<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
COMMISSION FILE NUMBERS 33-34562; 33-60288; 333-48983
ML LIFE INSURANCE COMPANY OF NEW YORK
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 16-1020455
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
</TABLE>
100 CHURCH STREET
NEW YORK, NEW YORK 10080-6511
(Address of Principal Executive Offices)
(800) 333-6524
(Registrant's telephone number including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No __
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
COMMON 220,000
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a)
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
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<PAGE> 2
PART I Financial Information
Item 1. Financial Statements.
ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
BALANCE SHEETS
(Dollars in thousands) (Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 2000 1999
------- ------------ ------------
<S> <C> <C>
INVESTMENTS:
Fixed maturity securities, at estimated fair value
(amortized cost: 2000 - $156,191; 1999 - $166,016 $ 149,931 $ 160,437
Equity securities, at estimated fair value
(cost: 2000 - $19,669; 1999 - $19,782 17,628 16,992
Policy loans on insurance contracts 89,062 88,165
------------ ------------
Total Investments 256,621 265,594
CASH AND CASH EQUIVALENTS 38,089 34,195
ACCRUED INVESTMENT INCOME 5,348 4,990
DEFERRED POLICY ACQUISITION COSTS 29,412 29,703
FEDERAL INCOME TAXES - DEFERRED 3,350 3,892
REINSURANCE RECEIVABLES 310 153
OTHER ASSETS 3,661 3,292
SEPARATE ACCOUNTS ASSETS 1,110,334 1,086,875
------------ ------------
TOTAL ASSETS $ 1,447,125 $ 1,428,694
============ ============
See accompanying notes to financial statements. (continued)
</TABLE>
ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
BALANCE SHEETS
(Continued) (Dollars in thousands, except common stock par value and shares)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 2000 1999
------------------------------------- ------------ ------------
<S> <C> <C>
LIABILITIES:
POLICYHOLDER LIABILITIES AND ACCRUALS:
Policyholders' account balances $ 239,702 $ 248,016
Claims and claims settlement expenses 2,668 3,762
------------ ------------
Total policyholder liabilities and accruals 242,370 251,778
OTHER POLICYHOLDER FUNDS 2,697 1,195
FEDERAL INCOME TAXES - CURRENT 932 1,420
AFFILIATED PAYABLES - NET - 1,030
OTHER LIABILITIES 2,059 2,414
SEPARATE ACCOUNTS LIABILITIES 1,110,334 1,086,875
------------ ------------
Total Liabilities 1,358,392 1,344,712
------------ ------------
STOCKHOLDER'S EQUITY:
Common stock, $10 par value - 220,000 shares
authorized, issued and outstanding 2,200 2,200
Additional paid-in capital 66,259 66,259
Retained earnings 25,677 21,051
Accumulated other comprehensive loss (5,403) (5,528)
------------ ------------
Total Stockholder's Equity 88,733 83,982
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 1,447,125 $ 1,428,694
============ ============
</TABLE>
See accompanying notes to financial statements.
ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF EARNINGS
(Dollars in thousands) (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------
2000 1999
------------ ------------
<S> <C> <C>
REVENUES:
Investment revenue:
Net investment income $ 9,375 $ 9,893
Net realized investment losses (77) (2,779)
Policy charge revenue 9,940 8,206
------------ ------------
Total Revenues 19,238 15,320
------------ ------------
BENEFITS AND EXPENSES:
Interest credited to policyholders' account balances 5,854 6,233
Policy benefits (net of reinsurance recoveries: 2000 - $376;
1999 - $360) 521 286
Reinsurance premium ceded 981 898
Amortization of deferred policy acquisition costs 2,479 2,302
Insurance expenses and taxes 2,286 1,907
------------ ------------
Total Benefits and Expenses 12,121 11,626
Earnings Before Federal Income Tax Provision 7,117 3,694
FEDERAL INCOME TAX PROVISION (BENEFIT):
Current 2,017 2,261
Deferred 474 (968)
------------ ------------
Total Federal Income Tax Provision 2,491 1,293
------------ ------------
NET EARNINGS $ 4,626 $ 2,401
============ ============
</TABLE>
See accompanying notes to financial statements.
ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF EARNINGS
(Dollars in thousands) (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------------------
2000 1999
------------ ------------
<S> <C> <C>
REVENUES:
Investment revenue:
Net investment income $ 4,727 $ 4,844
Net realized investment losses (59) (2,597)
Policy charge revenue 4,983 4,282
------------ ------------
Total Revenues 9,651 6,529
------------ ------------
BENEFITS AND EXPENSES:
Interest credited to policyholders' account balances 2,853 3,240
Policy benefits (net of reinsurance recoveries: 2000 - $273;
1999 - $224) 370 108
Reinsurance premium ceded 510 468
Amortization of deferred policy acquisition costs 1,168 947
Insurance expenses and taxes 1,140 992
------------ ------------
Total Benefits and Expenses 6,041 5,755
------------ ------------
Earnings Before Federal Income Tax Provision 3,610 774
FEDERAL INCOME TAX PROVISION (BENEFIT):
Current 933 877
Deferred 331 (606)
------------ ------------
Total Federal Income Tax Provision 1,264 271
------------ ------------
NET EARNINGS $ 2,346 $ 503
============ ============
</TABLE>
See accompanying notes to financial statements.
ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands) (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------
2000 1999
------------ ------------
<S> <C> <C>
NET EARNINGS $ 4,626 $ 2,401
------------ ------------
OTHER COMPREHENSIVE INCOME (LOSS):
Net unrealized gains (losses) on available-for-sale securities:
Net unrealized holding losses arising during the period (1) (7,746)
Reclassification adjustment for losses included in net earnings 77 3,123
------------ ------------
Net unrealized gains (losses) on investment securities 76 (4,623)
Adjustments for:
Policyholder liabilities 117 2,649
Deferred federal income taxes (68) 691
------------ ------------
Total other comprehensive income (loss), net of taxes 125 (1,283)
------------ ------------
COMPREHENSIVE INCOME $ 4,751 $ 1,118
------------ ------------
</TABLE>
See accompanying notes to financial statements.
ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands) (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------------------
2000 1999
------------ ------------
<S> <C> <C>
NET EARNINGS $ 2,346 $ 503
------------ ------------
OTHER COMPREHENSIVE INCOME (LOSS):
Net unrealized gains (losses) on available-for-sale securities:
Net unrealized holding gains (losses) arising during the period 108 (4,339)
Reclassification adjustment for losses included in net earnings 59 2,699
------------ ------------
Net unrealized gains (losses) on investment securities 167 (1,640)
Adjustments for:
Policyholder liabilities (321) 2,070
Deferred federal income taxes 54 (150)
------------ ------------
Total other comprehensive income (loss), net of taxes (100) 280
------------ ------------
COMPREHENSIVE INCOME $ 2,246 $ 783
============ ============
</TABLE>
See accompanying notes to financial statements.
ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF STOCKHOLDER'S EQUITY
(Dollars in thousands) (Unaudited)
<TABLE>
<CAPTION>
Accumulated
Additional other Total
Common paid-in Retained comprehensive stockholder's
Stock capital earnings loss equity
----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1999 $ 2,200 $ 66,259 $ 14,462 $ (967) $ 81,954
Net earnings 6,589 6,589
Other comprehensive loss, net of tax (4,561) (4,561)
----------- ----------- ----------- ------------- -------------
BALANCE, DECEMBER 31, 1999 2,200 66,259 21,051 (5,528) 83,982
Net earnings 4,626 4,626
Other comprehensive income, net of tax 125 125
----------- ----------- ----------- ------------- -------------
BALANCE, JUNE 30, 2000 $ 2,200 $ 66,259 $ 25,677 $ (5,403) $ 88,733
=========== =========== =========== ============= =============
</TABLE>
See accompanying notes to financial statements.
ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF CASH FLOWS
(Dollars in thousands) (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 4,626 $ 2,401
Noncash items included in earnings:
Amortization of deferred policy acquisition costs 2,479 2,302
Capitalization of policy acquisition costs (2,188) (2,017)
Amortization of investments 209 144
Interest credited to policyholders' account balances 5,854 6,233
Provision (benefit) for deferred Federal income tax 474 (968)
(Increase) decrease in operating assets:
Accrued investment income (358) (879)
Other (518) (231)
Increase (decrease) in operating liabilities:
Claims and claims settlement expenses (1,094) 1,240
Other policyholder funds 1,502 (705)
Federal income taxes - current (488) (469)
Affiliated payables (1,030) (1,253)
Other (355) (552)
Other operating activities:
Net realized investment losses 77 2,779
------------ ------------
Net cash and cash equivalents provided by operating activities 9,190 8,025
------------ ------------
Cash Flows From Investing Activities:
Proceeds from (payments for):
Sales of available-for-sale securities 650 138,023
Maturities of available-for-sale securities 17,861 22,353
Purchases of available-for-sale securities (8,859) (157,839)
Policy loans on insurance contracts (897) (1,365)
------------ ------------
Net cash and cash equivalents provided by investing activities $ 8,755 $ 1,172
------------ ------------
See accompanying notes to financial statements. (continued)
</TABLE>
ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
STATEMENTS OF CASH FLOWS
(Continued) (Dollars in thousands) (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash Flows From Financing Activities:
Proceeds from (payments for):
Policyholder deposits (excludes internal policy replacement $ 34,991 $ 34,536
deposits)
Policyholder withdrawals (including transfers to/from separate (49,042) (48,640)
accounts) ------------ ------------
Net cash and cash equivalents used by financing activities (14,051) (14,104)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,894 (4,907)
CASH AND CASH EQUIVALENTS:
Beginning of year 34,195 18,707
------------ ------------
End of period $ 38,089 $ 13,800
============ ============
Supplementary Disclosure of Cash Flow Information:
Cash paid for:
Federal income taxes $ 2,505 $ 2,730
Intercompany interest 40 44
</TABLE>
See accompanying notes to financial statements.
ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1: BASIS OF PRESENTATION:
ML Life Insurance Company of New York (the "Company") is a wholly
owned subsidiary of Merrill Lynch Insurance Group, Inc. ("MLIG").
The Company is an indirect wholly owned subsidiary of Merrill
Lynch & Co., Inc. ("Merrill Lynch & Co."). The Company sells life
insurance and annuity products, including variable life insurance
and variable annuities.
The interim financial statements for the three and six month periods
are unaudited. In the opinion of management, these unaudited
financial statements include all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of the
financial position and the results of operations in accordance with
generally accepted accounting principles. These unaudited financial
statements should be read in conjunction with the audited financial
statements included in the Company's Annual Report on Form 10-K
("1999 10K") for the year ended December 31, 1999. The nature of the
Company's business is such that the results of any interim period are
not necessarily indicative of results for a full year. Certain
reclassifications have also been made to prior period financial
statements, where appropriate, to conform to the current period
presentation.
NOTE 2. STATUTORY ACCOUNTING PRACTICES:
The Company maintains its statutory accounting records in conformity
with accounting practices prescribed or permitted by the Insurance
Department of the State of New York and the National Association of
Insurance Commissioners. Statutory capital and surplus at June 30,
2000 and December 31, 1999, was $65.6 million and $61.7 million,
respectively.For the six month periods ended June 30, 2000 and 1999,
statutory net income was $3.3 million and $4.4 million, respectively.
NOTE 3. INVESTMENTS:
The Company's investments in debt and equity securities are
classified as available-for-sale and are recorded at fair value.
Unrealized gains and losses on available-for-sale securities are
included in stockholder's equity as a component of accumulated other
comprehensive loss, net of tax. If management determines that a
decline in the value of a security is other-than-temporary, the
carrying value is adjusted to estimated fair value and the decline
in value is recorded as a net realized investment loss.
The Company has recorded certain adjustments to policyholders'
account balances in connection with unrealized holding gains or
losses on investments. The Company adjusts those liabilities as if
the unrealized holdings gains or losses had actually been realized,
with corresponding credits or charges reported in accumulated other
comprehensive loss, net of taxes. The components of net unrealized
gains (losses) included in accumulated other comprehensive loss
are as follows:
June 30, December 31,
2000 1999
----------- ------------
Assets:
Fixed maturity securities $ (6,260) $ (5,579)
Equity securities (2,041) (2,790)
Other assets (9) (17)
Federal income taxes - deferred 2,909 2,977
----------- ------------
(5,401) (5,409)
----------- ------------
Liabilities:
Policyholders' account balances 2 119
----------- ------------
Stockholder's equity:
Accumulated other comprehensive loss $ (5,403) $ (5,528)
=========== ============
NOTE 4. SEGMENT INFORMATION
In reporting to management, the Company's operating results are
categorized into two business segments: Life Insurance and
Annuities. The Company's Life Insurance segment consists of
variable life insurance products and interest-sensitive life
products. The Company's Annuity segment consists of variable
annuities and interest sensitive annuities.
The Company's organization is structured in accordance with its two
business segments. Each segment has its own administrative service
center that provides product support to the Company and customer
service support to the Company's policyholders. Additionally,
marketing and sales management functions, within MLIG, are organized
according to these two business segments.
The accounting policies of the business segments are the same as
those for the Company's financial statements included herein. All
revenue and expense transactions are recorded at the product level
and accumulated at the business segment level for review by
management.
The "Other" category, presented in the following segment financial
information, represents net revenues and earnings on assets that do
not support policyholder liabilities.
The following table summarizes each business segment's contribution
to the consolidated net revenues and net earnings for the three and
six month periods ended June 30:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
Net Revenues (a):
Life Insurance $ 2,744 $ 2,390 $ 5,414 $ 4,907
Annuities 3,261 555 6,425 3,034
Other 793 344 1,545 1,146
-------- -------- -------- --------
Total Net Revenues $ 6,798 $ 3,289 $13,384 $ 9,087
======== ======== ======== ========
Net Earnings:
Life Insurance $ 617 $ 607 $ 1,254 $ 1,253
Annuities 1,214 (328) 2,368 403
Other 515 224 1,004 745
-------- -------- -------- --------
Total Net Earnings $ 2,346 $ 503 $ 4,626 $ 2,401
======== ======== ======== ========
(a) Management considers investment income net of interest credited
to policyholders' account balances in evaluating results.
Item 2 Management's Narrative Analysis of the Results of Operations
This Management's Narrative Analysis of the Results of Operations
addresses changes in revenues and expenses for the three and six
month periods ended June 30, 2000 and 1999. This discussion should
be read in conjunction with the accompanying unaudited financial
statements and notes thereto, in addition to the 1999 Financial
Statements and Notes to Financial Statements and the Management's
Discussion and Analysis of Financial Condition and Results of
Operations included in the 1999 10K.
In addition to providing historical information, the Company may
make or publish forward-looking statements about management
expectations, strategic objectives, business prospects, anticipated
financial performance, and other similar matters. A variety of
factors, many of which are beyond the Company's control, affect the
operations, performance, business strategy, and results of the
Company and could cause actual results and experience to differ
materially from the expectations expressed in these statements.
These factors include, but are not limited to, the factors listed in
the Economic Environment section listed below, as well as actions
and initiatives taken by both current and potential competitors and
the effect of current, pending, and future legislation and
regulation. The Company undertakes no responsibility to update or
revise any forward looking statements.
Business Overview
The Company's gross earnings are principally derived from two
sources:
* the net earnings from investment of fixed rate life insurance
and annuity contract owner deposits less interest credited to
contract owners, commonly known as interest spread, and
* the charges imposed on variable life insurance and variable
annuity contracts
The costs associated with acquiring contract owner deposits are
amortized over the period in which the Company anticipates holding
those funds. In addition, the Company incurs expenses associated
with the maintenance of inforce contracts.
Economic Environment
The Company's financial position and/or results of operations are
primarily impacted by the following economic factors:
* fluctuations in medium term interest rates
* fluctuations in credit spreads
* equity market performance
The Company defines medium term interest rates as the average
interest rate on U.S. Treasury securities with terms of 1 to 10
years. During the current six month period, medium term interest
rates were relatively flat as compared to December 1999, but
increased approximately 131 basis points as compared to the first
six months of 1999.
The Company defines credit spreads as the interest rate spread
between the 5-year U.S. Treasury Bond Index and the 5-year Corporate
Industrial Bond Index. During the first half of 2000, credit spreads
widened approximately 43 basis points to end the period at 154 basis
points. During the first half of 1999, credit spreads contracted
approximately 25 basis points to end the period at 106 basis points.
There are several standard indices published on a daily basis that
measure performance of selected components of the U.S. equity
market. Examples include the Dow Jones Industrial Average ("Dow"),
NASDAQ Composite Index ("NASDAQ") and the Standard & Poor's 500
Composite Stock Price Index ("S&P Index"). During the first six
months of 2000, the U.S. equity market experienced increased
volatility. Although all three indices reached historical highs at
various points during the current six month period, each index
closed generally lower, on a daily basis, as compared to their
respective levels at December 31, 1999. During the first six months
of 2000, the Dow, NASDAQ and S&P Index decreased 9.1%, 2.5% and
1.0%, respectively. The investment performance in the underlying
mutual funds supporting the Company's variable products do not
replicate the returns on any specific U.S. equity market index.
However, investment performance will generally increase or decrease
with corresponding increases or decreases in the overall U.S.
equity market.
Life insurance premiums and annuity deposits recorded were $22.9
million for the three months ended June 30, 2000 and 1999. Life
insurance premiums and annuity deposits recorded increased $0.6
million (or 1.6%) to $39.7 million during the current six month
period, as compared to the same period in 1999. Life insurance
premiums and annuity deposits collected, which exclude premiums
recorded from internal tax-free exchanges, decreased $1.1 million
and increased $0.4 million during the current three and six month
periods, respectively, as compared to the equivalent periods in 1999.
Variable annuity deposits continue to dominate the Company's sales
by comprising 94% and 91% of total premiums recorded for the three
and six month periods ended June 30, 2000, respectively. Life
insurance premiums and annuity deposits by type of product were as
follows:
<TABLE>
<CAPTION>
Premiums Collected Change
-------------------------- ---------------------------
Second Quarter Six Months Second Quarter Six Months
2000 2000 2000 - 1999 2000 -1999
------------- ---------- -------------- ----------
($ In Millions) ($ In Millions)
<S> <C> <C> <C> <C>
Variable Annuities $ 21.5 $ 36.0 $ 0.7 $ 1.3
Modified Guaranteed Annuites 0.5 1.2 0.1 0.4
Variable Life Insurance 0.9 2.4 (0.7) (1.1)
Other - 0.1 (0.1) -
------------- ---------- -------------- ----------
Total Premiums Recorded 22.9 39.7 - 0.6
Internal tax-free exchanges (3.5) (4.8) (1.1) (0.2)
------------- ---------- -------------- ----------
Total Premiums Collected $ 19.4 $ 34.9 $ (1.1) $ 0.4
============= ========== ============== ===========
</TABLE>
Policy and contract surrenders increased $2.5 million (or 17%) and
$8.7 million (or 32%) during the current three and six month
periods, respectively, as compared to the equivalent periods in 1999
primarily due to an increase in variable annuity surrenders. During
the three and six month periods, ended June 30, 2000, variable
annuity surrenders increased $3.3 million (or 53%) and $7.1
million (or 60%), respectively, as compared to the same periods
in 1999. These increases are primarily a result of the anticipated
increase in lapse rates on contracts reaching the end of their
surrender charge period.
During the first six months of 2000, separate accounts assets
increased $23 million (or 2.2%) to $1.1 billion. Despite increased
market volatility, positive investment performance in the variable
products' underlying mutual funds contributed exclusively to the
increase in separate accounts assets.
To fund all business activities, the Company maintains a high
quality and liquid investment portfolio. As of June 30, 2000, the
Company's assets included $174 million of cash, short-term
investments and investment grade publicly traded available-for-sale
securities that could be liquidated if funds were required.
As of June 30, 2000, approximately $4.0 million (or 2.7%) of the
Company's fixed maturity securities were considered non-investment
grade. The Company defines non-investment grade as unsecured debt
obligations that do not have a rating equivalent to Standard and
Poor's BBB- or higher (or similar rating agency). Non-investment
grade securities are speculative and are subject to significantly
greater risks related to the creditworthiness of the issuers and
the liquidity of the market for such securities. The Company
carefully selects, and closely monitors, such investments.
Results of Operations
For the six month periods ended June 30, 2000 and 1999, the Company
reported net earnings of $4.6 million and $2.4 million,
respectively. For the three month periods ended June 30, 2000 and
1999, the Company reported net earnings of $2.3 million and $0.5
million, respectively.
Net earnings derived from interest spread increased $0.3 million and
decreased $0.1 million for the three and six month periods ended
June 30, 1999, respectively, compared to the same periods in 1999.
The increase in the current three month period interest spread
is primarily due to a reduction in interest crediting rates as
compared to the second quarter 1999.
Net realized investment losses decreased $2.5 million and $2.7
million during the three and six month periods ended June 30,
2000, respectively, compared to the equivalent periods in 1999. The
decreases in net realized investment losses during the current three
and six month periods are primarily due to reductions in credit
related losses of $2.6 million and $3.3 million, respectively.
Prior period credit related losses were impacted by book value
writedowns and asset sales of several large security holdings.
The Company did not incur any credit related losses during the
current six month period.
Policy charge revenue increased $0.7 million (or 16%) and $1.7
million (or 21%) during the three and six month periods ended
June 30, 2000, respectively, compared to the same periods during
1999. The increases in policy charge revenue are attributable
to the increase in contract owners' variable account balances.
Average variable account balances increased $173 million (or 19%)
during the current six month period as compared to the same period
in 1999.
Policy benefits increased $0.3 million (or 243%) and $0.2 million
(or 82%) during the current three and six month periods,
respectively, compared to equivalent periods in 1999. The increases
are primarily due to an increase in the number of variable life
death claims, as well as an increase in the average net amount at
risk per variable life death claim.
Amortization of deferred policy acquisition costs increased $0.2
million (or 23%) and $0.2 million (or 8%) during the three and six
month periods ended June 30, 2000, respectively, compared to the
equivalent periods in 1999. The increases in amortization of
deferred policy acquisition costs are primarily due to the growth
in policy fee income. Partially offsetting the six month period
increase was the impact of lower interest related realized
investment gains during the first quarter 2000 as compared to the
first quarter 1999.
Insurance expenses and taxes increased $0.1 million (or 15%) and
$0.4 million (or 20%) during the current three and six month
periods, respectively, compared to the same periods in 1999. The
increases are primarily due to increases in certain employee
compensation related expense allocations from Merrill Lynch & Co.,
variable product prospectus costs, and expenditures related to
financial systems enhancements.
Segment Information
The products that comprise the Life Insurance and Annuity segments
generally possess similar economic characteristics. As such, the
financial condition and results of operations of each business
segment are generally consistent with the Company's consolidated
financial condition and results of operations presented herein.
<PAGE> 3
PART II Other Information
Item 1. Legal Proceedings.
Nothing to report.
Item 5. Other Information.
Nothing to report.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Financial Data Schedule.
(b) Reports on Form 8-K.
None.
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ML LIFE INSURANCE COMPANY OF NEW YORK
/s/ JOSEPH E. CROWNE, JR.
-----------------------------------------
Joseph E. Crowne, Jr.
Senior Vice President and
Chief Financial Officer
Date: August 14, 2000
<PAGE> 5
EXHIBIT INDEX
-------------
Exhibit
No. Description
------- -----------
27 Financial Data Schedule
