ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II, 485BPOS, 1998-04-17

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II
485BPOS, 1998-04-17

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 1998
FILE NO.: 33-35445
FILE NO.: 811-6117

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

POST-EFFECTIVE AMENDMENT NO. 14

AND/OR

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/

AMENDMENT NO. 15

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II
(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
FARMINGVILLE, NEW YORK 11738
1-800-256-9392
(NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE)

COPIES TO:

RICHARD T. CHOI, ESQ. CHRISTINE A. EDWARDS, ESQ.
FREEDMAN, LEVY, KROLL & SIMONDS DEAN WITTER REYNOLDS, INC.
1050 CONNECTICUT AVE., NW SUITE 825 TWO WORLD TRADE CENTER
WASHINGTON, DC 20036 NEW YORK, NEW YORK 10048

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: CONTINUOUS
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, 1998 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on (date) pursuant to paragraph (a)(1) 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

TITLE OF SECURITIES BEING REGISTERED: UNITS OF INTEREST IN THE ALLSTATE LIFE OF
NEW YORK VARIABLE ANNUITY ACCOUNT II UNDER DEFERRED VARIABLE ANNUITY CONTRACTS.

<PAGE>

CROSS REFERENCE SHEET

Pursuant to Rule 495(a) under the Securities Act of 1933.

<S> <C>
ITEM OF FORM N-4
Part A Prospectus Caption
- -------------------- --------------------------------------
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 Previously Filed with Registration Statement
5. General
(a) Depositor Allstate Life Insurance Co. of New York
(b) Registrant The Variable Account
(c) Portfolio Company The Funds
(d) Fund Prospectus The Funds
(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 Early Withdrawal Charge
(c) Special Purchase Plans N/A
(d) Commissions Sales Commission
(e) Fund Expenses Summary of Expenses; Fund 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 Payout Start 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
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 & Withdrawals
(b) -- By Annuitant Income Plans
(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 Table of Contents

Part B Statement of Additional Information
- ------ -----------------------------------
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information & History
(a) Depositor's Name Allstate Life Insurance Company of New York
(b) Assets of Sub-Account The Variable Account
(c) Control of Depositor Allstate Life Insurance Company of New York
18. Services
(a) Fees & Expenses of Registrant Contract Maintenance Charge
(b) Management Contracts Contract Maintenance Charge; Sales Commissions
(c) Custodian Safekeeping of the Variable Account's Assets
Independent Public Accountant Experts
(d) Assets of Registrant 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 Purchase of Contracts
(b) Sales load Sales Commissions
20. Underwriters
(a) Principal Underwriter N/A
(b) Continuous offering Purchase of Contracts
(c) Commissions Sales Commissions; Dean Witter Reynolds Inc.
(d) Unaffiliated Underwriters N/A
21. Calculation of Performance Data Performance Data
22. Annuity Payments Income Payments
23. Financial Statements
(a) Financial Statements of Registrant Allstate Life of New York Variable Annuity
Account II Financial Statements
(b) Financial Statements of Depositor Allstate Life Insurance Company of New York
Financial Statements

Part C
- ------
Information required to be included in Part C is set forth under the appropriate
Item so numbered in Part C of the Registration Statement.

24a. Financial Statements Financial Statements
24b. Exhibits Exhibits
25. Directors and Officers Directors & Officers of Depositor
26. Persons Controlled By or Under Common
Control with Depositor or Registrant Persons Controlled by or Under Common Control with Depositor or Registrant
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29a. Relationship of Principal Underwriter
to Other Investment Companies Relationship of Principal Underwriter to Other Affiliated
Investment Companies
29b. Principal Underwriters Principal Underwriters
29c. Compensation of Underwriter Compensation of Dean Witter
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services
32. Undertakings Undertakings
</TABLE>

<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
One Allstate Drive
Farmingville, New York 11738

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
Customer Service
PO Box 94038
Palatine, IL 60094-4038

INDIVIDUAL VARIABLE ANNUITY CONTRACTS

Distributed By
Dean Witter Reynolds Inc.
Two World Trade Center
New York, New York 10048

This Prospectus describes the individual Flexible Premium Deferred Variable
Annuity Contract ("Contract") offered by Allstate Life Insurance Company of New
York ("Company"), a 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 II ("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 .

The Variable Account invests in shares of one or more management investment
companies ("Funds"). Presently, the Variable Account invests in shares of the
following Funds:
Dean Witter Variable Investment Series
Morgan Stanley Universal Funds, Inc.
Van Kampen American Capital Life Investment Trust

The Company has prepared and filed a Statement of Additional Information dated
May 1, 1998 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 of
this Prospectus. Before ordering, you may wish to review the Table of Contents
of the Statement of Additional Information on page 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
Farmingville, New York 11738
1-800-256-9392

This Prospectus is valid only when accompanied or preceded by a current
Prospectus for the Dean Witter Variable Investment Series, the Morgan Stanley
Universal Funds, Inc. and the Van Kampen American Capital Life Investment Trust.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR 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, 1998.

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.
<PAGE>

TABLE OF CONTENTS

Glossary...............................................................
Introduction...........................................................
Summary of Separate Account Expenses...................................
Condensed Financial Information........................................
Performance Data.......................................................
Financial Statements...................................................
Allstate Life Insurance Company of New York and the Variable Account
Allstate Life Insurance Company of New York..........................
Dean Witter Reynolds Inc.............................................
The Variable Account.................................................
The Funds............................................................
The Contracts..........................................................
Purchase of the Contracts............................................
Crediting of Initial Purchase Payments...............................
Allocation of Purchase Payments......................................
Value of Variable Account Accumulation Units.........................
Transfers............................................................
Surrender and Withdrawals............................................
Default..............................................................
Charges and Other Deductions...........................................
Deductions from Purchase Payments....................................
Early Withdrawal Charge..............................................
Contract Maintenance Charge..........................................
Administrative Expense Charge........................................
Mortality and Expense Risk Charge....................................
Taxes................................................................
Fund Expenses........................................................
Benefits Under the Contract............................................
Death Benefits Prior to the Payout Start Date........................
Death Benefits After the Payout Start Date...........................
Income Payments........................................................
Payout Start Date....................................................
Amount of Variable Annuity Income Payments...........................
Income Plans.........................................................
The Fixed Account......................................................
General Description..................................................
Transfers, Surrenders, and Withdrawals...............................
General Matters........................................................
Owner................................................................
Beneficiary..........................................................
Delay of Payments....................................................
Assignments..........................................................
Modification.........................................................
Customer Inquiries...................................................
Federal Tax Matters....................................................
Introduction.........................................................
Taxation of Annuities in General.....................................
Tax Qualified Contracts..............................................
Income Tax Withholding...............................................
Voting Rights..........................................................
Sales Commission.......................................................
Statement of Additional Information: Table of Contents.................
Order Form.............................................................

<PAGE>

GLOSSARY

Accumulation Unit--An accounting unit used to calculate the Cash Value in the
Variable Account prior to the Payout Start Date. Each Sub-Account of the
Variable Account has its own distinct Accumulation Unit value.

Age--Age on last birthday.

Annuitant--Includes Annuitant and any Joint Annuitant. A natural person(s) whose
life determines the duration of annuity payments involving life contingencies.

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 Portfolio Rebalancing--All of the money allocated to Sub-Accounts of
the Variable Account will be automatically rebalanced to the desired allocation
on a quarterly basis (or other frequencies that may be offered by the Company).

Beneficiary--The person(s) designated in the Contract who, after the death of
any Owner, or last surviving Annuitant may elect to receive the Death Benefit or
continue the Contract as described in "Benefits Under the Contract" on page .

Cash Value--The sum of the value of all Accumulation Units for the Fixed
Account.

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

Contract--The Flexible Premium Deferred Variable Annuity Contract known as the
"Variable Annuity II" that is described in this Prospectus.

Contract Anniversary--An anniversary of the date that the Contract was issued to
the Owner.

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--Prior to the Payout Start Date, the amount payable on the death
of the Owner or Annuitant.

Death Benefit Anniversary--Every sixth Contract Anniversary. For example, the
6th, 12th and 18th Contract Anniversaries are the first three Death Benefit
Anniversaries.

Dollar Cost Averaging Program--A method to transfer $100 or more of the Cash
Value in any Sub-Accounts of the Variable Account or the Dollar Cost Averaging
Fixed Account automatically to any Sub-Accounts on a monthly basis or other
frequencies that may be offered by the Company.

Due Proof Of Death--One of the following:

(a) A copy of a certified death certificate.
(b) A copy of a certified decree of a court of competent jurisdiction as
to the finding of death.
(c) Any other proof satisfactory to the Company.

Early Withdrawal Charge--The charge that may be assessed by the Company on full
or partial withdrawals of the Purchase Payments in excess of the Withdrawal
Amount Without Early Withdrawal Charge.

Fixed Account--All of the assets of the Company that are not in separate
accounts. Contributions made to the Fixed Account are invested in the general
account of the Company.

Fixed Annuity--An annuity with payments having a guaranteed amount.

Fund--The Dean Witter Variable Investment Series, the Morgan Stanley Universal
Funds, Inc. and/or the Van Kampen American Capital Life Investment Trust.

Guarantee Period--The period of time for which a credited rate on an allocation
or transfer to the Fixed Account is guaranteed.

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

Investment Alternative--The Fixed Account and the twenty Sub-Accounts of the
Variable Account constitute the twenty-one 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 or persons designated as the Owner(s) in the Contract.

Payout Start Date--The date Income Payments are to begin under the Contract.

Performance Death Benefit--An additional death benefit option which can be
selected.

Portfolios--The mutual fund portfolios of Funds.

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, partial 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.

Settlement Value--The Cash Value less any applicable Early Withdrawal Charges
and premium tax. The Settlement Value will be calculated at the end of the
valuation period coinciding with a request for payment.

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

Systematic Withdrawals--Partial withdrawals of $100 or more 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 or sent directly to the Owner.

Valuation Date--Each day that the New York Stock Exchange ("NYSE") is open for
business, except for days in which there is an insufficient degree of trading in
the Variable Account's portfolio securities that the value of Accumulation or
Annuity Units might not be materially affected by changes in the value of the
portfolio securities. The Valuation Date does not include such Federal and
non-Federal holidays as are observed by the NYSE.

Valuation Period-- The period between successive Valuation Dates, commencing at
the close of regular trading on the NYSE (which is currently 4:00 p.m. Eastern
Time) and ending as of the close of regular trading on the NYSE on the next
succeeding Valuation Date.

Variable Account--Allstate Life of New York Variable Annuity Account II, 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 amounts depending upon the
investment experience of one or more of the Portfolios.

Withdrawal Amount Without Early Withdrawal Charge--A portion of the Cash Value
which may be withdrawn during the course of the Contract year without incurring
an Early Withdrawal Charge, i.e., 15% of all Purchase Payments made.

<PAGE>

INTRODUCTION

1. What is the purpose of the Contract?

The Contracts described in this Prospectus seek to allow you to accumulate funds
and to receive annuity payments ("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.

Because Income Payments and Cash Values invested in the Variable Account 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," page and "Amount of Variable Annuity
Income Payments," page .

2. How do I purchase a Contract?

You may purchase the Contract from Dean Witter, the Company's authorized sales
representative. The first Purchase Payment must be at least $4,000 (for
Qualified Contracts, $1,000). Presently, the Company will accept an initial
Purchase Payment of at least $1,000, but reserves the right to increase the
minimum initial Purchase Payment amount to $4,000. See "Purchase of the
Contracts," page .

On your application, you will allocate your Purchase Payment among the
Investment Alternatives. All allocations must be in whole percents from 0% to
100% and must total 100%. Purchase payments may be allocated in amounts of no
less than $100. Allocations may be changed by notifying the Company in writing.
See "Allocation of Purchase Payments," page .

3. What types of investments underlie the Variable Account?

The Variable Account invests in shares of the Dean Witter Variable Investment
Series, a mutual fund managed by Dean Witter InterCapital Inc. a wholly owned
subsidiary of Morgan Stanley Dean Witter & Co. The Fund has fifteen 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, the S&P 500 Index
Portfolio, the Competitive Edge "Best Efforts" Portfolio, and the Strategist
Portfolio. The Variable Account invests in shares of four Portfolios of Morgan
Stanley Universal Funds, Inc., a mutual fund managed by Morgan Stanley Asset
Management Inc., a wholly owned subsidiary of Morgan Stanley Dean Witter & Co.
The Fund Portfolios include: the Equity Growth Portfolio, the U.S. Real Estate
Portfolio, the International Magnum Portfolio, and the Emerging Markets Equity
Portfolio. The Variable Account also invests in shares of one Portfolio of Van
Kampen American Capital Life Investment Trust, a mutual fund managed by Van
Kampen American Capital Asset Management, Inc., a wholly owned subsidiary of
Morgan Stanley Dean Witter & Co. The Fund Portfolio includes: the Emerging
Growth 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. In addition to the
Variable Account, Owners can also allocate all or part of their Purchase
Payments to the Fixed Account. See "The Fixed Account," page .

4. Can I transfer amounts among the Investment Alternatives?

Transfers must be at least $100 or the entire amount in the Investment
Alternative, whichever is less. Transfers to any Guarantee Period of the Fixed
Account must be at least $500. The Dollar Cost Averaging Program automatically
moves funds on a monthly basis (or other frequencies that may be offered by the
Company) from any Sub-Accounts of the Variable Account or the Dollar Cost
Averaging Fixed Account to any Sub-Accounts of your choice. Certain transfers
may be restricted. See "Transfers," page .

5. Can I get my money if I need it?

All or part of the Cash Value can be withdrawn before the earliest of the Payout
Start Date, the death of any Owner, or the death of the last surviving
Annuitant. No Early Withdrawal Charges will be deducted on amounts up to the
annual Withdrawal Amount Without Early Withdrawal Charge, i.e., 15% of all
Purchase Payments made. Amounts withdrawn in excess of the Withdrawal Amount
Without Early Withdrawal Charge may be subject to an Early Withdrawal 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 EARLY
WITHDRAWAL CHARGES WILL NEVER EXCEED 6% OF THE PURCHASE PAYMENTS. Withdrawals
and surrenders may be subject to income tax and a 10% tax penalty. In addition,
federal and state income tax may be withheld from withdrawal and surrender
amounts. Additional restrictions may apply to Qualified Contracts. See
"Surrender and Withdrawals," page , and "Taxation of Annuities in General,"
page.

6. What are the charges and deductions under the Contract?

To meet its Death Benefit obligations and to pay expenses not covered by the
Contract Maintenance Charge, the Company deducts a Mortality and Expense Risk
Charge of 1.25% and an Administrative Expense Charge of .10%. For Contracts with
the optional Performance Death Benefit provision, an additional Mortality and
Expense Risk Charge of .13% is assessed. As a result, Contracts with the
optional Performance Death Benefit provision will have a Mortality and Expense
Risk Charge of 1.38% and an Administrative Expense Charge of .10%. See
"Mortality and Expense Risk Charge," page and "Administrative Expense Charge,"
page . Annually, the Company deducts $30 for maintaining the Contract. See
"Contract Maintenance Charge," page . The Company may also deduct Early
Withdrawal Charges. See "Early Withdrawal Charge," page . Additional deductions
may be made for certain taxes. See "Taxes," page .

7. Does the Contract pay any guarantee Death Benefits?

The Contracts provide that if the Owner(s) or the last surviving Annuitant dies
prior to the Payout Start Date, a Death Benefit may be paid to the new Owner or
Beneficiary. If requested to be paid in a lump sum within 180 days from the Date
of Death, the Death Benefit will be the greatest of (1) the sum of all Purchase
Payments less any amounts deducted in connection with partial withdrawals
including any Early Withdrawal Charges and premium tax; or (2) the Cash Value on
the date we receive Due Proof of Death; or (3) the Cash Value on the most recent
Death Benefit Anniversary less any amounts deducted in connection with partial
withdrawals, including any Early Withdrawal Charges and premium tax deducted
from the Cash Value, since that anniversary. The Company is currently waiving
the 180 day limit. The Company reserves the right to enforce the limitation in
the future. For Contracts with the optional Performance Death Benefit provision,
the Death Benefit will be the greatest of (1) through (3) above or (4) the
Performance Death Benefit. If the optional Performance Death Benefit is
selected, it applies only at the death of Owner. It does not apply to the death
of the Annuitant if different from the Owner unless the Owner is a nonnatural
person. See "Death Benefits Prior to the Payout Start Date," page , for a full
description of Death Benefit options.

Prior to the Payout Start Date the Beneficiary has 180 days from the Date of
Death of the Owner(s) or Annuitant(s) to either elect an income plan or to take
a lump sum payment. The Company is currently waiving the 180 day limit. The
Company reserves the right to enforce the limitation in the future. Death
Benefits after the Payout Start Date, if any, will depend on the income plan
chosen. See "Benefits Under the Contract," page .

8. Is there a free-look provision?

The Owner(s) may cancel the Contract any time within 10 days after receipt of
the Contract and receive a full refund of Purchase Payments allocated to the
Fixed Account. Unless a refund of Purchase Payments is required by State or
Federal law, Purchase Payments allocated to the Variable Account will be
returned after an adjustment to reflect investment gain or loss, less any
applicable Contract expenses, that occurred from the date of allocation through
the date of cancellation.

SUMMARY OF SEPARATE ACCOUNT EXPENSES

The following fee table illustrates all expenses and fees that the Owner will
incur. The expenses and fees set forth in the table are based on charges under
the Contracts and on the expenses of the separate account and the underlying
fund for the fiscal year ended December 31, 1997.

<TABLE>
<CAPTION>
Owner Transaction Expenses (All Sub-Accounts)

<S> <C>
Sales Load Imposed on Purchases (as a percentage of Purchase Payments).................. None
Early Withdrawal Charge (as a percentage of Purchase Payments)*
Applicable Sales
Number Of Complete Contract Years Since Purchase Payment Being Withdrawn Was Made Charge Percentage

<C> <C>
0 years................................................................................ 6%
1 year................................................................................. 5%
2 years................................................................................ 4%
3 years................................................................................ 3%
4 years................................................................................ 2%
5 years................................................................................ 1%
6 years or more........................................................................ 0%
Exchange Fee........................................................................... None
Annual Contract Fee.................................................................... $30
</TABLE>

Separate Account Annual Expenses (as a percentage of average account value)
<TABLE>
<CAPTION>

With The Optional Without The Optional
Performance Death Performance Death
Benefit Provision Benefit Provision
----------------- --------------------
<S> <C> <C>
Mortality and Expense Risk Charge**....................... 1.38% 1.25%
Administrative Expense Charge............................. 10% .10%
Total Separate Account Annual Expenses.................... 1.48% 1.35%
</TABLE>

* There are no Early Withdrawal Charges on amounts up to the Withdrawal
Amount Without Early Withdrawal Charge.
** For amounts allocated to the Variable Account, the mortality and expense
risk charge is assessed during both the accumulation and the payout phases
of the Contract.

Dean Witter Variable Investment Series ("Fund") Expenses (as a percentage of
Fund average assets)
<TABLE>

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% (2) .03% .53%
Utilities................................... .65% (3) .02% .67%
Income Builder(5)........................... .75% .24% .99%
Dividend Growth............................. .625%(4) .01% .635%
Capital Growth.............................. .65% .06% .71%
Global Dividend Growth...................... .75% .09% .84%
European Growth............................. 1.00% (6) .12% 1.12%
Pacific Growth.............................. 1.00% .44% 1.44%
Capital Appreciation(5)..................... .75% .22% .97%
Equity...................................... .50% (7) .02% .52%
S&P 500 Index(8) ........................... 0% 0% 0%
Competitive Edge "Best Ideas"(8)............ 0% 0% 0%
Strategist.................................. .50% .02% .52%
</TABLE>

(1) Applicable to net assets of up to $500 million. For net assets which exceed
$500 million, the fee will be .45%.
(2) Applicable to net assets of up to $500 million. For net assets which exceed
$500 million, the fee will be .425%.
(3) Applicable to net assets of up to $500 million. For net assets which exceed
$500 million, the fee will be .55%.
(4) Applicable to net assets of up to $500 million. For net assets which exceed
$500 million, the fee will be .50%, assets that exceed $1 billion, the fee
will be .475%. and for assets that exceed $2 billion, the fee will be .45%.
(5) Dean Witter InterCapital has undertaken to assume all expenses until the
pertinent portfolio has $50 million in assets or until July 31, 1998,
whichever occurs first. Income Builder obtained $50 million on December 3,
1997 resulting in fees being applied on that date and thereafter.
(6) Applicable to net assets of up to $500 million. For net assets which exceed
$500 million, the fee will be .95%.
(7) Applicable to net assets of up to $1 billion. For net assets which exceed
$1 billion, the fee will be .475%.
(8) The Investment Manager has undertaken to assume all expenses of each of
these Portfolios (except for brokerage fees) and to waive the compensation
provided for each of these Portfolios in its Management Agreement with the
Fund 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. Thereafter, the Investment Manager has
agreed to assume all expenses of the S&P 500 Index Portfolio (except for
brokerage fees) and to waive the compensation provided in its Management
Agreement with the Fund to the extent that such expenses and compensation
on an annualized basis exceed .50% of the daily net assets of the S&P 500
Index Portfolio. The fees being waived would be as follows:

<TABLE>
<CAPTION>
Management Other Total Fund
Portfolio Fees(1) Expenses Annual Expenses
- --------- ---------- -------- ---------------
<S> <C> <C> <C> <C>
S&P 500 Index .40% .05% .45%
Competitive Edge "Best Ideas" .65% .06% .71%
</TABLE>

Morgan Stanley Universal Funds, Inc. ("Fund") Expenses (as a percentage of Fund
average assets)
<TABLE>
<CAPTION>
Management Other Total Fund
Portfolio Fees(1) Expenses Annual Expenses
- --------- ---------- -------- ---------------
<S> <C> <C> <C>
Equity Growth 0% .85% .85%
U.S. Real Estate 0% 1.10% 1.10%
International Magnum 0% 1.15% 1.15%
Emerging Markets Equity 0% 1.75% 1.75%
</TABLE>

(1) Morgan Stanley Asset Management Inc. has voluntarily agreed to a reduction
in its management fees and to reimburse the Portfolios for which it acts as
investment adviser if such fees would cause "Total Fund Annual Expenses" to
exceed the amount set forth in the table above. Absent such reductions the
expenses would have been as follows:

Management Other Total Fund
Portfolio Fees Expenses Annual Expenses
- --------- ---- -------- ---------------
<S> <C> <C> <C>
Equity Growth .55% 1.50% 2.05%
U.S. Real Estate .80% 1.52% 2.32%
International Magnum .80% 1.98% 2.78%
Emerging Markets Equity 1.25% 2.87% 4.12%
</TABLE>

Van Kampen American Capital Life Investment Trust ("Fund") Expenses (as a
percentage of Fund average assets)
<TABLE>
<CAPTION>

Management Other Total Fund
Portfolio Fees (1) Expenses Annual Expenses
- --------- ---------- -------- ---------------
<S> <C> <C> <C>
Emerging Growth 0% .85% .85%
</TABLE>

(1) Van Kampen American Capital has voluntarily agreed to a reduction in its
management fees and to reimburse the Portfolio for which it acts as
investment adviser if such fees would cause "Total Fund Annual Expenses" to
exceed the amount set forth in the table above. Absent of such reductions
the expenses would have been as follows:

Management Other Total Fund
Portfolio Fees Expenses Annual Expenses
- --------- ---- -------- ---------------
<S> <C> <C> <C>
Emerging Growth .70% 1.80% 2.50%
</TABLE>

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*):

(Without the Performance Death Benefit**) 1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------

<S> <C> <C> <C> <C>
Money Market Sub-Account ........................................... $ 62 $ 87 $113 $226
Quality Income Plus Sub-Account .................................... $ 62 $ 87 $114 $227
High Yield Sub-Account ............................................. $ 62 $ 87 $114 $227
Utilities Sub-Account .............................................. $ 64 $ 91 $121 $242
Income Builder Sub-Account ......................................... $ 67 $101 $138 $276
Dividend Growth Sub-Account ........................................ $ 63 $ 87 $114 $228
Capital Growth Sub-Account ......................................... $ 64 $ 93 $123 $246
Global Dividend Growth Sub-Account ................................. $ 66 $ 97 $130 $260
European Growth Sub-Account ........................................ $ 68 $105 $144 $289
Pacific Growth Sub-Account ......................................... $ 72 $115 $161 $321
Capital Appreciation Sub-Account ................................... $ 67 $101 $137 $273
Equity Sub-Account ................................................. $ 62 $ 87 $113 $226
S&P 500 Index Sub-Account .......................................... $ 57 $ 70 $ 86 $169
Competitive Edge "Best Ideas" Sub-Account .......................... $ 57 $ 70 $ 86 $169
Strategist Sub-Account ............................................. $ 62 $ 87 $113 $226
Equity Growth Sub-Account .......................................... $ 66 $ 97 $131 $261
U.S. Real Estate Sub-Account ....................................... $ 68 $105 $143 $287
International Magnum Sub-Account ................................... $ 69 $106 $146 $292
Emerging Markets Equity Sub-Account ................................ $ 75 $124 $176 $350
Emerging Growth Sub-Account ........................................ $ 66 $ 97 $131 $261
</TABLE>

(With the Optional Performance Death Benefit***)
1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------
<S> <C> <C> <C> <C>
Money Market Sub-Account ........................................... $ 64 $ 91 $120 $240
Quality Income Plus Sub-Account .................................... $ 64 $ 91 $121 $241
High Yield Sub-Account ............................................. $ 64 $ 91 $121 $241
Utilities Sub-Account .............................................. $ 65 $ 95 $128 $256
Income Builder Sub-Account ......................................... $ 68 $105 $144 $289
Dividend Growth Sub-Account ........................................ $ 64 $ 91 $121 $242
Capital Growth Sub-Account ......................................... $ 66 $ 97 $130 $260
Global Dividend Growth Sub-Account ................................. $ 67 $101 $137 $273
European Growth Sub-Account ........................................ $ 70 $109 $151 $302
Pacific Growth Sub-Account ......................................... $ 73 $119 $167 $333
Capital Appreciation Sub-Account ................................... $ 68 $105 $143 $287
Equity Sub-Account ................................................. $ 64 $ 91 $120 $240
S&P 500 Index Sub-Account .......................................... $ 58 $ 74 $ 93 $184
Competitive Edge "Best Ideas" Sub-Account .......................... $ 58 $ 74 $ 93 $184
Strategist Sub-Account ............................................. $ 64 $ 91 $120 $240
Equity Growth Sub-Account .......................................... $ 67 $101 $137 $274
U.S. Real Estate Sub-Account ....................................... $ 70 $109 $150 $300
International Magnum Sub-Account ................................... $ 70 $110 $153 $305
Emerging Markets Equity Sub-Account ................................ $ 76 $128 $183 $363
Emerging Growth Sub-Account ........................................ $ 67 $101 $137 $274
</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
------ ------- ------- --------
(Without the Performance Death Benefit**)
<S> <C> <C> <C> <C>
Money Market Sub-Account ........................................... $ 20 $ 61 $105 $226
Quality Income Plus Sub-Account .................................... $ 20 $ 61 $105 $227
High Yield Sub-Account ............................................. $ 20 $ 61 $105 $227
Utilities Sub-Account .............................................. $ 21 $ 66 $113 $242
Income Builder Sub-Account ......................................... $ 25 $ 76 $129 $276
Dividend Growth Sub-Account ........................................ $ 20 $ 62 $106 $228
Capital Growth Sub-Account ......................................... $ 22 $ 67 $115 $246
Global Dividend Growth Sub-Account ................................. $ 23 $ 71 $122 $260
European Growth Sub-Account ........................................ $ 26 $ 80 $136 $289
Pacific Growth Sub-Account ......................................... $ 29 $ 89 $152 $321
Capital Appreciation Sub-Account ................................... $ 24 $ 75 $128 $273
Equity Sub-Account ................................................. $ 20 $ 61 $105 $226
S&P 500 Index Sub-Account .......................................... $ 14 $ 45 $ 77 $169
Competitive Edge "Best Ideas" Sub-Account .......................... $ 14 $ 45 $ 77 $169
Strategist Sub-Account ............................................. $ 20 $ 61 $105 $226
Equity Growth Sub-Account .......................................... $ 23 $ 71 $122 $261
U.S. Real Estate Sub-Account ....................................... $ 26 $ 79 $135 $287
International Magnum Sub-Account ................................... $ 26 $ 81 $137 $292
Emerging Markets Equity Sub-Account ................................ $ 32 $ 99 $168 $350
Emerging Growth Sub-Account ........................................ $ 23 $ 71 $122 $261
</TABLE>

(With the Optional Performance Death Benefit***)

1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------
<S> <C> <C> <C> <C>
Money Market Sub-Account ........................................... $ 21 $ 65 $112 $240
Quality Income Plus Sub-Account .................................... $ 21 $ 65 $112 $241
High Yield Sub-Account ............................................. $ 21 $ 65 $112 $241
Utilities Sub-Account .............................................. $ 23 $ 70 $120 $256
Income Builder Sub-Account ......................................... $ 26 $ 80 $136 $289
Dividend Growth Sub-Account ........................................ $ 21 $ 66 $113 $242
Capital Growth Sub-Account ......................................... $ 23 $ 71 $122 $260
Global Dividend Growth Sub-Account ................................. $ 24 $ 75 $128 $273
European Growth Sub-Account ........................................ $ 27 $ 84 $143 $302
Pacific Growth Sub-Account ......................................... $ 31 $ 93 $159 $333
Capital Appreciation Sub-Account ................................... $ 26 $ 79 $135 $287
Equity Sub-Account ................................................. $ 21 $ 65 $112 $240
S&P 500 Index Sub-Account .......................................... $ 16 $ 49 $ 84 $184
Competitive Edge "Best Ideas" Sub-Account .......................... $ 16 $ 49 $ 84 $184
Strategist Sub-Account ............................................. $ 21 $ 65 $112 $240
Equity Growth Sub-Account .......................................... $ 25 $ 75 $129 $274
U.S. Real Estate Sub-Account ....................................... $ 27 $ 83 $142 $300
International Magnum Sub-Account ................................... $ 28 $ 85 $144 $305
Emerging Markets Equity Sub-Account ................................ $ 34 $103 $174 $363
Emerging Growth Sub-Account ........................................ $ 25 $ 75 $129 $274
</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.
** Total Separate Account Annual Expenses of 1.35%.
*** Total Separate Account Annual Expenses of 1.48%.

CONDENSED FINANCIAL INFORMATION
- -------------------------------
<TABLE>
<CAPTION>
Accumulation Unit Values And Number
Of Accumulation Units Outstanding For
Each Sub-Account since Inception*

For the years Beginning
January 1 and Ending December 31,
---------------------------------

1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ----

MONEY MARKET SUB-ACCOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit Value, Beginning of Period.. $10.452 $ 10.549 $ 10.765 $ 10.913 $ 11.178 $ 11.653 $ 12.084
Accumulation Unit Value, End of Period ....... $10.549 $ 10.765 $ 10.913 $ 11.178 $ 11.653 $ 12.084 $ 12.546
Number of Units Outstanding, End of Period.... 70,118 402,184 396,727 1,084,005 975,338 1,246,476 1,168,562
QUALITY INCOME PLUS SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period . $11.509 $ 12.163 $ 12.993 $ 14.487 $ 13.344 $ 16.373 $ 16.404
Accumulation Unit Value, End of Period ....... $12.163 $ 12.993 $ 14.487 $ 13.344 $ 16.373 $ 16.404 $ 17.983
Number of Units Outstanding, End of Period.... 64,174 524,450 2,173,013 2,144,417 2,100,915 1,859,637 1,668,020
HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period . $13.028 $ 13.982 $ 16.336 $ 20.022 $ 19.264 $ 21.859 $ 24.148
Accumulation Unit Value, End of Period........ $13.982 $ 16.336 $ 20.022 $ 19.264 $ 21.859 $ 24.148 $ 26.652
Number of Units Outstanding, End of Period ... 1,622 15,225 159,150 239,258 323,251 404,887 438,022
UTILITIES SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period . $11.382 $ 12.454 $ 13.840 $ 15.798 $ 14.180 $ 17.999 $ 19.298
Accumulation Unit Value, End of Period........ $12.454 $ 13.840 $ 15.798 $ 14.180 $ 17.999 $ 19.298 $ 24.208
Number of Units Outstanding, End of Period ... 36,552 404,297 1,563,593 1,409,729 1,361,709 1,230,293 1,061,445
INCOME BUILDER SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period.. -- -- -- -- -- -- $ 10.000
Accumulation Unit Value, End of Period ....... -- -- -- -- -- -- $ 12.084
Number of Units Outstanding, End of Period.... -- -- -- -- -- -- 136,370
DIVIDEND GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period . $13.135 $ 13.911 $ 14.844 $ 16.746 $ 15.981 $ 21.505 $ 26.298
Accumulation Unit Value, End of Period ....... $13.911 $ 14.844 $ 16.746 $ 15.981 $ 21.505 $ 26.298 $ 32.590
Number of Units Outstanding, End of Period ... 78,758 512,298 1,676,673 2,186,642 2,355,001 2,615,339 2,609,873
CAPITAL GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period . $10.930 $ 12.697 $ 12.731 $ 11.682 $ 11.379 $ 14.923 $ 16.421
Accumulation Unit Value, End of Period ....... $12.697 $ 12.731 $ 11.682 $ 11.379 $ 14.923 $ 16.421 $ 20.177
Number of Units Outstanding, End of Period ... 26,084 143,626 231,320 227,347 218,192 251,179 280,082
GLOBAL DIVIDEND GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period . -- -- -- $ 10.000 $ 9.912 $ 11.935 $ 13.845
Accumulation Unit Value, End of Period ....... -- -- -- $ 9.912 $ 11.935 $ 13.845 $ 15.304
Number of Units Outstanding, End of Period ... -- -- -- 676,049 839,928 1,174,153 1,363,172
EUROPEAN GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period . $ 9.805 $ 10.020 $ 10.280 $ 14.290 $ 15.278 $ 18.976 $ 24.335
Accumulation Unit Value, End of Period ....... $10.020 $ 10.280 $ 14.290 $ 15.278 $ 18.976 $ 24.335 $ 27.870
Number of Units Outstanding, End of Period ... 3,234 54,287 291,085 549,696 576,522 693,859 716,444
PACIFIC GROWTH SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period . -- -- -- $ 10.000 $ 9.221 $ 9.619 $ 9.858
Accumulation Unit Value, End of Period ....... -- -- -- $ 9.221 $ 9.619 $ 9.858 $ 6.059
Number of Units Outstanding, End of Period ... -- -- -- 426,544 578,970 830,820 702,114
CAPITAL APPRECIATION SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period . -- -- -- -- -- -- $ 10.000
Accumulation Unit Value, End of Period ....... -- -- -- -- -- -- 11.177
Number of Units Outstanding, End of Period ... -- -- -- -- -- -- 77,395
EQUITY SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period . $14.658 $ 16.799 $ 16.599 $ 19.604 $ 18.392 $ 25.864 $ 28.699
Accumulation Unit Value, End of Period ....... $16.799 $ 16.599 $ 19.604 $ 18.392 $ 25.864 $ 28.669 $ 38.873
Number of Units Outstanding, End of Period ... 9,016 63,933 346,339 515,289 593,398 766,587 853,934
STRATEGIST SUB-ACCOUNT
Accumulation Unit Value, Beginning of Period . $12.437 $ 13.266 $ 14.035 $ 15.286 $ 15.675 $ 16.919 $ 19.199
Accumulation Unit Value, End of Period ....... $13.266 $ 14.035 $ 15.286 $ 15.675 $ 16.919 $ 19.199 $ 21.540
Number of Units Outstanding, End of Period ... 14,159 547,208 1,529,877 1,862,227 1,739,991 1,559,143 1,549,369
</TABLE>

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

* All Sub-Accounts commenced operations on September 24, 1991, except for the
Global Dividend Growth, Pacific Growth, Income Builder and Capital
Appreciation Sub-Accounts. The Global Dividend Growth and Pacific Growth
Sub-Accounts commenced operations on February 23, 1994. The Income Builder
and the 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 the this table
reflect a Mortality and Expense Risk Charge of 1.25% and an Administrative
Expense Charge of .10%.

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
nonrecurring charges.

Performance figures used by the Variable Account are based on actual historical
performance of its Sub-Accounts or the Funds 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 Allstate Life Insurance Company of New York and the
Allstate Life of New York Variable Annuity Account II 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 page.)

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK AND THE VARIABLE ACCOUNT
- --------------------------------------------------------------------

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

The Company is the issuer of the Contract. Incorporated in 1967 as a stock life
insurance company under the laws of New York, 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 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. Customer Service is
located in Northbrook, Illinois.

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 Morgan Stanley Dean Witter
& Co. ("Morgan Stanley Dean Witter"). 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.

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

Morgan Stanley Dean Witter's wholly owned subsidiary, Morgan Stanley Asset
Management Inc. ("MSAM"), is the investment manager of Morgan Stanley Universal
Funds, Inc. MSAM is registered with the Securities and Exchange Commission as an
investment adviser. As compensation for investment management, the Fund pays
MSAM a monthly advisory fee. These expenses are more fully described in the
Fund's Prospectus.

Morgan Stanley Dean Witter's wholly owned subsidiary, Van Kampen American
Capital Asset Management, Inc. ("VKACAM"), is the investment manager of Van
Kampen American Capital Life Investment Trust. VKACAM is registered with the
Securities and Exchange Commission as an investment adviser. As compensation for
investment management, the Fund pays VKACAM a monthly advisory fee. These
expenses are more fully described in the Fund's Prospectus.

THE VARIABLE ACCOUNT

Established on May 18, 1990, 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 twenty Sub-Accounts, each of which
invests solely in its corresponding Portfolio of the Dean Witter Variable
Investment Series, the Morgan Stanley Universal Funds, Inc. and the Van Kampen
American Capital Life Investment Trust. Additional Sub-Accounts may be added at
the discretion of the Company.

THE FUNDS

The Variable Account will invest in the Dean Witter Variable Investment Series,
the Morgan Stanley Universal Funds, Inc. and the Van Kampen American Capital
Life Investment Trust (collectively "Funds"). Shares of the Funds are also
offered to separate accounts of the Company which fund other variable annuity
and variable life contracts. Shares of the Funds are also offered to separate
accounts of a life insurance company affiliated with the Company which fund
variable annuity and variable life contracts. Shares of the Funds are also
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 Funds. Although
neither the Company nor the Funds currently foresee any such disadvantage, the
Funds' Directors or Boards of Trustees intend 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 Portfolios of the Funds are not deposits, or obligations of, or
guaranteed or endorsed by any bank and the shares are not federally insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency.

DEAN WITTER VARIABLE INVESTMENT SERIES

The Fund has fifteen 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, the
S&P 500 Index Portfolio, the Competitive Edge "Best Ideas" Portfolio and the
Strategist Portfolio. Each Portfolio has different investment objectives and
policies and operates as a separate investment fund.

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

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

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

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

The 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 on 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 S&P 500 Index Portfolio seeks to provide investment results that, before
expenses, correspond to the total return (i.e., the combination of capital
changes and income) of the Standard and Poor's(R) 500 Composite Stock Price
Index (the "S&P 500 Index") by investing, under normal circumstances, at least
80% of the value of its total assets in common stocks included in the S&P 500
Index in approximately the same weightings as the Index.

The Competitive Edge "Best Ideas" Portfolio seeks long-term capital growth by
investing, under normal circumstances, at least 80% of its net assets in the
common stock of U.S. and non-U.S. companies included in the "Best Ideas"
subgroup of "Global Investing: The Competitive Edge," a research compilation
assembled and maintained by Morgan Stanley Dean Witter Equity Research.

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, and
the writing of covered options on such securities and the collateralized sale of
stock index options.

MORGAN STANLEY UNIVERSAL FUNDS, INC.

The Fund Portfolios available under the Contracts include: the Equity Growth
Portfolio, the U.S. Real Estate Portfolio, the International Magnum Portfolio,
and the Emerging Markets Equity Portfolio. Each Portfolio has different
investment objectives and policies and operates as a separate investment fund.

The Equity Growth Portfolio seeks long-term capital appreciation by investing
primarily in equity securities of medium and large capitalization companies
that, in the investment adviser's judgment, provide above-average potential for
capital growth.

The U.S. Real Estate Portfolio seeks above-average current income and long-term
capital appreciation by investing primarily in equity securities of U.S. and
non-U.S. companies principally engaged in the U.S. real estate industry,
including real estate investment trusts.

The International Magnum Portfolio seeks long-term capital appreciation by
investing primarily in equity securities of non-US issuers domiciled in EAFE
counties (defined as countries that include Australia, Japan, New Zealand, most
nations in Western Europe and certain developed countries in Asia such as Hong
Kong and Singapore, see the Fund's Prospectus for greater detail).

The Emerging Markets Equity Portfolio seeks long-term capital appreciation by
investing primarily in equity securities of emerging market country issuers with
a focus on those in which the investment manager believes the economies are
developing strongly and in which the markets are becoming more sophisticated.

VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST

The Fund Portfolio available under the Contracts includes the Emerging Growth
Portfolio. The Emerging Growth Portfolio seeks capital appreciation by investing
in a portfolio of securities consisting of common stocks of small and medium
sized companies considered by the investment manager to be emerging growth
companies.

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 Prospectuses for the
Funds accompanying this Prospectus.

THE PROSPECTUSES OF THE FUNDS 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 Contracts may be purchased through sales representatives of Dean Witter. The
first Purchase Payment must be at least $4,000 unless the Contract is a
Qualified Contract, in which case the first Purchase Payment must be at least
$1,000. Presently, the Company will accept an initial Purchase Payment of at
least $1,000, but reserves the right to increase the minimum initial Purchase
Payment amount to $4,000. All subsequent Purchase Payments must be $25 or more
and may be made at any time prior to the Payout Start 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
Automatic Additions program is not available for Qualified Contracts issued
pursuant to a Dean Witter Custodial Account.

The Company reserves the right to underwrite or reject future additions.

CREDITING OF INITIAL PURCHASE PAYMENTS

A Purchase Payment accompanied by complete information will be credited to the
Contract within two business days of receipt by the Company at its home office.
If the information is not complete, the Company will credit the Purchase
Payments to the Contract within five business days or return it at that time
unless the applicant specifically consents to the Company holding the Purchase
Payment until the information is complete. The Company reserves the right to
reject any proposed purchase of the Contract. Subsequent Purchase Payments will
be credited to the Contract at the close of the Valuation Period in 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 twenty-one 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%. Purchase Payments may also be
allocated in amounts of no less than $100. Unless the Owner notifies the Company
otherwise, subsequent Purchase Payments are allocated according to the original
instructions.

Each Purchase Payment will be credited to the Contract as Variable Account
Accumulation Units equal to the amount of the 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," page ).

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

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 ("NYSE") is open for business except for any
day in which there is an insufficient degree of trading in the Variable
Account's portfolio securities that the value of Accumulation or Annuity Units
might not 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 NYSE. The NYSE currently observes the following holidays:
New Year's Day (January 1); Martin Luther King Day (the third Monday in
January); 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 and Administrative Expense Charge.

TRANSFERS

Transfers must be at least $100 or the total amount in the Investment
Alternative, whichever is less. Transfers to any Guarantee Period of the Fixed
Account must be at least $500. Transfers into the Dollar Cost Averaging Fixed
Account are not permitted. Currently, there is no charge for transfers among the
twenty-one Investment Alternatives. The Company, however, reserves the right to
assess a $25 charge on all transfers in excess of 12 per Contract Year. The
Company will notify Owners at least 30 days prior to imposing the transfer
charge.

Transfers out of any Sub-Account before the Payout Start Date may be made at any
time. After the Payout Start 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
Payout Start Date.

Transfers may be made pursuant to telephone instructions. Telephone transfer
requests will be accepted by the Company if received at 1-800-256-9392 by 4:00
p.m., Eastern Time. Telephone transfer requests received at any other telephone
number or after 4:00 p.m., Eastern Time or after the close of trading on the
NYSE will not be accepted by the Company. Telephone transfer requests received
before 4:00 p.m., Eastern Time are effected at the Sub-Account Accumulation Unit
values next computed value after the receipt of the request. Otherwise, transfer
requests must be in writing, on a form provided by the Company. In the event
that the NYSE closes early, i.e., before 4:00 p.m. Eastern Time, or in the event
that the NYSE closes early for a period of time but then reopens for trading on
the same day, telephone transfer requests will be processed by the Company as of
the close of the NYSE on that particular day.

Transfers may also be made automatically through the Dollar Cost Averaging
Program prior to the Payout Start Date. The Dollar Cost Averaging Program
permits the Owner to transfer a specified amount every month (or other
frequencies that may be offered by the Company) from any Sub-Accounts of the
Variable Account or the Dollar Cost Averaging Fixed Account to any Sub-Account.
Transfers made through the Dollar Cost Averaging Program must be $100 or more.
The Dollar Cost Averaging Program cannot be used to transfer amounts to the
Fixed Account. Please consult with your Dean Witter Account Executive for
detailed information about the Dollar Cost Averaging Program.

Transfers may also be made automatically through Automatic Portfolio Rebalancing
prior to the Payout Start Date. By electing Automatic Portfolio Rebalancing, all
of the money allocated to Sub-Accounts of the Variable Account will be
rebalanced to the desired allocation on a quarterly basis (or other frequencies
that may be offered by the Company), determined from the first date that you
decide to rebalance. Upon rebalancing, your money will be transferred among
Sub-Accounts of the Variable Account to achieve the desired allocation.

The desired allocation will be the allocation initially selected, unless
subsequently changed. You may change the allocation at any time by giving us
written notice. The new allocation will be effective with the first rebalancing
that occurs after we receive the written request.

Transfers made through Automatic Portfolio Rebalancing are not assessed a $25
charge and are not counted towards the twelve free transfers per Contract Year.
Any money allocated to the Fixed Account or the Dollar Cost Averaging Fixed
Account will not be included in the rebalancing.

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 involving the Fixed Account, see page.

SURRENDER AND WITHDRAWALS

The Owner may withdraw all or part of the Cash Value at any time prior to the
earlier of the death of the last surviving Annuitant, death of any Owner or the
Payout Start Date. The amount available for withdrawal is the Cash Value next
computed after the Company receives the request for a withdrawal at its home
office, less any Early Withdrawal Charges, Contract Maintenance Charges or any
remaining charge for premium taxes. Withdrawals from the Variable Account will
be paid within seven days of receipt of the request, subject to postponement in
certain circumstances. See "Delay of Payments," page . For withdrawals from the
Fixed Account, see page .

The minimum partial withdrawal is $100. If the Cash 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 Cash Value, less any
charges and premium taxes, will be paid out.

Partial withdrawals may also be taken automatically through monthly Systematic
Withdrawals. Systematic Withdrawals of $100 or more may be requested at any time
prior to the Payout Start Date. Please consult with your Dean Witter Account
Executive for detailed information about Systematic 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 page .

The full Contract Maintenance Charge will be deducted at the time of total
surrender. The total amount paid at surrender may be more or less than the total
Purchase Payments due to prior withdrawals, any deductions, and investment
performance.

To complete the partial withdrawals, the Company will cancel Accumulation Units
in an amount equal to the withdrawal and any applicable Early Withdrawal Charge
and premium taxes. The Owner must name the Investment Alternative from which the
withdrawal is to be made. If none is named, then the withdrawal request is
incomplete and cannot be honored.

DEFAULT

So long as the Cash 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 Payout Start
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.

EARLY WITHDRAWAL CHARGE (CONTINGENT DEFERRED SALES CHARGE)

The Owner may withdraw the Cash Value at any time before the earliest of the
Payout Start Date, the death of any Owner or the last surviving Annuitant's
death.

There are no Early Withdrawal Charges on amounts up to the Withdrawal Amount
Without Early Withdrawal Charge. A Withdrawal Amount Without Early Withdrawal
Charge will be available in each Contract Year. The annual Withdrawal Amount
Without Early Withdrawal Charge is 15% of all Purchase Payments. Amounts
withdrawn in excess of the Withdrawal Amount Without Early Withdrawal Charge,
may be subject to an Early Withdrawal Charge. Any Withdrawal Amount Without
Early Withdrawal Charge not withdrawn in a Contract Year does not increase the
Withdrawal Amount Without Early Withdrawal Charge in later Contract Years. Early
Withdrawal Charges, if applicable, will be deducted from the amount paid.

In certain cases, distributions required by federal tax law (see the Statement
of Additional Information for "IRS Required Distribution at Death Rules") may be
subject to an Early Withdrawal Charge. 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.

Withdrawal Amounts Without Early Withdrawal Charge 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 Early Withdrawal Charge, withdrawals
are assumed to come from Purchase Payments first, beginning with the oldest
payment. Unless the Company is instructed otherwise, for partial withdrawals,
the Early Withdrawal Charge will be deducted from the amount paid, rather than
from the remaining Cash Value. Once all Purchase Payments have been withdrawn,
additional withdrawals will not be assessed an Early Withdrawal Charge.

Early Withdrawal Charges will be applied to amounts withdrawn in excess of a
Withdrawal Amount Without Early Withdrawal Charge as set forth below:

Complete Contract Applicable
Years Since Purchase Withdrawal
Payment Being Charge
Withdrawn Was Made Percentage
------------------ ----------

0 years............................................ 6%
1 year............................................. 5%
2 years............................................ 4%
3 years............................................ 3%
4 years............................................ 2%
5 years............................................ 1%
6 years or more.................................... 0%

THE CUMULATIVE TOTAL OF ALL EARLY WITHDRAWAL CHARGES IS GUARANTEED NEVER TO
EXCEED 6% OF AN OWNER'S PURCHASE PAYMENTS.

Early Withdrawal Charges will be used to pay sales commissions and other
promotional or distribution expenses associated with the marketing of the
Contracts. The Company does not anticipate that the Early Withdrawal Charges
will cover all distribution expenses in connection with the Contract.

In addition, 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," page .

CONTRACT MAINTENANCE CHARGE

A Contract Maintenance Charge is deducted annually from the Cash Value to
reimburse the Company for its actual costs in maintaining each Contract and the
Variable Account. THE COMPANY GUARANTEES THAT THE AMOUNT OF THIS CHARGE WILL NOT
EXCEED $30 PER CONTRACT YEAR OVER THE LIFE OF THE CONTRACT. Maintenance costs
include but are not limited to expenses incurred in collecting Purchase
Payments; keeping records; processing death claims and cash surrenders; policy
changes and proxy statements; calculating Accumulation Unit and Annuity Unit
values; and issuing reports to Owners and regulatory agencies. The Company does
not expect to realize a profit from this charge.

On each Contract Anniversary, the Contract Maintenance Charge will be deducted
from the Investment Alternatives in the same proportion that the Owner's
interest in each bears to the total Cash Value. After the Payout Start Date, a
pro rata share of the annual Contract Maintenance Charge will be deducted from
each Income Payment. For example, 1/12 of the $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.

ADMINISTRATIVE EXPENSE CHARGE

The Company will deduct an Administrative Expense Charge which is equal, on an
annual basis to .10% of the daily net assets in the Variable Account. This
charge is designed to cover actual administrative expenses which exceed the
revenues from the Contract Maintenance Charge. The Company does not intend to
profit from this charge. The Company reserves the right to increase this charge
in the future. The Company believes that the Administrative Expense Charge and
Contract Maintenance Charge have been set at a level that will recover no more
than the actual costs associated with administering the Contract. There is no
necessary relationship between the amount of administrative charge imposed on a
given Contract and the amount of expenses that may be attributable to that
Contract.

MORTALITY AND EXPENSE RISK CHARGE

A Mortality and Expense Risk Charge will be deducted daily at a rate equal on an
annual basis of 1.25% of the daily net assets in the Variable Account. The
Company estimates that .85% is attributed to the assumption of mortality risks
and .40% is attributed to the assumption of expense risks. For Contracts with
the optional Performance Death Benefit provision, the Mortality and Expense Risk
Charge will be deducted daily, at a rate equal on an annual basis, to 1.38% of
the daily net assets in the Variable Account. The assessment of the additional
.13% for the optional Performance Death Benefit is attributed to the assumption
of additional mortality risks. For amounts allocated to the Variable Account,
the mortality and expense risk charge is assessed during both the accumulation
and payout phases of the Contract. 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 Income Payment
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 and
Early Withdrawal Charges, both of which are guaranteed not to increase, will be
insufficient to cover actual administrative expenses.

TAXES

The Company will deduct state premium taxes or other taxes relative to the
Contract (collectively referred to as "premium taxes") either at the Payout
Start Date, or when a total withdrawal occurs. The Company reserves the right to
deduct premium taxes from the Purchase Payments. Currently, no deductions are
made because New York does not charge premium taxes on annuities.

At the Payout Start Date, any charge for premium taxes will be deducted from
each Investment Alternative in the proportion that the Owner's interest in the
Investment Alternative bears to the total Cash Value.

FUND EXPENSES

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

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

DEATH BENEFITS PRIOR TO THE PAYOUT START DATE

If any Owner or the last surviving Annuitant dies prior to the Payout Start
Date, and a Death Benefit is elected, it will be paid to the new Owner or
Beneficiary. If requested to be paid in a lump sum within 180 days from the Date
of Death, the Death Benefit will be the greatest of: (a) the sum of all Purchase
Payments less any amounts deducted in connection with partial withdrawals
including any applicable Early Withdrawal Charges or premium taxes; or (b) the
Cash Value on the date we receive Due Proof of Death, or (c) the Cash Value on
the most recent Death Benefit Anniversary less any amounts deducted in
connection with partial withdrawals, including any applicable Early Withdrawal
Charges and premium taxes deducted from the Cash Value, since that anniversary.
The Company is currently waiving the 180 day limit. The Company reserves the
right to enforce the limitation in the future. The Death Benefit Anniversary is
every sixth Contract Anniversary. For example, the 6th, 12th and 18th Contract
Anniversaries are the first three Death Benefit Anniversaries.

If the Performance Death Benefit option is selected, it applies only at the
death of Owner. It does not apply to the death of the Annuitant if different
from the Owner unless the Owner is a nonnatural Owner. For Contracts with the
optional Performance Death Benefit provision, the Death Benefit will be the
greatest of (a) through (c) above, or (d) the Performance Death Benefit.

When the Performance Death Benefit is selected on the date of issue, it is equal
to the initial Purchase Payment. On each Contract Anniversary, we will
recalculate your Performance Death Benefit to equal the greater of your Cash
Value on that date or the most recently calculated Performance Death Benefit. We
will also recalculate your Performance Death Benefit whenever you make an
additional Purchase Payment or a partial withdrawal. Additional Purchase
Payments will increase the Performance Death Benefit dollar-for-dollar.
Withdrawals will reduce the Performance Death Benefit by an amount equal to: (i)
the Performance Death Benefit immediately just before the withdrawal, multiplied
by (ii) the ratio of the withdrawal amount to the Cash Value just before the
withdrawal. In the absence of any withdrawals or Purchase Payments, the
Performance Death Benefit will be the greatest of all Contract Anniversary Cash
Values on or before the date the Company calculates the death benefit.

The Performance Death Benefit will be recalculated until the oldest Owner or the
Annuitant, if the Owner is a nonnatural Owner, attains age 85. After age 85, we
will recalculate the Performance Death Benefit only to reflect additional
Purchase Payments and withdrawals.

The performance Death Benefit will never be greater than the maximum death
benefit allowed by any non-forfeiture laws which govern this Contract.

The Company will not settle any death claim until it receives Due Proof of
Death. If an Owner dies prior to the Payout Start Date the new Owner will be the
surviving Owner, if any. Otherwise the new Owner will be the Beneficiary.
Generally, this new Owner has the following options:

1. The new Owner may elect, within 180 days of the date of death, to receive
the Death Benefit in a lump sum;

2. The new Owner may elect, within 180 days of the date of death, to receive
the Settlement Value (the Settlement Value is the Cash Value less any
applicable Early Withdrawal Charges and premium tax on the date payment is
requested) payable within five years of the date of death.

3. The new Owner may elect to apply an amount equal to the Death Benefit to
one of the income plans. Payments must begin within one year of the date of
death and must be over the life of the new Owner, or a period not to exceed
the life expectancy of the new Owner.

4. If the new Owner is the spouse of the deceased Owner, the new Owner may
elect one of the above options or may continue the Contract. If the
Contract is continued prior to the Payout Start Date, the surviving spouse
may make a single withdrawal of any amount within one year of the date of
death without incurring an Early Withdrawal Charge.

The Company is currently waiving the 180 day limit. The Company reserves the
right to enforce the limitation in the future.

If the new Owner who is not the spouse of the deceased Owner does not make one
of these elections, the Settlement Value will be paid in a lump sum to the new
Owner five years after the date of death.

If the new Owner is a nonnatural person, then the new Owner must receive the
Death Benefit in a lump sum, and the options listed above are not available.

If any Annuitant dies who is not also an Owner, the Owner must elect an
applicable option listed below. If the option selected is 1(a) or 1(b)(ii)
below, the new Annuitant will be the youngest Owner, unless the Owner names a
different Annuitant.

1. If the Owner is a natural person:

a. The Owner may choose to continue the Contract as if the death had not
occurred; or

b. If the Company receives due proof of death within 180 days of the date
of the Annuitant's death, then the Owner may alternatively choose to:

i. Receive the Death Benefit in a lump sum; or

ii. Apply the Death Benefit to an income plan which must begin within
one year of the date of death and must be for a period equal to
or less than the life expectancy of the Owner.

2. If the Owner is a nonnatural person: The Owner must receive the Death
Benefit in a lump sum.

The Company is currently waiving the 180 day limit. The Company reserves the
right to enforce the limitation in the future.

The value of the Death Benefit will be determined at the end of the Valuation
Period during which the Company receives a complete request for payment of the
Death Benefit, which includes Due Proof of Death.

DEATH BENEFITS AFTER THE PAYOUT START DATE

If the Annuitant and Joint Annuitant, if applicable, die after the Payout Start
Date, the Company will pay the Death Benefit, if any, contained in the
particular income plan.

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

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

PAYOUT START DATE

The Payout Start Date is the day that Income Payments will start under the
Contract. The Owner may change the Payout Start Date at any time by notifying
the Company in writing of the change at least 30 days before the current Payout
Start Date. The Payout Start 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 90.

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, any premium taxes, the age
and sex of the Annuitant(s), and the income plan chosen. The Company guarantees
that the Income Payments will not be affected by (1) actual mortality experience
and (2) the amount of the Company's administration expenses.

The Contracts offered by this Prospectus contain 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. For qualified plans, where it is appropriate, a unisex
endorsement is available.

The sum of Income Payments made 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)
Early Withdrawal Charges may be applicable. As such, the total amount of Income
Payments cannot be predicted.

The duration of the income plan may affect the dollar amounts of each Income
Payment. For example, if an income plan guaranteed for life is chosen, the
Income Payments may be greater or lesser than Income Payments under an income
plan 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 Income Payments will decrease. The dollar
amount of the Income Payments will stay level if the net investment experience
equals the assumed investment rate and the dollar amount of the Income Payments
will increase if the net investment experience exceeds the assumed investment
rate. For purposes of the Variable Annuity Income Payments, the assumed
investment rate is found in the Contract.

If no payments have been received for three full years and if the Cash Value to
be applied to an income plan is less than $2,000, or if the monthly payments
determined under the Income Plan are less than $20, the Company may pay the Cash
Value in a lump sum or change the payment frequency to an interval which results
in Income Payments of at least $20.

INCOME PLANS

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 Payout Start
Date, the Owner may change the income plan or request any other form of income
plan agreeable to both the Company and the Owner. Subsequent changes will not be
permitted. If an income plan is chosen which depends on the Annuitant or Joint
Annuitant's life, proof of age will be required before Income Payments begin.
Premium taxes may be assessed. The income plans include:

INCOME PLAN 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.

INCOME PLAN 2--JOINT AND LAST SURVIVOR Monthly payments beginning on the Payout
Start 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.

INCOME PLAN 3--PAYMENTS FOR A SPECIFIED PERIOD Monthly payments beginning on the
Payout Start Date will be made for a specified period. An Early Withdrawal
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. If the
Owner dies before the end of the specified period, the remaining payments will
be paid to the surviving Beneficiary. The Mortality and Expense Risk Charge is
deducted from the Variable Account even though the Company does not bear any
mortality risk. If Income Plan 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 income plan is not selected, the Company will make Income
Payments in accordance with Income Plan 1. At the Company's discretion, other
income plans may be available upon request. The Company uses sex-distinct
annuity tables. However, the Company reserves the right to use Income Payment
tables which do not distinguish on the basis of sex.

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

Contributions under the fixed portion of the annuity Contract and transfers to
the fixed portion become part of the general account of the Company, which
supports insurance and annuity obligations. Because of exemptive and
exclusionary provisions, interests in the general account have not been
registered under the Securities Act of 1933 ("1933 Act"), nor is the general
account registered as an investment company under the Investment Company Act of
1940 ("1940 Act"). Accordingly, neither the general account nor any interests
therein are generally subject to the provisions of the 1933 or 1940 Acts and the
Company has been advised that the staff of the Securities and Exchange
Commission has not reviewed the disclosures in this Prospectus which relate to
the fixed portion. Disclosures regarding the fixed portion of the annuity
Contract and the general account, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made in prospectuses.

GENERAL DESCRIPTION

Contributions made to the Fixed Account are invested in the general account of
the Company. The general 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 contributed to the general account. The Company has sole discretion
to invest the assets of the general account, subject to applicable law. The
Company guarantees that the amounts allocated to the Fixed Account will be
credited interest at a net effective interest rate of at least the minimum
guaranteed rate found in the Contract. (This interest rate is net of separate
account asset based charges of 1.35% or 1.48% if the optional Performance Death
Benefit provision has been selected). Currently the amount of interest credited
in excess of the guaranteed rate will vary periodically in the sole discretion
of the Company. Any interest held in the general account does not entitle an
Owner to share in the investment experience of the general account.

Money deposited in the Fixed Account earns interest at the current rate in
effect at the time of allocation or transfer for the Guarantee Period. After the
Guarantee Period, a renewal rate will be declared. 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 Contract Year
then starting. This interest rate will be guaranteed by the Company for a full
year and will not be less than the guaranteed rate found in the Contract. The
Company may declare more than one interest rate for different monies based upon
the date of allocation or transfer to the Fixed Account and based upon the
Guarantee Period.

The Company will offer a one year Guarantee Period. Additional Guarantee Periods
are offered at the sole discretion of the Company. The Company currently offers
a 1 year and a 6 year Guarantee Period. The Company is also currently offering a
Dollar Cost Averaging Fixed Account.

THE DOLLAR COST AVERAGING FIXED ACCOUNT

Purchase Payments may also be allocated to the Dollar Cost Averaging Fixed
Account. Transfers are not allowed into the Dollar Cost Averaging Fixed Account.
Once Purchase Payments have been allocated to the Dollar Cost Averaging Fixed
Account, interest is earned for a one year period at a current rate in effect at
the time of allocation. This rate may be different from the rate of the 1 year
Fixed Account Guarantee Period discussed above. After the one year period, a
renewal rate will be declared. Subsequent renewal dates will be every twelve
months for each Purchase Payment. The renewal rate will be guaranteed by the
Company for a full year and will not be less than the minimum guaranteed rate
found in the Contract.

ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF THE
GUARANTEED RATE FOUND IN THE CONTRACT 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 (but not the Dollar Cost Averaging Fixed Account), and prior to
the Payout Start Date amounts may also be transferred from the Fixed Account to
Sub-Accounts of the Variable Account.

The maximum amount in any Contract Year which may be transferred from the Fixed
Account to the Variable Account or between Guarantee Periods of the Fixed
Account is limited to the greater of (1) 25% of the value in the Fixed Account
as of the most recent Contract Anniversary; if 25% of the value as of the most
recent Contract Anniversary is greater than zero but less than $1,000, then up
to $1,000 may be transferred; or (2) 25% of the sum of all Purchase Payments and
transfers to the Fixed Account as of the most recent Contract Anniversary. These
restriction do not apply to transfers pursuant to the Dollar Cost Averaging
Program. Also, the Company reserves the right to waive these restrictions.

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 Fixed Account, the
transfer restriction for that money and the accumulated interest thereon will be
waived during the 60-day period following the first renewal date.

After the Payout Start 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 Payout Start Date and may be made thereafter only once every
six months.

Surrenders and withdrawals from the Fixed Account may be delayed for up to six
months. After the Payout Start Date no surrenders or withdrawals may be made
from the Fixed Account.

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

OWNER

The Owner has the sole right to exercise all rights and privileges under the
Contract, except as otherwise provided in the Contract. These rights include the
right to name and change the Owner, Beneficiary and Annuitant. The Annuitant can
be changed only if the Owner is a natural person. At time of designation, the
age of the Annuitant may not exceed 80 years of age.

Generally, an Owner who is not a natural person is required to include in income
each year any increase in the Cash Value to the extent the increase is
attributable to contributions made after February 28, 1986.

BENEFICIARY

Subject to the terms 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 settlements 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 NYSE is closed for other than usual weekends or holidays, or trading on
the Exchange is otherwise restricted;

2. An emergency exists as defined by the Securities and Exchange Commission;
or

3. The Securities and Exchange Commission permits delay for the protection of
the Owners.

For payment or transfers from the Fixed Account, see page .

ASSIGNMENTS

The Owner may not assign an interest in a Contract as collateral or security for
a loan. Otherwise, the Owner may assign benefits under the Contract prior to the
Payout Start Date. No Beneficiary may assign benefits under the Contract until
they are due. No assignment will bind the Company unless it is signed by the
Owner and filed with the Company. The Company is not responsible for the
validity of an assignment.

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.

CUSTOMER INQUIRIES

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

FEDERAL TAX MATTERS
- -------------------

INTRODUCTION

THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. THE
COMPANY MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR
TRANSACTION INVOLVING A CONTRACT. Federal, state, local and other tax
consequences of ownership or receipt of distributions under an annuity contract
depend on the individual circumstances of each person. If you are concerned
about any tax consequences with regard to your individual circumstances, you
should consult a competent tax adviser.

TAXATION OF ANNUITIES IN GENERAL

Tax Deferral. Generally, an annuity contract owner is not taxed on increases in
the Contract Value until a distribution occurs. This rule applies only where (1)
the Owner is a natural person, (2) the investments of the Variable Account are
"adequately diversified" in accordance with Treasury Department ("Treasury")
regulations and (3) the Company, instead of the annuity owner, is considered the
owner of the Variable Account assets for federal income tax purposes.

Nonnatural Owners. As a general rule, annuity contracts owned by nonnatural
persons are not treated as annuity contracts for federal income tax purposes and
the income on such contracts is taxed as ordinary income received or accrued by
the Owner during the taxable year. There are several exceptions to the general
rule for Contracts owned by nonnatural 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 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, 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. The investment in the contract is the gross premium or other
consideration paid for the contract reduced by any amounts previously received
from the contract to the extent such amounts were properly excluded from gross
income. In the case of a partial withdrawal under a Qualified Contract, the
portion of the payment that bears the same ratio to the total payment that the
investment in the Contract (i.e., nondeductible IRA contributions, after tax
contributions to qualified plans) bears to the Contract Value, can be excluded
from income. In the case of a full withdrawal under a Non-Qualified Contract or
a Qualified Contract, the amount received will be taxable only to the extent it
exceeds the investment in the Contract. If an individual transfers an annuity
contract without full and adequate consideration to a person other than the
individual's spouse (or to a former spouse incident to a divorce), the Owner
will be taxed on the difference between the Contract Value and the investment in
the Contract at the time of transfer. Other than in the case of certain
Qualified Contracts, any amount received as a loan under a Contract, and any
assignment or pledge (or agreement to assign or pledge) of the Contract Value is
treated as a withdrawal of such amount or portion.

Taxation of Annuity Payments. Generally, the rule for income taxation of
payments received from an annuity contract provides for the return of the
Owner's investment in the Contract in equal tax-free amounts over the payment
period. The balance of each payment received is taxable. In the case of variable
annuity payments, the amount excluded from taxable income is determined by
dividing the investment in the Contract by the total number of expected
payments. In the case of fixed annuity payments, the amount excluded from income
is determined by multiplying the payment by the ratio of the investment in the
Contract (adjusted for any refund feature or period certain) to the total
expected value of annuity payments for the term of the Contract. Once the total
amount of the investment in the contract is excluded using this ratio, the
annuity payments are fully taxable. If annuity payments cease because of the
death of the annuitant before the total amount of the investment in the contract
is recovered, the unrecovered amount will be allowed as a deduction to the
annuitant for his last taxable year.

Taxation of Annuity Death Benefits. Amounts may be distributed from an annuity
contract because of the death of an Owner or Annuitant. Generally, such amounts
are includible in income as follows: (1) if distributed in a lump sum, the
amounts are taxed in the same manner as a full withdrawal or (2) if distributed
under an annuity option, the amounts are taxed in the same manner as an annuity
payment.

Penalty Tax on Premature Distributions. There is a 10% penalty tax on the
taxable amount of any premature distribution from a non-qualified annuity
contract. The penalty tax generally applies to any distribution made prior to
the date the Owner attains age 59 1/2. However, there should be no penalty tax
on distributions to Owners (1) made on or after the date 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. Consult a competent tax advisor for other possible
exceptions to the penalty tax.

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) Roth Individual Retirement Annuities under Section 408A of the Code; (3)
Simplified Employee Pension Plans under Section 408(k) of the Code; (4) Savings
Incentive Match Plans for Employees (SIMPLE) Plans under Section 408(p) of the
Code; (5) Tax Sheltered Annuities under Section 403(b) of the Code; (6)
Corporate and Self Employed Pension and Profit Sharing Plans; and (7) 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
on or after the date 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).

Roth Individual Retirement Annuities. Section 408A of the Code permits eligible
individuals to make nondeductible contributions to an individual retirement
program known as a Roth Individual Retirement Annuity. Roth Individual
Retirement Annuities are subject to limitations on the amount that can be
contributed and on the time when distributions may commence. "Qualified
distributions" from Roth Individual Retirement Annuities are not includible in
gross income. "Qualified distributions" are any distributions made more than
five taxable years after the taxable year of the first contribution to the Roth
Individual Retirement Annuity, and which are made on or after the date the
individual attains age 59 1/2, made to a beneficiary after the owner's death,
attributable to the owner being disabled or for a first time home purchase
(first time home purchases are subject to a lifetime limit of $10,000).
"Nonqualified distributions" are treated as made from contributions first and
are includible in gross income to the extent such distributions exceed the
contributions made to the Roth Individual Retirement Annuity. The taxable
portion of a "nonqualified distribution" may be subject to the 10% penalty tax
on premature distribution. Subject to certain limitations, a traditional
Individual Retirement Account or Annuity may be converted or "rolled over" to a
Roth Individual Retirement Annuity. The taxable portion of a conversion or
rollover distribution is includible in gross income, but is exempted from the
10% penalty tax on premature distributions.

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 anyone with a voting interest in the Sub-Account of the Variable
Account may instruct the Company on how to vote at shareholder meetings of the
Funds. The Company will solicit and cast each vote according to the procedures
set up by the Funds and to the extent required by law. 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. The
Company reserves the right to vote the eligible shares in its own right, to the
extent permitted by the Investment Company Act of 1940, its regulations or
interpretations thereof.

Before the Payout Start Date, the Owner holds the voting interest in the
Sub-Account. (The number of votes for the Owner will be determined by dividing
the Cash Value attributable to a Sub-Account by the net asset value per share of
the applicable Portfolio.)

After the Payout Start Date, the person receiving Income Payments has the voting
interest. After the Payout Start Date, the votes decrease as Income Payments are
made and as the reserves for the Contract decrease. That person's number of
votes will be determined by dividing the reserve for such Contract allocated to
the applicable Sub-Account by the net asset value per share of the corresponding
Portfolio.

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 established by that Portfolio for determining
shareholders eligible to vote at the meeting of the Funds. Voting instructions
will be solicited by written communication prior to such meeting in accordance
with procedures established by the Funds.

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

From its profits the Company may pay a maximum sales commission of 6.0% of
Purchase Payments and an annual sales administration expense allowance of up to
0.125% of the average net assets of the Fixed Account to Dean Witter Reynolds
Inc., the principal underwriter of the Contracts.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

TABLE OF CONTENTS

<S> <C>
PAGE
The Contract...................................................................................
Purchase of Contracts........................................................................
Value of Variable Account Accumulation Units.................................................
Performance Data...............................................................................
Standardized Total Return..................................................................
Adjusted Historical Return...................................................................
Other Total Returns..........................................................................
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers)...................................
Income Payments................................................................................
Amount of Variable Annuity Income Payments...................................................
General Matters................................................................................
Additions, Deletions or Substitutions of Investments.......................................
Reinvestment...............................................................................
Incontestability.............................................................................
Settlements..................................................................................
Safekeeping of the Variable Account's Assets.................................................
Experts......................................................................................
Legal Matters................................................................................
Federal Tax Matters............................................................................
Introduction.................................................................................
Taxation of Allstate Life Insurance Company of New York......................................
Exceptions to the Nonnatural Owner Rule......................................................
IRS Required Distribution at Death Rules.....................................................
Qualified Plans..............................................................................
Types of Qualified Plans...................................................................
Sales Commissions..............................................................................
Financial Statements........................................................................... F-1
</TABLE>

<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 II.

- ---------------------- --------------------------------------------
(Date) (Name)

--------------------------------------------
(Street Address)

--------------------------------------------
(City) (State) (Zip Code)

Send to: Allstate Life Insurance Company of New York
Post Office Box 94038
Palatine, IL 60094-4038

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
One Allstate Drive
Farmingville, New York 11738

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 individual 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, 1998, has been filed with the U.S.
Securities and Exchange Commission.

Dated May 1, 1998

<PAGE>

TABLE OF CONTENTS

<S>
<C>
Page

The Contract..................................................................................
Purchase of Contracts.......................................................................
Value of Variable Account Accumulation Units................................................
Performance Data..............................................................................
Standardized Total Return................................................................
Adjusted Historical Return..................................................................
Other Total Returns.........................................................................
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers)..................................
Income Payments...............................................................................
Amount of Variable Annuity Income Payments..................................................
General Matters...............................................................................
Additions, Deletions or Substitutions of Investments.....................................
Reinvestment.............................................................................
Incontestability............................................................................
Settlements.................................................................................
Safekeeping of the Variable Account's Assets................................................
Experts.....................................................................................
Legal Matters...............................................................................
Federal Tax Matters...........................................................................
Introduction.............................................................................
Taxation of Allstate Life Insurance Company of New York.....................................
Exceptions to the Nonnatural Owner Rule.....................................................
IRS Required Distribution at Death Rules....................................................
Qualified Plans.............................................................................
Types of Qualified Plans.................................................................
Sales Commissions.............................................................................
Financial Statements.......................................................................... F-1
</TABLE>

<PAGE>

THE CONTRACT

Purchase of Contracts

The Contracts are offered to the public through brokers licensed under the
federal securities laws and state insurance laws. The offering of the Contracts
is continuous and the Company does not anticipate discontinuing the offering of
the Contracts. However, the Company reserves the right to discontinue the
offering of the Contracts.

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 Accumulation Unit value.

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 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 preceding
valuation period.

(C) is the annualized Mortality and Expense Risk and Administrative
Expense Charges 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 Early
Withdrawal Charges or Contract Maintenance Charges imposed on the Contracts by
the Variable Account, by the initial hypothetical $1,000 Purchase Payment,
taking the "n"th root of the quotient (where "n" is the number of years in the
period) and subtracting 1 from the result.

The Early Withdrawal Charges assessed upon redemption are computed as
follows: The Withdrawal Amount Without Early Withdrawal Charge is not assessed
an Early Withdrawal Charge. Early Withdrawal Charges are charged on the amount
of redemption equal to the Purchase Payment, reduced by the Withdrawal Amount
Without Early Withdrawal Charge, if any. The remaining amount of the redemption,
if any, is not assessed an Early Withdrawal Charge. The Early Withdrawal Charge
Schedule specifies rates based on the Contract Year in which the Purchase
Payment was made. One rate is specified for Purchase Payments made in the
current Contract Year, another rate for Purchase Payments made in the prior
Contract Year, another rate for Purchase Payments made in the second prior
Contract Year, and so on until a rate for Purchase Payments made in the sixth
prior Contract Year or prior to it is reached. For a one year total return
calculation the second rate, (i.e., the rate for Purchase Payments made in the
prior Contract Year), is assessed. The Contract Maintenance Charge ($30 per
contract) used in the total return calculation is 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 ending Cash Value.

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 would not reflect deductions
for Early Withdrawal Charges or Contract Maintenance 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 are "year-to-date" (prior calendar year end to
the day of the advertisement); "year to most recent quarter" (prior calendar
year end to the end of the most recent quarter); "the prior calendar year"; and
inception (commencement of the Sub-Account's operation) to date (day of the
advertisement).

The performance data that may be presented are not estimates or guarantees
of future investment performance and do not necessarily represent the actual
experience of amounts invested by a particular Contract owner. Set out in the
tables below are standardized, adjusted historical and other total return
performance data for the periods shown.

Standardized Total Return

The standardized average annual total returns for the Sub-Accounts for the
one-year and since inception periods ending December 31, 1997 are presented
below:
<TABLE>
<CAPTION>

(Without the Optional Performance Death Benefit)

Since
Sub-Account One-Year Five-Year Inception*
- ----------- -------- --------- ----------
<S> <C> <C> <C>
Money Market..................................................... -0.49% 2.90% 2.89%
Quality Income Plus.............................................. 5.31% 6.53% 7.32%
High Yield....................................................... 6.05% 10.12% 12.04%
Utilities........................................................ 21.14% 11.67% 12.74%
Income Builder................................................... NA NA 16.72%
Dividend Growth.................................................. 19.61% 16.89% 15.54%
Capital Growth................................................... 18.56% 9.47% 10.21%
Global Dividend Growth........................................... 6.22% NA 11.13%
European Growth.................................................. 10.21% 21.96% 18.08%
Pacific Growth................................................... -42.85% NA -13.23%
Capital Appreciation............................................. NA NA 7.03%
Equity........................................................... 31.28% 18.42% 16.78%
Strategist....................................................... 7.88% 8.77% 9.10%
</TABLE>

(With the Optional Performance Death Benefit)

10-Years or Since
Sub-Account 1 Year 5-Years Inception (if less)*,**
- ---------------- ------ ------- -----------------------
Money Market -0.62% 2.76% 2.75%
Quality Income Plus 5.17% 6.39% 7.18%
High Yield 5.91% 9.97% 11.89%
Utilities 20.97% 11.52% 12.59%
Income Builder NA NA 16.56%
Dividend Growth 19.45% 16.74% 15.39%
Capital Growth 18.40% 9.32% 10.07%
Global Dividend Growth 6.08% NA 10.98%
European Growth 10.07% 21.80% 17.93%
Pacific Growth -42.93% NA -13.35%
Capital Appreciation NA NA 6.88%
Equity 31.10% 18.26% 16.63%
Strategist 7.74% 8.63% 8.96%

* All Sub-Accounts commenced operation on September 24, 1991 except for the
Global Dividend Growth, Pacific Growth, Income Builder and Capital
Appreciation Sub-Accounts. 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.

** Contracts with the optional Death Benefit provision first became available
for all Sub-Accounts on April 3, 1998. The performance information for
these Contracts for periods prior to their availability has been related to
reflect the changes under the Contracts that would have applied had the
Contracts been available during those periods.

Adjusted Historical Return

From time to time, sales literature or advertisements may also quote average
annual total returns for periods prior to the date the Variable Account
commenced operations. Such performance information for the Sub-Accounts will be
calculated based on the performance of the Portfolios and the assumption that
the Sub-Accounts were in existence for the same periods as those indicated for
the Portfolios, with the level of Contract charges currently in effect.

Such average annual total return information for the Sub-Accounts (including
deduction of the Surrender Charge) is as follows:

(Without the Optional Performance Death Benefit)

10-Years or Since
Sub-Account 1 Year 5-Years Inception (if less)
- ---------------- ------ ------- ---------------------
<S> <C> <C> <C>
Money Market ......................... -0.49% 2.90% 4.51%
Quality Income Plus .................. 5.31% 6.53% 8.33%
High Yield ........................... 6.05% 10.12% 7.72%
Utilities ............................ 21.14% 11.67% 11.84%
Income Builder ....................... NA NA 16.72%
Dividend Growth ...................... 19.61% 16.89% 13.15%
Capital Growth ....................... 18.56% 9.47% 10.76%
Global Dividend Growth ............... 6.22% NA 11.13%
European Growth ...................... 10.21% 21.96% 16.13%
Pacific Growth ....................... -42.85% NA -13.23%
Capital Appreciation ................. NA NA 7.03%
Equity ............................... 31.28% 18.42% 16.32%
Strategist ........................... 7.88% 8.77% 9.98%
</TABLE>

(With the Optional Performance Death Benefit)
10-Years or Since
Sub-Account 1 Year 5-Years Inception (if less)
- ---------------- ------ ------- ---------------------
<S> <C> <C> <C>
Money Market ......................... -0.62% 2.76% 4.48%
Quality Income Plus .................. 5.17% 6.39% 8.30%
High Yield ........................... 5.91% 9.97% 7.69%
Utilities ............................ 20.97% 11.52% 11.80%
Income Builder ....................... NA NA 16.56%
Dividend Growth ...................... 19.45% 16.74% 13.51%
Capital Growth ....................... 18.40% 9.32% 10.62%
Global Dividend Growth ............... 6.08% NA 10.98%
European Growth ...................... 10.07% 21.80% 15.98%
Pacific Growth ....................... -42.93% NA -13.35%
Capital Appreciation ................. NA NA 6.88%
Equity ............................... 31.10% 18.26% 16.29%
Strategist ........................... 7.74% 8.63% 9.95%
</TABLE>

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
immediately 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. Sales literature or
advertisements may also quote such average annual total returns for periods
prior to the date the Variable Account commenced operations, calculated based on
the performance of the Portfolios and the assumption that the Sub-Accounts were
in existence for the same periods as those indicated for the Portfolios, with
the level of Contract charges currently in effect except for the Surrender
Charge.

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

(Without the Optional Performance Death Benefit)
10-Years or Since
Sub-Account 1 Year 5-Years Inception (if less)
- ---------------- ------ ------ ---------------------
<S> <C> <C> <C>
Money Market 3.82% 3.11% 2.95%
Quality Income Plus 9.62% 6.53% 7.32%
High Yield 10.37% 10.29% 12.08%
Utilities 25.45% 11.83% 12.78%
Income Builder NA NA 22.24%
Dividend Growth 23.92% 17.03% 15.59%
Capital Growth 22.87% 9.65% 10.27%
Global Dividend Growth 10.54% NA 11.66%
European Growth 14.53% 22.07% 18.12%
Pacific Growth -38.54% NA -12.18%
Capital Appreciation NA NA 12.53%
Equity 35.59% 18.55% 16.82%
Strategist 12.19% 8.95% 9.15%
</TABLE>

(With the Optional Performance Death Benefit)
<TABLE>
<CAPTION>

10-Years or Since
Sub-Account 1 Year 5-Years Inception (if less)
- ---------------- ------ ------- ---------------------
<S> <C> <C> <C>
Money Market ......................... 3.69% 2.97% 2.82%
Quality Income Plus .................. 9.48% 6.58% 7.23%
High Yield ........................... 10.22% 10.13% 11.93%
Utilities ............................ 25.29% 11.69% 12.63%
Income Builder ....................... NA NA 22.08%
Dividend Growth ...................... 23.76% 16.88% 15.44%
Capital Growth ....................... 22.71% 9.50% 10.12%
Global Dividend Growth ............... 10.39% NA 11.52%
European Growth ...................... 14.38% 21.92% 17.96%
Pacific Growth ....................... -38.62% NA -12.29%
Capital Appreciation ................. NA NA 12.39%
Equity ............................... 35.42% 18.40% 16.67%
Strategist ........................... 12.05% 8.80% 9.01%
</TABLE>

The Variable Account may also advertise the performance of the Sub-Accounts
relative to certain performance rankings and indexes compiled by independent
organizations, such as: (a) Lipper Analytical Services, Inc.; (b) the Standard &
Poor's 500 Composite Stock Price Index ("S & P 500"); and, (c) A.M. Best
Company.

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-Section 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. An Owner
contemplating any such exchange, rollover or transfer of a Contract should
contact a competent tax adviser with respect to the potential effects of such a
transaction.

INCOME PAYMENTS

Amount of Variable Annuity Income Payments

The amount of the first Income Payment is calculated by applying the
Contract Value allocated to each Sub-Account less any applicable premium tax
charge deducted at this time, to the income payment tables in the Contract. The
first Variable Annuity Income Payment is divided by the Sub-Account's then
current Annuity Unit Value to determine the number of Annuity Units upon which
later Income Payments will be based. Variable Annuity Income Payments after the
first will be equal to the sum of the number of Annuity Units determined in this
manner for each Sub-Account times the then current Annuity Unit Value for each
respective Sub-Account.

The value of an Annuity Unit in each Sub-Account of the Variable Account is
set at $10. Annuity Units in each Sub-Account are valued separately and Annuity
Unit Values will depend upon the investment experience of the particular
Portfolios in which the Sub-Account invests. The value of the Annuity Unit for
each Sub-Account at the end of any Valuation Period is calculated by: (a)
multiplying the prior value by the Sub-Account's Net Investment Factor during
the period; and then (b) dividing the product by the sum of 1.0 plus the assumed
investment rate for the period. The assumed investment rate adjusts for the
interest rate assumed in the annuity tables used to determine the dollar amount
of the first Variable Annuity Income Payment, and is an effective annual rate of
4.0%.

Currently, the amount of the first Income Payment paid under an Annuity
Option is determined using 4% interest and the 1971 Individual Annuity Mortality
Table with the following age adjustment (The revised Contract is based on the
1983A Individual Annuity Mortality Table.) An annuitant's age at his or her last
birthday on or prior to the Income Starting Date will be set back one year each
six full years between January 1, 1971 and the Income Starting Date (except in
the case of Contracts based on the 1983A Table). Due to judicial or legislative
developments regarding the use of tables which do not differentiate on the basis
of sex, in some cases different annuity tables may be used.

GENERAL MATTERS

Additions, Deletions or Substitutions of Investments

The Company retains the right, subject to any applicable law, to make
additions to, deletions the 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 Owners on a
basis to be determined by the Company. The Company may also eliminate one or
more Sub-Accounts if, in its sole discretion, marketing, tax or investment
conditions so warrant.

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

Reinvestment

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

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 the 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 II 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

Freedman, Levy, Kroll & Simonds Washington, D.C., has advised the Company
on certain federal securities law matters. All matters of New York law
pertaining to the Contracts, including the validity of the Contracts and the
Company's right to issue such Contracts under New York insurance law, have been
passed upon by Michael J. Velotta, General Counsel of Allstate Life Insurance
Company of New York.

FEDERAL TAX MATTERS

Introduction

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 Nonnatural Owner Rule

There are several exceptions to the general rule that contracts held by a
nonnatural 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
nonnatural 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.

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 nonnatural 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 nonnatural 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.

Roth Individual Retirement Annuities

Section 408A of the Code permits eligible individuals to make nondeductible
contributions to an individual retirement program known as a Roth Individual
Retirement Annuity. Roth Individual Retirement Annuities are subject to
limitations on the amount that can be contributed and on the time when
distributions may commence. "Qualified distributions" from Roth Individual
Retirement Annuities are not includible in gross income. "Qualified
distributions" are any distributions made more than five taxable years after the
taxable year of the first contribution to the Roth Individual Retirement
Annuity, and which are made on or after the date the individual attains age 59
1/2 , made to a beneficiary after the owner's death, attributable to the owner
being disabled or for a first time home purchase (first time home purchases are
subject to a lifetime limit of $10,000). "Nonqualified distributions" are
treated as made from contributions first and are includible in gross income to
the extent such distributions exceed the contributions made to the Roth
Individual Retirement Annuity. The taxable portion of a "nonqualified
distribution" may be subject to the 10% penalty tax on premature distributions.
Subject to certain limitations, a traditional Individual Retirement Account or
Annuity may be converted or "rolled over" to a Roth Individual Retirement
Annuity. The taxable portion of a conversion or rollover distribution is
includible in gross income, but is exempted from the 10% penalty tax on
premature distributions.

Simplified Employee Pension Plans

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

Tax Sheltered Annuities

Section 403(b) of the Code permits public school employees and employees of
certain types of tax-exempt organizations (specified in Section 501(c)(3) of the
Code) to have their employers purchase annuity contracts for them, and subject
to certain limitations, to exclude the purchase payments from the employees'
gross income. An annuity contract used for a Section 403(b) plan must provide
that distributions attributable to salary reduction contributions made after
12/31/88, and all earnings on salary reduction contributions, may be made only
on or after the date 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). These limitations do not
apply to withdrawals where the Company is directed to transfer some or all of
the contract value to another 403(b) plan.

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 compensation without paying
current taxes. The employees must be participants in an eligible deferred
compensation plan. To the extent the contracts are used in connection with an
eligible plan, employees are considered general creditors of the employer and
the employer as owner of the contract has the sole right to the proceeds of the
contract. Generally, under the nonnatural owner rules, such contracts are not
treated as annuity contracts for federal income tax purposes. Under these plans,
contributions made for the benefit of the employees will not be includible in
the employees' gross income until distributed for the plan. However, under a 457
plan all the compensation deferred under the plan must remain solely the
property of the employer, subject only to the claims of the employer's general
creditors, until such time as made available to the employee of a beneficiary.

SALES COMMISSIONS

The Company pays Dean Witter for its underwriting and general agent's
services a sales commission of up to 6.0% of the Purchase Payments and sales
administration expense allowance of up to 0.125% of the average net assets of
the Fixed Account. These commissions are intended to cover Dean Witter's
expenses in distributing and selling the Contracts.

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. The Company paid Dean Witter sales
commission in the amount of $1,718,335 in 1997, $1,666,490 in 1996, and
$1,116,188 in 1995 for its services under these agreements. These fees are based
on sales commissions.

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 agents, 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.

<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, 1997 and
1996, and the related Statements of Operations, Shareholder's Equity and Cash
Flows for each of the three years in the period ended December 31, 1997. 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 the Company as of December 31, 1997 and
1996, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1997 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 20, 1998

F-1
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF FINANCIAL POSITION

December 31,
------------
($ in thousands) 1997 1996
---- ----
<S> <C> <C> <C>

ASSETS
Investments
Fixed income securities, at fair value (amortized cost
$1,510,110 and $1,378,155) $ 1,756,257 $ 1,500,783
Mortgage loans 114,627 84,657
Policy loans 27,600 25,359
Short-term 9,513 25,855
--------------- ---------------
Total investments 1,907,997 1,636,654

Deferred acquisition costs 71,946 61,559
Accrued investment income 21,725 20,321
Reinsurance recoverables 1,726 2,566
Cash 393 1,027
Other assets 6,167 7,489
Separate Accounts 308,595 260,668
--------------- ---------------
Total assets $ 2,318,549 $ 1,990,284
=============== ===============

LIABILITIES
Reserve for life-contingent contract benefits $ 1,084,409 $ 911,457
Contractholder funds 607,474 572,480
Income taxes payable 1,419 -
Deferred income taxes 16,990 3,692
Other liabilities and accrued expenses 10,985 6,405
Net payable to affiliates 5,267 2,515
Separate Accounts 308,595 260,668
--------------- ---------------
Total liabilities 2,035,139 1,757,217
--------------- ---------------

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 64,479 36,852
Retained income 171,144 148,428
--------------- ---------------
Total shareholder's equity 283,410 233,067
--------------- ---------------
Total liabilities and shareholder's equity $ 2,318,549 $ 1,990,284
=============== ===============
</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,
-----------------------
($ in thousands) 1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
REVENUES
Premiums (net of reinsurance
ceded of $3,087, $2,273 and $2,147) $ 90,366 $ 91,825 $ 126,713
Contract charges 28,597 25,281 21,603
Net investment income 124,887 112,862 104,384
Realized capital gains and losses 701 (1,581) (1,846)
------------- ------------- -------------
244,551 228,387 250,854
------------- ------------- -------------
COSTS AND EXPENSES
Contract benefits (net of reinsurance recoveries
of $1,985, $2,827 and $1,581) 179,872 172,772 198,055
Amortization of deferred acquisition costs 5,023 6,512 5,502
Operating costs and expenses 23,644 16,874 17,864
------------- ------------- -------------
208,539 196,158 221,421
------------- ------------- -------------

INCOME FROM OPERATIONS BEFORE
INCOME TAX EXPENSE 36,012 32,229 29,433
INCOME TAX EXPENSE 13,296 11,668 9,911
------------- ------------- -------------

NET INCOME $ 22,716 $ 20,561 $ 19,522
============= ============= =============
</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,
-----------------------
($ in thousands) 1997 1996 1995
---- ---- ----
<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
Balance, beginning of year 36,852 74,413 (6,891)
Net change 27,627 (37,561) 81,304
-------------- -------------- --------------
Balance, end of year 64,479 36,852 74,413
-------------- -------------- --------------

RETAINED INCOME
Balance, beginning of year 148,428 127,867 108,345
Net income 22,716 20,561 19,522
-------------- -------------- --------------
Balance, end of year 171,144 148,428 127,867
-------------- -------------- --------------
Total shareholder's equity $ 283,410 $ 233,067 $ 250,067
============== ============== ==============

</TABLE>

See notes to financial statements.

F-4
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
($ in thousands) 1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 22,716 $ 20,561 $ 19,522
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation, amortization and other
non-cash items (31,112) (26,172) (22,348)
Realized capital gains and losses (701) 1,581 1,846
Interest credited to contractholder funds 31,667 25,817 26,924
Increase in life-contingent contract
benefits and contractholder funds 68,114 75,217 103,513
Increase in deferred acquisition costs (10,781) (6,859) (5,537)
Increase in accrued investment income (1,404) (1,493) (2,497)
Change in deferred income taxes (1,578) 257 (2,677)
Changes in other operating assets and
liabilities 11,369 (4,234) 3,897
-------------- -------------- --------------
Net cash provided by operating
activities 88,290 84,675 122,643
-------------- -------------- --------------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of fixed income securities 15,723 28,454 13,526
Investment collections
Fixed income securities available for sale 120,061 72,751 30,871
Fixed income securities held to maturity - - 3,067
Mortgage loans 5,365 12,508 6,499
Investment purchases
Fixed income securities available for sale (236,984) (236,252) (142,205)
Fixed income securities held to maturity - - (32,046)
Mortgage loans (35,200) (10,325) (9,864)
Change in short-term investments, net 16,342 (18,598) (45)
Change in policy loans, net (2,241) (2,574) (859)
-------------- -------------- --------------
Net cash used in investing activities (116,934) (154,036) (131,056)
-------------- -------------- --------------

CASH FLOWS FROM FINANCING ACTIVITIES
Contractholder fund deposits 79,384 115,420 76,534
Contractholder fund withdrawals (51,374) (46,504) (68,412)
-------------- -------------- --------------
Net cash provided by financing
activities 28,010 68,916 8,122
-------------- -------------- --------------

NET DECREASE IN CASH (634) (445) (291)
CASH AT BEGINNING OF YEAR 1,027 1,472 1,763
-------------- -------------- --------------
CASH AT END OF YEAR $ 393 $ 1,027 $ 1,472
============== ============== ==============
</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 1997 presentation, certain amounts 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 which include
life specialists, banks, independent agents, 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. Single and flexible premium deferred annuity contracts issued by the
Company are subject to discretionary withdrawal or surrender by the customers,
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 new and proposed federal
and state regulation and legislation that would allow banks greater
participation in the securities and insurance businesses, which will present an
increased level of competition for sales of the Company's life and annuity
products. 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 demand for these products.

Although the Company currently benefits from agreements with financial services
entities who market and distribute its products, consolidation within that
industry and specifically, a change in control of those entities with which the
Company partners, could affect the Company's sales.

Enacted and pending state legislation to permit mutual insurance companies to
convert to a hybrid structure known as a mutual holding company could have a
number of significant effects on the Company by (1) increasing industry
competition through consolidation caused by mergers and acquisitions related to
the new corporate form of business; (2) increasing competition in capital
markets; and (3) reopening stock/mutual company disagreements related to such
issues as taxation disparity between mutual and stock insurance companies.

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 amortized 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 futures contract
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 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 either the hedge or the hedged
item, whichever is shorter, or are reported in shareholder's equity, consistent
with the accounting for the hedged item. Futures contracts 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.

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
contracts as hedges using deferral accounting for anticipatory investment
purchases and sales when the criteria for futures (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 types of 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.

F-7
<PAGE>

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

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 policies are comprised of
contract charges and fees, and are recognized when assessed against the
policyholder account balance. Revenues on most annuities, which are considered
investment contracts, include contract charges and fees for contract
administration and surrenders. These revenues are recognized when levied against
the contract balance. 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
insurance, limited payment contracts and accident and disability insurance,
these costs are amortized in proportion to the estimated revenues on such
business. For universal life-type policies 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, net of deferred income taxes.

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 at the enacted tax
rates. 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 and losses on fixed income securities
carried at fair value.

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 (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, unit investment trusts registered with the Securities and
Exchange Commission).

The assets of the Separate Accounts are carried at fair value. Investment income
and realized capital gains and losses of the Separate Accounts accrue directly
to the contractholders and, therefore, are not included in the 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.

F-8
<PAGE>

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

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
4.00% to 11.00% during 1997. To the extent that unrealized gains on fixed income
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, net of deferred income taxes.

Contractholder funds
Contractholder funds arise from the issuance of individual or group policies and
contracts that include an investment component, including most annuities and
universal life policies. 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 3.30% to 9.75% for those contracts with fixed interest rates
and from 3.25% to 7.75% for those with flexible rates during 1997.

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.

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 $2,171 and $327 in 1997, $1,383 and $1,662 in 1996, and $1,259 and
$278 in 1995, respectively. Included in the reinsurance recoverable at December
31, 1997 and 1996 are amounts due from the Parent of $342 and $965,
respectively.

Structured settlement annuities
AIC, through an affiliate, purchased $12,766, $15,610 and $11,243 of structured
settlement annuities from the Company in 1997, 1996 and 1995, respectively. Of
these amounts, $3,468, $8,517 and $4,164 relate to structured settlement
annuities with life contingencies and are included in premium income in 1997,
1996 and 1995, 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 behalf of the Company. The
cost to the Company is determined by various allocation methods and is primarily
related to the level of services provided. Expenses allocated to the Company
were $27,632, $23,134 and $21,288 in 1997, 1996 and 1995, respectively. A
portion of these expenses related to the acquisition of life and annuity
business is deferred and amortized over the contract period.

F-9
<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
Cost Gains Losses Value
--------- ----- ------ -----
<S> <C> <C> <C> <C>
At December 31, 1997
- --------------------
U.S. government and agencies $ 416,203 $ 126,824 $ (212) $ 542,815
Municipal 35,382 2,449 (22) 37,809
Corporate 803,935 103,700 (479) 907,156
Mortgage-backed securities 215,465 13,442 (166) 228,741
Asset-backed securities 39,125 642 (31) 39,736
-------------- -------------- -------------- --------------
Total fixed income securities $ 1,510,110 $ 247,057 $ (910) $ 1,756,257
============== ============== ============== ==============

At December 31, 1996
- --------------------
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
============== ============== ============== ==============
</TABLE>

Scheduled maturities
The scheduled maturities for fixed income securities are as follows at December
31, 1997:
<TABLE>
<CAPTION>

Amortized
Cost Fair Value
-------------- ---------------
<S> <C> <C>
Due in one year or less $ 18,751 $ 18,839
Due after one year through five years 74,886 77,931
Due after five years through ten years 221,116 237,020
Due after ten years 940,767 1,153,990
--------------- ---------------
1,255,520 1,487,780
Mortgage- and asset-backed securities 254,590 268,477
--------------- ---------------
Total $ 1,510,110 $ 1,756,257
=============== ===============
</TABLE>

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

F-10
<PAGE>

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

Net investment income

Year ended December 31, 1997 1996 1995
- ---------------------- ---- ---- ----
<S> <C> <C> <C>

Fixed income securities $ 116,763 $ 104,583 $ 95,212
Mortgage loans 7,896 7,113 7,999
Other 2,200 2,942 2,744
------------- ------------- -------------
Investment income, before expense 126,859 114,638 105,955
Investment expense 1,972 1,776 1,571
------------- ------------- -------------
Net investment income $ 124,887 $ 112,862 $ 104,384
============== ============= =============

Realized capital gains and losses

Year ended December 31, 1997 1996 1995
- ----------------------- ---- ---- ----

Fixed income securities $ 922 $ (1,522) $ 422
Mortgage loans (221) (59) (2,268)
------------- ------------- -------------
Realized capital gains and losses 701 (1,581) (1,846)
Income tax expense (benefit) 245 (553) (646)
------------- ------------- -------------
Realized capital gains and losses, after tax $ 456 $ (1,028) $ (1,200)
============= ============= =============
</TABLE>

Excluding calls and prepayments, gross gains of $471, $480 and $172 and gross
losses of $105, $2,308 and $105 were realized on sales of fixed income
securities during 1997, 1996 and 1995, respectively.

Unrealized net capital gains
Unrealized net capital gains on fixed income securities included in
shareholder's equity at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Cost/ Unrealized
Amortized Fair Net
Cost Value Gains
------------- ------------- -------------
<S> <C> <C> <C>
Fixed income securities $ 1,510,110 $ 1,756,257 $ 246,147
============= =============
Reserves for life insurance policy benefits (145,455)
Deferred income taxes (34,720)
Deferred acquisition costs and other (1,493)
-------------
Unrealized net capital gains $ 64,479
=============

Change in unrealized net capital gains

Year ended December 31, 1997 1996 1995
- ----------------------- ---- ---- ----

Fixed income securities $ 123,519 $ (82,847) $ 216,975
Reserves for life insurance policy benefits (80,155) 24,300 (89,600)
Deferred income taxes (14,876) 20,224 (43,779)
Deferred acquisition costs and other (861) 762 (2,292)
------------- ------------- -------------
Increase (decrease) in unrealized net
capital gains $ 27,627 $ (37,561) $ 81,304
============= ============= =============
</TABLE>

F-11
<PAGE>

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

Investment loss provisions and valuation allowances
Pretax provisions for investment losses, principally relating to other than
temporary declines in value of fixed income securities and valuation allowances
on mortgage loans were $261, $208 and $2,448 in 1997, 1996 and 1995,
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, 1997 and 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, 1997, 1996 and 1995 is summarized as follows:

1997 1996 1995
---- ---- ----
<S> <C> <C> <C>

Balance at January 1 $ 225 $ 1,952 $ 1,179
Net additions (reductions) 261 (296) 1,923
Direct write-downs - (1,431) (1,150)
----------- -------- --------
Balance at December 31 $ 486 $ 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. There were
no impaired loans during 1997. 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-12
<PAGE>
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
($ IN THOUSANDS)

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 5% of the portfolio at December 31, 1997 and
1996:

(% of municipal bond portfolio carrying value) 1997 1996
---- ----

Ohio 28.4% 25.9%
California 22.7 24.3
Illinois 19.8 19.0
Maryland 8.0 7.8
Maine 5.6 5.7
Minnesota 5.5 5.3
New York 5.4 5.3

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 listed below.
Except for the following, holdings in no other state exceed 5% of the portfolio
at December 31, 1997 and 1996:

(% of commercial mortgage portfolio carrying value) 1997 1996
---- ----

California 47.7% 49.1%
New York 30.5 21.1
Illinois 15.3 21.3

The types of properties collateralizing the commercial mortgage loans at
December 31, are as follows:

(% of commercial mortgage portfolio carrying value) 1997 1996
---- ----

Retail 38.8% 39.1%
Warehouse 25.4 24.2
Office buildings 15.3 14.3
Apartment complex 14.9 14.6
Industrial 4.9 6.8
Other 0.7 1.0
------ ------
100.0% 100.0%
====== ======

The contractual maturities of the commercial mortgage loan portfolio as of
December 31, 1997, for loans that were not in foreclosure are as follows:

Number of Loans Carrying Value Percent
--------------- --------------- -------
1999 3 $ 5,302 4.6%
2000 4 7,927 6.9
2001 5 7,340 6.4
2002 2 6,385 5.6
Thereafter 23 87,673 76.5
----- --------------- ------
Total 37 $ 114,627 100.0%
===== =============== ======

In 1997, $7.3 million of commercial mortgage loans were contractually due. Of
these, 20.9% were paid as due and 79.1% were refinanced at prevailing market
terms.

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

Securities on deposit
At December 31, 1997, fixed income securities with a carrying value of $1,981
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, accrued investment income and cash are generally of a short-term
nature. It is assumed that their carrying value approximates fair value.

Financial assets
The carrying value and fair value of financial assets at December 31, are as
follows:

1997 1996
---- ----
Carrying Fair Carrying Fair
Value Value Value Value
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Fixed income securities $ 1,756,257 $ 1,756,257 $ 1,500,783 $ 1,500,783
Mortgage loans 114,627 120,849 84,657 83,789
Short-term investments 9,513 9,513 25,855 25,855
Policy loans 27,600 27,600 25,359 25,359
Separate Accounts 308,595 308,595 260,668 260,668

</TABLE>

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

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. Separate
Accounts assets are carried in the statements of financial position at fair
value.

Financial liabilities
The carrying value and fair value of financial liabilities at December 31, are
as follows:
<TABLE>
<CAPTION>

1997 1996
---- ----
Carrying Fair Carrying Fair
Value Value Value Value
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Contractholder funds on
investment contracts $437,449 $466,136 $421,642 $430,696
Separate Accounts 308,595 308,595 260,668 260,668

</TABLE>

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

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.

Derivative financial instruments
The Company primarily uses derivative financial instruments to reduce its
exposure to market risk, specifically 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/ Carrying Value
Notional Credit Fair Assets/
Amount Exposure Value (Liabilities)
--------- -------- ----- --------------
At December 31, 1997
- --------------------
<S> <C> <C> <C> <C>
Financial futures contracts $ 29,800 $ - $ (153) $ (810)

At December 31, 1996
- --------------------
Financial futures contracts $ 6,700 $ 56 $ 56 $ 266

</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. Dealer 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.

F-16
<PAGE>

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

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 and liabilities.

Off-balance-sheet financial instruments
Commitments to extend mortgage loans are agreements to lend to a borrower
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, 1997 and 1996, the Company had $18,000 and $6,190 in mortgage
loan commitments which had a fair value of $180 and $62, respectively.

6. Income Taxes

The Company joins the Corporation and its other eligible domestic subsidiaries
in the filing of a consolidated federal income tax return (the "Allstate Group")
and is party to a federal income tax allocation agreement (the "Tax Sharing
Agreement"). Under the Tax Sharing Agreement, the Company paid to or received
from the Corporation the amount, if any, by which the Allstate Group's federal
income tax liability was affected by virtue of inclusion of the Company in the
consolidated federal income tax return. Effectively, this results in the
Company's annual income tax provision being computed, with adjustments, as if
the Company filed a separate return.

Prior to the Distribution, the Corporation and all of its eligible domestic
subsidiaries, including the Company, 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 "Sears Tax Sharing Agreement"). Under the Sears 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 Allstate Group
filed a separate consolidated 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 Sears Tax Sharing Agreement.

F-17
<PAGE>

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

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
Sears Tax Sharing Agreement with respect to the Allstate Group's federal income
tax liability.

The components of the deferred income tax assets and liabilities at December 31,
are as follows:
<TABLE>
<CAPTION>

1997 1996
---- ----
Deferred assets
<S> <C> <C>
Life-contingent contract reserves and
contractholder funds $ 34,084 $ 27,951
Difference in tax bases of investments 742 270
Loss on disposal of discontinued operations 364 375
Other postretirement benefits 352 524
Other assets 255 1,789
--------- --------
Total deferred assets 35,797 30,909
--------- --------

Deferred liabilities
Unrealized net capital gains (34,720) (19,844)
Deferred acquisition costs (15,821) (14,020)
Prepaid commission expense (792) (717)
Other liabilities (1,454) (20)
--------- --------
Total deferred liabilities (52,787) (34,601)
--------- --------
Net deferred liability $ (16,990) $ (3,692)
========= ========
</TABLE>

The components of income tax expense for the year ended December 31, are as
follows:
<TABLE>
<CAPTION>

1997 1996 1995
---- ---- ----

<S> <C> <C> <C>
Current $ 14,874 $ 11,411 $ 12,588
Deferred (1,578) 257 (2,677)
-------- -------- --------
Total income tax expense $ 13,296 $ 11,668 $ 9,911
======== ======== ========
</TABLE>

The Company paid income taxes of $13,350, $11,968 and $12,096 in 1997, 1996 and
1995, respectively. The Company had an income tax payable of $1,419 at December
31, 1997 and an income tax recoverable of $105 at December 31, 1996.

F-18
<PAGE>

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

A reconciliation of the statutory federal income tax rate to the effective
income tax rate on income from operations for the year ended December 31, is as
follows:
<TABLE>
<CAPTION>

1997 1996 1995
---- ---- ----

<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 35.0% 35.0%
State income tax expense 2.2 2.4 2.3
Other (.3) (1.2) (1.3)
---- ---- ----
Effective income tax rate 36.9% 36.2% 36.0%
==== ==== ====
</TABLE>

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, 1997, approximately $389,
will result in federal income taxes payable of $136 if distributed by the
Company. 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.

7. Statutory Financial Information

The following tables reconcile net income for the year ended December 31, and
shareholder's equity at December 31, 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:

Net Income
----------
1997 1996 1995
---- ---- ----

Balance per generally accepted accounting
principles $ 22,716 $ 20,561 $ 19,522
Deferred acquisition costs (10,782) (6,858) (5,537)
Deferred income taxes (1,578) 257 (2,677)
Statutory reserves 7,749 6,101 11,380
Other postretirement and postemployment
benefits (36) (34) 71
Other 522 (1,882) 441
-------- -------- --------
Balance per statutory accounting practices $ 18,591 $ 18,145 $ 23,200
======== ======== ========

Shareholder's Equity
--------------------
1997 1996
---- ----

Balance per generally accepted accounting principles $ 283,410 $ 233,067
Deferred acquisition costs (71,946) (61,559)
Deferred income taxes 16,990 3,692
Unrealized gain/loss on fixed income securities (246,147) (122,628)
Non-admitted assets (4,301) (2,739)
Statutory reserves 207,163 115,725
Other postretirement and postemployment benefits 1,007 1,074
Other (1,556) (1,613)
--------- ---------
Balance per statutory accounting practices $ 184,620 $ 165,019
========= =========

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

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
("NAIC"), 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, statutory net income
or risk-based capital.

Final approval of the NAIC's proposed "Comprehensive Guide" on statutory
accounting principles is expected in early 1998. The requirements may be
effective as early as January 1, 1999, and are not expected to have a material
impact on statutory surplus of the Company.

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 $597, $490 and $446 for the pension
plans in 1997, 1996 and 1995, 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.

F-20
<PAGE>

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

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's 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 note has a fixed
interest rate of 7.9% and matures in 2019. The Corporation expects to make net
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 $164 and $111 in
1997 and 1996, respectively.

F-21
<PAGE>

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

Gross Net
Year Ended December 31, 1997 Amount Ceded Amount
- ---------------------------- ------ ----- ------

Life insurance in force $11,339,990 $ 721,040 $10,618,950
=========== =========== ===========

Premiums and contract charges:
Life and annuities $ 116,167 $ 2,185 $ 113,982
Accident and health 5,846 864 4,982
----------- ----------- -----------
$ 122,013 $ 3,049 $ 118,964
=========== =========== ===========

Gross Net
Year Ended December 31, 1996 Amount Ceded Amount
- ---------------------------- ------ ----- ------

Life insurance in force $ 9,962,300 $ 553,628 $ 9,408,672
=========== =========== ===========

Premiums and contract charges: $ 114,296 $ 1,398 $ 112,898
Life and annuities 5,044 834 4,210
Accident and health ----------- ----------- -----------
$ 119,340 $ 2,232 $ 117,108
=========== =========== ===========

Gross Net
Year Ended December 31, 1995 Amount Ceded Amount
- ---------------------------- ------ ----- ------

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
=========== =========== ===========

F-22
<PAGE>

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

Balance at Charged to Balance at
Beginning Costs and End of
of Period Expenses Deductions Period
---------- ---------- ---------- ----------
Year Ended December 31, 1997

<S> <C> <C> <C> <C>
Allowance for estimated losses
on mortgage loans $ 225 $ 261 $ - $ 486
============ ============ ============ ============

Year Ended December 31, 1996

Allowance for estimated losses
on mortgage loans $ 1,952 $ (296) $ 1,431 $ 225
============ ============ ============ ============

Year Ended December 31, 1995

Allowance for estimated losses
on mortgage loans $ 1,179 $ 1,923 $ 1,150 $ 1,952
============ ============ ============ ============

</TABLE>

F-23

<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 II (the "Account") as of December 31, 1997, and
the related statement of operations for the year then ended and the statements
of changes in net assets for the year ended December 31, 1997 of the Money
Market, High Yield, Equity, Quality Income Plus, Strategist, Dividend Growth,
Utilities, European Growth, Capital Growth, Global Dividend Growth, Pacific
Growth, Capital Appreciation, and Income Builder portfolios of the Dean Witter
Variable Investment Series that comprise the Account and for the year 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 of the Dean Witter Variable
Investment Series 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, 1997. 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, 1997, 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 20, 1998

<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II

STATEMENT OF NET ASSETS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------

($ and shares in thousands)

ASSETS
Investments in the Dean Witter Variable Investment Series Portfolios:
<S> <C>
Money Market, 14,661 shares (cost $14,661) $ 14,661
High Yield, 1,908 shares (cost $12,219) 11,674
Equity, 989 shares (cost $24,219) 33,195
Quality Income Plus, 2,785 shares (cost $29,524) 29,995
Strategist, 2,255 shares (cost $28,643) 33,373
Dividend Growth, 3,938 shares (cost $55,939) 85,056
Utilities, 1,382 shares (cost $18,410) 25,696
European Growth, 848 shares (cost $14,044) 19,967
Capital Growth, 309 shares (cost $4,513) 5,651
Global Dividend Growth, 1,502 shares (cost $17,458) 20,861
Pacific Growth, 695 shares (cost $6,733) 4,254
Capital Appreciation, 76 shares (cost $841) 865
Income Builder, 140 shares (cost $1,530) 1,648
--------

Total assets 286,896

LIABILITIES
Payable to Allstate Life Insurance Company of New York:
Accrued contract maintenance charges 81
--------

Net assets $286,815
========
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II

STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------------

($ in thousands)
Dean Witter Variable Investment Series Portfolios
---------------------------------------------------------------------------------
Quality
Money High Income Dividend
Market Yield Equity Plus Strategist Growth Utilities
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

INVESTMENT INCOME
Dividends .......................... $ 772 $ 1,301 $ 1,983 $ 1,980 $ 1,670 $ 5,399 $ 1,108
Charges from Allstate Life Insurance
Company of New York:
Mortality and expense ............ (189) (133) (341) (368) (401) (988) (289)
Administrative expense ........... (15) (11) (27) (29) (32) (79) (23)
-------- -------- -------- -------- -------- -------- --------
Net investment(loss) ......... 568 1,157 1,615 1,583 1,237 4,332 796

REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from sales
of investments:
Proceeds from sale ............. 8,360 1,250 2,104 4,496 2,976 8,306 4,062
Cost of investments sold........ (8,360) (1,264) (1,647) (4,576) (2,696) (5,501) (3,362)
-------- -------- -------- -------- -------- -------- --------
Net realized gains (losses) .. -- (14) (457) (80) 280 2,805 700
-------- -------- -------- -------- -------- -------- --------

Change in unrealized gains (losses) -- (76) 6,140 1,182 2,086 9,518 3,847
-------- -------- -------- -------- -------- -------- --------

Net gains (losses) on investments -- (90) 6,597 1,102 2,366 12,323 4,547
-------- -------- -------- -------- -------- -------- --------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS .................. $ 568 $ 1,067 $ 8,212 $ 2,685 $ 3,603 $ 16,655 $ 5,343
======== ======== ======== ======== ======== ======== ========

Dean Witter Variable Investment Series Portfolios
---------------------------------------------------------------------------------
Global
European Capital Dividend Pacific Capital Income
Growth Growth Growth Growth Appreciation Builder Total
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

INVESTMENT INCOME
Dividends .......................... $ 1,205 $ 516 $ 1,142 $ 113 $ -- $ 41 $ 17,230
Charges from Allstate Life Insurance
Company of New York:
Mortality and expense ............ (242) (60) (243) (89) (5) (9) (3,357)
Administrative expense ........... (19) (5) (19) (7) -- (1) (267)
-------- -------- -------- -------- -------- -------- --------
Net investment(loss) ......... 944 451 880 17 (5) 31 13,606

REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from sales
of investments:
Proceeds from sale ............. 2,369 737 1,441 1,944 40 50 38,135
Cost of investments sold ....... (1,679) (558) (1,185) (2,315) (40) (49) (33,232)
-------- -------- -------- -------- -------- -------- --------
Net realized gains (losses) .. 690 179 256 (371) -- 1 4,903

Change in unrealized gains (losses 985 220 638 (2,588) 24 118 22,094
-------- -------- -------- -------- -------- -------- --------

Net gains (losses) on investment 1,675 399 894 (2,959) 24 119 26,997
-------- -------- -------- -------- -------- -------- --------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS .................. $ 2,619 $ 850 $ 1,774 $ (2,942) $ 19 $ 150 $ 40,603
======== ======== ======== ======== ======== ======== ========

See notes to financial statements.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II

STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------

($ and units in thousands, except value per unit)

Dean Witter Variable Investment Series Portfolios
---------------------------------------------------------------------------------------
Quality
Money High Income Dividend
Market Yield Equity Plus Strategist Growth Utilities
---------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ...... $ 568 $ 1,157 $ 1,615 $ 1,583 $ 1,237 $ 4,332 $ 796
Net realized gains (losses) ....... -- (14) 457 (80) 280 2,805 700
Change in unrealized gains (losses) -- (76) 6,140 1,182 2,086 9,518 3,847
--------- --------- --------- --------- --------- --------- ---------

Change in net assets resulting
from operations ............. 568 1,067 8,212 2,685 3,603 16,655 5,343

FROM CAPITAL TRANSACTIONS
Deposits .......................... 6,064 1,493 3,214 1,148 2,496 8,237 560
Benefit payments .................. (141) (36) (351) (498) (141) (601) (256)
Payments on termination ........... (2,101) (721) (2,153) (2,534) (2,935) (10,838) (2,179)
Contract maintenance charges ...... (6) (5) (16) (16) (21) (45) (14)
Transfers among the portfolios and
with the Fixed Account - net .... (4,803) 99 2,304 (1,304) 427 2,845 (1,509)
--------- --------- --------- --------- --------- --------- ---------
Change in net assets resulting
from capital transactions.... (987) 830 2,998 (3,204) (174) (402) (3,398)
--------- --------- --------- --------- --------- --------- ---------

INCREASE (DECREASE) IN NET ASSETS.. (419) 1,897 11,210 (519) 3,429 16,253 1,945

NET ASSETS AT BEGINNING OF YEAR ... $ 15,076 9,775 21,977 30,506 29,933 68,778 23,742
--------- --------- --------- --------- --------- --------- ---------

NET ASSETS AT END OF YEAR ........ $ 14,657 $ 11,672 $ 33,187 $ 29,987 $ 33,362 $ 85,031 $ 25,687
========= ========= ========= ========= ========= ========= =========
Net asset value per unit at end
of year ....................... $ 12.55 $ 26.65 $ 38.87 $ 17.98 $ 21.54 $ 32.59 $ 24.21
========= ========= ========= ========= ========= ========= =========

Units outstanding at end of year .. 1,168 438 854 1,668 1,549 2,610 1,062
========= ========= ========= ========= ========= ========= =========

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
YEAR ENDED DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------

($ and units in thousands, except value per unit)

Dean Witter Variable Investment Series Portfolios
----------------------------------------------------------------------------------------
Global
European Capital Dividend Pacific Capital Income
Growth Growth Growth Growth Appreciation Builder Total
FROM OPERATIONS ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ...... $ 944 $ 451 $ 880 $ 17 $ (5) $ 31 $ 13,606
Net realized gains (losses) ....... 690 179 256 (371) -- 1 4,903
Change in unrealized gains (losses) 985 220 638 (2,588) 24 118 22,094
--------- --------- --------- --------- --------- --------- ---------

Change in net assets resulting
from operations ............. $ 2,619 850 1,774 (2,942) 19 150 40,603

FROM CAPITAL TRANSACTIONS
Deposits .......................... 2,373 657 3,319 621 316 728 31,226
Benefit payments .................. (156) (13) (116) (49) -- -- (2,358)
Payments on termination ........... (1,563) (343) (1,752) (468) (2) (6) (27,595)
Contract maintenance charges ...... (11) (3) (12) (3) -- (1) (153)
Transfers among the portfolios and
with the Fixed Account - net .... (184) 374 1,391 (1,094) 533 776 (145)
--------- --------- --------- --------- --------- --------- ---------
Change in net assets resulting
from capital transaction .... 459 672 2,830 (993) 847 1,497 975
--------- --------- --------- --------- --------- --------- ---------

INCREASE (DECREASE) IN NET ASSETS.. 3,078 1,522 4,604 (3,935) 866 1,647 41,578

NET ASSETS AT BEGINNING OF YEAR ... 16,885 4,125 16,250 8,190 -- -- 245,237
--------- --------- --------- --------- --------- --------- ---------

NET ASSETS AT END OF YEAR ........ $ 19,963 $ 5,647 $ 20,854 $ 4,255 $ 866 $ 1,647 $ 286,815
========= ========= ========= ========= ========= ========= =========

Net asset value per unit at end
of year ....................... $ 27.87 $ 20.18 $ 15.30 $ 6.06 $ 11.18 $ 12.08
========= ========= ========= ========= ========= =========

Units outstanding at end of year .. 717 280 1,362 702 77 136
========= ========= ========= ========= ========= =========

See notes to financial statements.
</TABLE>

<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II

STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------

($ and units in thousands, except value per unit)

Dean Witter Variable Investment Series Portfolios
-----------------------------------------------------------------------------
Quality
Money High Income Dividend
Market Yield Equity Plus Strategist Growth
-----------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ................... $ 481 $ 878 $ 2,150 $ 1,727 $ 1,000 $ 2,016
Net realized gains (losses) .................... -- (41) 119 (157) 178 847
Change in unrealized gains (losses) ............ -- (32) (378) (1,699) 2,509 9,042
--------- --------- --------- --------- --------- ---------
Change in net assets resulting from
operations ................................ 481 805 1,891 (129) 3,687 11,905

FROM CAPITAL TRANSACTIONS
Deposits ....................................... 5,196 2,216 4,073 1,274 1,305 8,044
Benefit payments ............................... (55) (10) (105) (275) (100) (447)
Payments on termination ........................ (1,541) (347) (511) (1,880) (2,978) (3,461)
Contract maintenance charges ................... (7) (5) (12) (18) (21) (40)
Transfers among the portfolios and with the
Fixed Account - net ........................... (366) 49 1,300 (2,867) (1,400) 2,142
--------- --------- --------- --------- --------- ---------

Change in net assets resulting from capital
transactions............................... 3,227 1,903 4,745 (3,766) (3,194) 6,238
--------- --------- --------- --------- --------- ---------

INCREASE (DECREASE) IN NET ASSETS .............. 3,708 2,708 6,636 (3,895) 493 18,143

NET ASSETS AT BEGINNING OF YEAR ................ 11,368 7,067 15,341 34,401 29,440 50,635
--------- --------- --------- --------- --------- ---------

NET ASSETS AT END OF YEAR ...................... $ 15,076 $ 9,775 $ 21,977 $ 30,506 $ 29,933 $ 68,778
========= ========= ========= ========= ========= =========

Net asset value per unit at end of year ........ $ 12.08 $ 24.14 $ 28.67 $ 16.40 $ 19.20 $ 26.30
========= ========= ========= ========= ========= =========

Units outstanding at end of year ............... 1,246 405 767 1,860 1,559 2,615
========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------

($ and units in thousands, except value per unit)
Dean Witter Variable Investment Series Portfolios
---------------------------------------------------------------------------
Global
European Capital Dividend Pacific
Utilities Growth Growth Growth Growth Total
---------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) .................. $ 622 $ 530 $ 19 $ 427 $ (9) $ 9,841
Net realized gains (losses) ................... 388 153 90 75 12 1,664
Change in unrealized gains (losses) ........... 651 2,748 223 1,476 55 14,595
--------- --------- --------- --------- --------- ---------
Change in net assets resulting from
operations................................. 1,661 3,431 332 1,978 58 26,100

FROM CAPITAL TRANSACTIONS
Deposits ...................................... 1,052 1,959 590 3,269 1,620 30,598
Benefit payments .............................. (49) (108) (2) (111) (57) (1,319)
Payments on termination ....................... (1,153) (304) (216) (485) (175) (13,051)
Contract maintenance charges .................. (15) (10) (2) (10) (5) (145)
Transfers among the portfolios and with the
Fixed Account - net ......................... (2,252) 997 166 1,579 1,175 523
--------- --------- --------- --------- --------- ---------

Change in net assets resulting from capital
transactions .............................. (2,417) 2,534 536 4,242 2,558 16,606
--------- --------- --------- --------- --------- ---------

INCREASE (DECREASE) IN NET ASSETS ............. (756) 5,965 868 6,220 2,616 42,706

NET ASSETS AT BEGINNING OF YEAR ............... 24,498 10,920 3,257 10,030 5,574 202,531
--------- --------- --------- --------- --------- ---------

NET ASSETS AT END OF YEAR ..................... $ 23,742 $ 16,885 $ 4,125 $ 16,250 $ 8,190 $ 245,237
========= ========= ========= ========= ========= =========

Net asset value per unit at end of year ....... $ 19.30 $ 24.33 $ 16.42 $ 13.84 $ 9.86
========= ========= ========= ========= =========

Units outstanding at end of year .............. 1,230 694 251 1,174 831
========= ========= ========= ========= =========

See notes to financial statements.
</TABLE>
<PAGE>

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II

NOTES TO FINANCIAL STATEMENTS
TWO YEARS ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------

1. ORGANIZATION

Allstate Life of New York Variable Annuity Account II (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 of Allstate Insurance Company, which is wholly
owned by The Allstate 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
(the "Fixed Account"). The Account, in turn, invests in shares of the
portfolios of the Dean Witter Variable Investment Series (the "Fund"). ALNY
provides administrative and insurance services to the Account for a fee.

Dean Witter Reynolds Inc., a wholly owned subsidiary of Morgan Stanley,
Dean Witter, Discover & 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 Morgan Stanley, Dean Witter, Discover & Co., is the
investment manager for the Fund. InterCapital receives investment
management fees from the Fund.

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.

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

Federal Income Taxes - The Account is intended to qualify as a segregated
asset account as defined in the Internal Revenue Code ("Code"). As such,
the operations of the Account are included with and taxed as a part of
ALNY. ALNY is taxed as a life insurance company under the Code. Under
current law, no federal income taxes are payable by the Account.

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

3. CONTRACT MAINTENANCE, MORTALITY AND EXPENSE RISK, AND ADMINISTRATIVE
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 equal to 1.25% per annum of the
daily net assets of the Account. ALNY guarantees that the rate of this
charge will not increase over the life of the contract.

ALNY deducts administrative expense charges daily at a rate equal to .10%
per annum of the daily net assets of the Account. This charge is designed
to cover administrative expense.

4. FINANCIAL INSTRUMENTS

The investments of the Account 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.

<PAGE>

5. UNITS ISSUED AND REDEEMED

Units issued and redeemed by the Account during 1997 were as follows:

<TABLE>
<CAPTION>
Dean Witter Variable Investment Series Portfolios
---------------------------------------------------------------------------------
(Units in thousands) Quality
Money High Income Dividend
Market Yield Equity Plus Strategist Growth Utilities
---------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C>
Units outstanding at beginning year 1,246 405 767 1,860 1,559 2,615 1,230

Unit activity during 1997:
Issued ........................ 767 90 182 92 172 421 36
Redeemed ...................... (845) (57) (95) (284) (182) (426) (204)
------ ------ ------ ------ ------ ------ ------

Units outstanding at end of year .. 1,168 438 854 1,668 1,549 2,610 1,062
====== ====== ====== ====== ====== ====== ======

Dean Witter Variable Investment Series Portfolios
------------------------------------------------------------------------
(Units in thousands) Global
European Capital Dividend Pacific Capital Income
Growth Growth Growth Growth Appreciation Builder
------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
Units outstanding at beginning year 694 251 1,174 831 -- --

Unit activity during 1997:
Issued ........................ 138 70 349 131 81 141
Redeemed ...................... (115) (41) (161) (260) (4) (5)
------ ------ ------ ------ ------ ------

Units outstanding at end of year .. 717 280 1,362 702 77 136
====== ====== ====== ====== ====== ======

</TABLE>

Units relating to accrued contract maintenance charges are included in units
redeemed.

******

<PAGE>

PART C
OTHER INFORMATION

24A. FINANCIAL STATEMENTS

PART B: Financial Statements for Allstate Life Insurance Company of New
York and Allstate Life of New York Variable Annuity Account II

24B. EXHIBITS

The following exhibits: The following exhibits correspond to those required
by item 24 (b) of Form N-4:

(1) Resolution of the Board of Directors of Allstate Life Insurance Company of
New York authorizing establishment of the Variable Annuity Account II**
(2) Not Applicable
(3) 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) Form of Participation Agreement****
(9) Opinion of Robert S. Seiler, Senior Vice President, Secretary and General
Counsel of Allstate Life Insurance Company of New York**
(10) (a) Consent of Accountants
(b) Consent of Attorneys
(11) Not applicable
(12) Not applicable
(13) Performance Data*
(99) Powers of Attorney*, **, ****

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

* Previously filed in Post-Effective Amendment No. 12 to this Form N-4
Registration Statement on February 2, 1998.
** Previously filed in Post-Effective Amendment No. 10 to this Form N-4
Registration Statement on December 31, 1996.
*** Incorporated herein by reference to Pre-Effective Amendment No. 1 in Form
N-4 Registration Statement No. 33-65381 dated September 20, 1996.
**** Previously filed in Post-Effective Amendment No. 9 to this Form N-4
Registration Statement on April 30, 1996.

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
Marla G. Friedman* Director and Vice President
Cleveland Johnson, Jr.* 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
Timothy H. Plohg* Director and Vice President
Karen C. Gardner* Vice President
Peter H. Heckman* Vice President
Thomas A. McAvity, Jr.* 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
Mark A. Bishop* Assistant Treasurer
Barbara S. Brown* Assistant Treasurer
Dorothy E. Even* Assistant Vice President
Judith P. Greffin* Assistant Vice President
Peter S. Horos* Assistant Treasurer
John R. Hunter* Assistant Vice President
Thomas C. Jensen* Assistant Treasurer
Emma M. Kalaidjian* Assistant Secretary
Paul N. Kierig* Assistant Secretary and Assistant General Counsel
Kenneth S. Klimala* Assistant Vice President
Ronald A. Mendel* Assistant Treasurer
Mary J. McGinn* Assistant Secretary
Deborah K. Miller* Assistant Treasurer
Barry S. Paul* Assistant Vice President
C. Nelson Strom* Assistant Vice President and Corporate Actuary
Brenda D. Sneed* Assistant Secretary
Patricia W. Wilson* Assistant Vice President
Ralph A. Bergholtz* Assistant Treasurer
D. Steven Boger* Assistant Vice President
Adrian B. Corbiere* Assistant Treasurer
Louise J. Walton* Assistant Treasurer
Jerry D. Zinkula* Assistant Treasurer

* Principal business address is 3100 Sanders Road, Northbrook, Illinois
60062.
** Principal business address is One Allstate Drive, Farmingville, New York
11738.

26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH DEPOSITOR OR REGISTRANT
Incorporated herein by reference to the Form 10-K Report, Commission File #
1-11840, of The Allstate Corporation.

27. NUMBER OF CONTRACT OWNERS
As of March 27, 1998 there were in force 470 qualified and 4,976
non-qualified contract owners. The Registrant began operations on September
24, 1991.

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.

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 Reynolds Inc. is the principal underwriter for the following
affiliated investment companies:

Allstate Life of New York Variable Annuity Account
Northbrook Variable Annuity Account
Northbrook Variable Annuity Account II

29b. PRINCIPAL UNDERWRITER

Name and Principal Business Positions and Offices
Address of Each Such Person with Underwriter
- ---------------------------------------- -------------------------------
DEAN WITTER REYNOLDS INC. UNDERWRITER
("DEAN WITTER")
<S> <C>
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
Alfred J. Golden Executive Vice President
E. Davisson Hardman, Jr. Executive Vice President
Mitchell M. Merin Executive Vice President, Chief Administrative Officer and Director
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
Mary E. Curran Senior Vice President
David Diaz 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
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.
</TABLE>

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
Name of Discounts Redemption
Principal and or Brokerage
Underwriter Commissions Annuitization Commissions Compensation
- ----------- ----------- ------------- ----------- ------------
Dean Witter $1,718,335
Reynolds Inc.

30. LOCATION OF ACCOUNTS AND RECORDS
Allstate Life Insurance Company of New York
One Allstate Drive
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 CONTRACT 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 risks 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 II,
certifies that it meets the requirements of Securities Act Rule 485 (b) for
effectiveness of this amended Registration Statement and has caused this amended
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 this 15th day of April 1998.

ALLSTATE LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT II
(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 Secretary Vice President, Secretary and
General Counsel

As required by the Securities Act of 1933, this amended Registration
Statement has been duly signed below by the following Directors and Officers of
Allstate Life Insurance Company of New York on the 15th day of April, 1998.

<S> <C>
*/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
- ------------------------------ General Counsel
Michael J. Velotta

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

*/MARLA G. FRIEDMAN Director and Vice President
- ------------------------------
Marla G. Friedman

*/VINCENT A. FUSCO Director and Chief Operations Officer
- ------------------------------
Vincent A. Fusco

*/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.

*/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

*/PATRICIA W. WILSON Director
- ------------------------------
Patricia W. Wilson

*/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

</TABLE>

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

Exhibit 3

AGREEMENT TO PURCHASE SHARES

THIS AGREEMENT, made and entered into this the 30th day of June, 1993, and
amended as of the 15th day of March, 1995, by and between ALLSTATE LIFE
INSURANCE COMPANY OF NEW YORK (hereinafter the "Company"), on its own behalf and
on behalf of the Allstate Life Insurance Company of New York Variable Annuity
Account (hereinafter the "Account"), a separate account of the Company, and DEAN
WITTER VARIABLE INVESTMENT SERIES, an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter the "Trust")
and DEAN WITTER DISTRIBUTORS INC. (hereinafter the "Distributor").

WHEREAS, by resolution of its Board of Directors on June 26, 1987, the
Company established the Account to set aside and invest assets attributable to
certain variable annuity contracts (hereinafter the "Contracts") issued by the
Company;

WHEREAS, the Company has registered the Account as a unit investment trust
under the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act");

WHEREAS, the Securities and Exchange Commission (hereinafter "S.E.C.")
declared the Account's registration statement of the Contract filed under the
Securities Act of 1933, as amended, (hereinafter the "1933 Act") effective on
February 15, 1989;

WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered as such under the 1940 Act and has filed
its registration statement with the S.E.C. which declared such registration
statement effective on October 5, 1983;

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

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

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

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

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

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

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

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

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

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

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

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

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

8. Investment of Assets. The Trust agrees to invest its assets in
accordance with the representations made to the Internal Revenue Service in
connection with the Company's request for a private letter ruling regarding the
ownership of the Trust's shares attached as Exhibit "A:' and in accordance with
Section 817(h) of the Internal Revenue Code and Treasury Regulation 1.817-5, as
amended from time to time, and any Treasury interpretations thereof, relating to
the diversification requirements for variable annuity contracts and any
amendments or other modifications to such Section or Regulations.

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

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

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

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

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

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

14. Company's Warranty. The Company represents and warrants that it is an
insurance company duly organized and in good standing under New York law and
that it has legally and validly established the Account under Section 424.40 of
the New York Insurance Laws and has registered the Account as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for certain Contracts. The Company further represents and
warrants that the Contracts will be registered under the 1933 Act and the
Contracts will be issued and sold in compliance with all applicable Federal and
State laws.

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

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

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

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

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

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

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

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

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

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

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

(ii) arise out of the Trust's or Distributor's failure, whether
unintentional or in good faith or otherwise, to comply with the
representations made to the Internal Revenue Service attached as Exhibit
"A:' in connection with the request for a private letter ruling regarding
the ownership of Trust shares; or

(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in registration statement
or prospectus or sales literature of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not apply as to
the Company's Indemnified Parties if such statement or omission was made in
reliance upon and in conformity with information furnished to the Trust or
Distributor by or on behalf of the Company for use in the registration
statement or prospectus for the Trust or in sales literature (or any
amendment or supplement) or otherwise for use in connection with the sale
of the Contracts or Trust shares; or

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

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

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

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

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

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

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

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

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

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

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

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

(g) If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Trust and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable;
and (b) paragraphs 11(a), 11(b), 20(a), 20(b), 20(c), 20(d), 20(e) and 20(f) of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such paragraphs are contained in such
Rule(s) as so amended or adopted.

21. Duration of this Agreement. This Agreement, as amended, shall remain in
force until April 30, 1995 and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually by the Trustees of
the Trust, or by the vote of a majority of the outstanding voting securities of
the Trust, cast in person or by proxy. Ibis Agreement also may be terminated in
accordance with paragraph 16 hereof.

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

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

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

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement, as
amended, to be duly executed as of March 15, 1995.

Company:

ATTEST: ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

By:

Trust:

ATTEST: DEAN WITTER VARIABLE INVESTMENT SERIES

By:

Distributor:

ATTEST: DEAN WITTER DISTRIBUTORS INC.

Exhibit (10)(a)

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post-Effective Amendment No. 14 to Registration
Statement No. 033-35445 of Allstate Life Insurance of New York Variable Annuity
Account II of Allstate Life Insurance Company of New York on Form N-4 of our
report dated February 20, 1998 relating to the financial statements and
financial statement schedules of Allstate Life Insurance Company of New York and
our report dated February 20, 1998 relating to the financial statements of
Allstate Life of New York Variable Annuity Account II, contained in the
Statement of Additional Information (which is incorporated by reference in the
Prospectus of Allstate Life of New York Variable annuity Account II 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 13, 1998

Exhibit (10)(b)

CONSENT OF
FREEDMAN, LEVY, KROLL & SIMONDS

We hereby consent to the reference to our firm under the caption "Legal
Matters" in the statement of additional information contained in Post-Effective
Amendment No. 14 to the Form N-4 Registration Statement of Allstate Life
Insurance Company of New York (File No. 33-35445).

FREEDMAN, LEVY, KROLL & SIMONDS

Washington, DC
April 15, 1998