385 0.04390
2 FEE 01-Mar-91 0.618 12.727362 0.04856
3 FEE 01-Mar-92 0.618 19.565161 0.03159
4 FEE 01-Mar-93 0.618 21.397317 0.02888
5 FEE 01-Mar-94 0.618 25.497566 0.02424
6 FEE 01-Mar-95 0.618 24.374992 0.02535
7 FEE 01-Mar-96 0.618 27.822130 0.02221
8 FEE 31-Dec-96 0.618 29.993293 0.02060

RESULTING VALUE 31-Dec-96 29.993293 55.38052 1661.0442

7.836
FORMULA: 1000*(1+T)= 1661.0442
= 1661.044157
T=Std Avg Ann Tot Return= 6.69%
R = 66.10%

AL VA EQUITY

NO. YEARS 7.836

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

0 INIT DEPOSIT 01-Mar-89 1000.00 16.367892 61.09522
1 FEE 01-Mar-90 0.618 17.610247 0.03509
2 FEE 01-Mar-91 0.618 20.305746 0.03043
3 FEE 01-Mar-92 0.618 26.795443 0.02306
4 FEE 01-Mar-93 0.618 27.781239 0.02225
5 FEE 01-Mar-94 0.618 33.502560 0.01845
6 FEE 01-Mar-95 0.618 31.834376 0.01941
7 FEE 01-Mar-96 0.618 44.391676 0.01392
8 FEE 31-Dec-96 0.618 48.482659 0.01275

RESULTING VALUE 31-Dec-96 48.482659 60.91986 2953.5567

7.836
FORMULA: 1000*(1+T)= 2953.5567
= 2953.556692
T=Std Avg Ann Tot Return= 14.82%
R = 195.36%

<PAGE>

AL VA QUALITY INCOME

NO. YEARS 7.836

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

0 INIT DEPOSIT 01-Mar-89 1000.00 10.842532 92.22938
1 FEE 01-Mar-90 0.618 11.821703 0.05228
2 FEE 01-Mar-91 0.618 13.110273 0.04714
3 FEE 01-Mar-92 0.618 14.889654 0.04151
4 FEE 01-Mar-93 0.618 16.959219 0.03644
5 FEE 01-Mar-94 0.618 17.629095 0.03506
6 FEE 01-Mar-95 0.618 17.492449 0.03533
7 FEE 01-Mar-96 0.618 20.046927 0.03083
8 FEE 31-Dec-96 0.618 20.608465 0.02999

RESULTING VALUE 31-Dec-96 20.608465 91.92082 1894.3470

7.836
FORMULA: 1000*(1+T)= 1894.3470
= 1894.346961
T=Std Avg Ann Tot Return= 8.49%
R = 89.43%

AL VA STRATEGIST

NO. YEARS 7.836

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

0 INIT DEPOSIT 01-Mar-89 1000.00 11.323778 88.30975
1 FEE 01-Mar-90 0.618 12.266483 0.05038
2 FEE 01-Mar-91 0.618 13.795925 0.04480
3 FEE 01-Mar-92 0.618 15.830227 0.03904
4 FEE 01-Mar-93 0.618 17.059340 0.03623
5 FEE 01-Mar-94 0.618 18.379823 0.03362
6 FEE 01-Mar-95 0.618 18.911245 0.03268
7 FEE 01-Mar-96 0.618 20.916732 0.02955
8 FEE 31-Dec-96 0.618 23.098424 0.02676

RESULTING VALUE 31-Dec-96 23.098424 88.01670 2033.0471

7.836
FORMULA: 1000*(1+T)= 2033.0471
= 2033.047131
T=Std Avg Ann Tot Return= 9.48%
R = 103.30%

<PAGE>

AL VA DIVIDEND GROWTH

NO. YEARS 6.836

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

0 INIT DEPOSIT 01-Mar-90 1000.00 10.000000 100.00000
1 FEE 01-Mar-91 0.618 10.332453 0.05981
2 FEE 01-Mar-92 0.618 11.633340 0.05312
3 FEE 01-Mar-93 0.618 12.822116 0.04820
4 FEE 01-Mar-94 0.618 13.840125 0.04465
5 FEE 01-Mar-95 0.618 14.301718 0.04321
6 FEE 01-Mar-96 0.618 19.234847 0.03213
7 FEE 31-Dec-96 0.618 22.247657 0.02778

RESULTING VALUE 31-Dec-96 22.247657 99.69110 2217.8933

6.836
FORMULA: 1000*(1+T)= 2217.8933
= 2217.8933
T=Std Avg Ann Tot Return= 12.36%
R = 121.79%

AL VA UTILITIES

NO. YEARS 6.836

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

0 INIT DEPOSIT 01-Mar-90 1000.00 10.000000 100.00000
1 FEE 01-Mar-91 0.618 10.708783 0.05771
2 FEE 01-Mar-92 0.618 11.931271 0.05180
3 FEE 01-Mar-93 0.618 14.841412 0.04164
4 FEE 01-Mar-94 0.618 15.018084 0.04115
5 FEE 01-Mar-95 0.618 14.804435 0.04174
6 FEE 01-Mar-96 0.618 18.260926 0.03384
7 FEE 31-Dec-96 0.618 19.508713 0.03168

RESULTING VALUE 31-Dec-96 19.508713 99.70044 1945.0272

6.836
FORMULA: 1000*(1+T)= 1945.0272
= 1945.027229
T=Std Avg Ann Tot Return= 10.22%
R = 94.50%

<PAGE>

AL VA EUROPEAN GROWTH

NO. YEARS 5.837

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

0 INIT DEPOSIT 01-Mar-91 1000.00 10.000000 100.00000
1 FEE 01-Mar-92 0.618 10.342458 0.05975
2 FEE 01-Mar-93 0.618 10.819823 0.05712
3 FEE 01-Mar-94 0.618 14.932663 0.04139
4 FEE 01-Mar-95 0.618 15.889428 0.03889
5 FEE 01-Mar-96 0.618 20.288419 0.03046
6 FEE 31-Dec-96 0.618 24.837037 0.02488

RESULTING VALUE 31-Dec-96 24.837037 99.74751 2477.4325

5.837
FORMULA: 1000*(1+T)= 2477.4325
= 2453.658183
T=Std Avg Ann Tot Return= 16.62%
R = 145.37%

AL VA CAPITAL GROWTH

NO. YEARS 5.837

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

0 INIT DEPOSIT 01-Mar-91 1000.00 10.000000 100.00000
1 FEE 01-Mar-92 0.618 12.184182 0.05072
2 FEE 01-Mar-93 0.618 11.927075 0.05181
3 FEE 01-Mar-94 0.618 11.869900 0.05206
4 FEE 01-Mar-95 0.618 12.323505 0.05015
5 FEE 01-Mar-96 0.618 16.017288 0.03858
6 FEE 31-Dec-96 0.618 16.760477 0.03687

RESULTING VALUE 31-Dec-96 16.760477 99.71980 1671.3513

5.837
FORMULA: 1000*(1+T)= 1671.3513
= 1655.637822
T=Std Avg Ann Tot Return= 9.02%
R = 65.56%

<PAGE>

AL VA PACIFIC GROWTH

NO. YEARS 2.853

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

0 INIT DEPOSIT 23-Feb-94 1000.00 10.000000 100.00000
1 FEE 23-Feb-95 0.618 8.657681 0.07138
2 FEE 23-Feb-96 0.618 10.474231 0.05900
3 FEE 31-Dec-96 0.618 9.957264 0.06207

RESULTING VALUE 31-Dec-96 9.957264 99.80755 993.8101

2.853
FORMULA: 1000*(1+T)= 993.8101
= 958.0577302
T=Std Avg Ann Tot Return= -1.49%
R = -4.19%

AL VA GLOBAL DIVIDEND GROWTH

NO. YEARS 2.853

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

0 INIT DEPOSIT 23-Feb-94 1000.00 10.000000 100.00000
1 FEE 23-Feb-95 0.618 10.011806 0.06173
2 FEE 23-Feb-96 0.618 12.363990 0.04998
3 FEE 31-Dec-96 0.618 13.983705 0.04419

RESULTING VALUE 31-Dec-96 13.983705 99.84409 1396.1904

2.853
FORMULA: 1000*(1+T)= 1396.1904
= 1344.342752
T=Std Avg Ann Tot Return= 10.93%
R = 34.43%

</TABLE>

<PAGE>

AL VA Non-Standardized Calculations

Dates:
Current: 12/31/96
3 Months Ago: 9/30/96
End of Last Year: 12/29/95
One Yr Ago: 12/29/95
Five Yrs Ago: 12/31/91
Ten Yrs Ago: 12/31/86

<TABLE>
<CAPTION>
Inception Inception Five Yr One Yr Today's Inception Inception Five Years Five Years One Year
Fund Date AUV AUV AUV AUV Total Average Total Average
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High Yield 03/01/89 17.977253 17.064481 27.054944 29.993293 66.84% 6.75% 75.76% 11.94% 10.86%
Equity 03/01/89 16.367892 27.915861 43.584604 48.482659 196.21% 14.85% 73.67% 11.67% 11.24%
Quality Income 03/01/89 10.842532 15.0157 20.497516 20.608465 90.07% 8.54% 37.25% 6.54% 0.54%
Managed Assets 03/01/89 11.323778 15.683739 20.284229 23.098424 103.98% 9.52% 47.28% 8.05% 13.87%
Dividend Growth 03/01/90 10 11.564074 18.12838 22.247657 122.48% 12.40% 92.39% 13.98% 22.72%
Utilities 03/01/90 10 12.37215 18.131828 19.508713 95.09% 10.26% 57.68% 9.54% 7.59%
European Growth 03/01/91 10 10.049828 19.299488 24.837037 148.37% 16.85% 147.14% 19.84% 28.69%
Capital Growth 03/01/91 10 12.734508 15.177296 16.760477 67.60% 9.24% 31.61% 5.65% 10.43%
Pacific Growth 02/23/94 10 N/A 9.681504 9.957264 -0.43% -0.15% N/A N/A 2.85%
Global Div Growth 02/23/94 10 N/A 12.012328 13.983705 39.84% 12.46% N/A N/A 16.41%
</TABLE>