ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A, N-4 EL/A, 1996-09-23

ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
N-4 EL/A, 1996-09-23

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 20, 1996
FILE NO. 33-65381
------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. 1 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940

AMENDMENT NO. 1 /X/
-----------------------------------------------------------------------------
ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
(EXACT NAME OF REGISTRANT)

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
ONE ALLSTATE DRIVE
FARMINGVILLE, NEW YORK 11738
(NAME OF DEPOSITOR)

MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
3100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
847/402-2400
(NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE)

COPIES TO:

STEPHEN E. ROTH, ESQUIRE JOHN R. HEDRICK, ESQUIRE
SUTHERLAND, ASBILL AND BRENNAN ALLSTATE LIFE FINANCIAL SERVICES, INC.
1275 PENNSYLVANIA AVENUE 3100 SANDERS ROAD
WASHINGTON, D.C. 20004-2404 NORTHBROOK, IL 60062

Approximate date of proposed public offering: As soon as practicable after
the effective date of the Registration Statement.

The Registrant has elected pursuant to Rule 24f-2 to register an indefinite
number of securities. The requisite $500 24f-2 filing fee was paid at time of
initial registration.

The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
<PAGE>

CROSS REFERENCE SHEET

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

Item of Form N-4 Prospectus Caption
- ---------------- ------------------
Part A: INFORMATION REQUIRED IN A PROSPECTUS

1. Cover Page...................................................... Cover Page
2. Definitions....................................................... Glossary
3. Synopsis Highlights;.................. Summary of Variable Account Expenses
4. Condensed Financial.................................................... ---
(a) Chart................................................... Not Applicable
(b) MM Yield................................................ Not Applicable
(c) Location of Others................................ Financial Statements
5. General................................................................ ---
(a) Depositor...................Allstate Life Insurance Company of New York
(b) Registrant........................................ The Variable Account
(c) Portfolio Company..The Fund Series; AIM Variable Insurance Funds, Inc.;
Investment Advisors for the Fund
(d) Fund Prospectus.......................... AIM Variable Insurance Funds;
(e) Voting Rights............................................ Voting Rights
(f) Services.................................... Charges & Other Deductions
Contract Maintenance Charge
6. Deductions & Expenses........................... Charges & Other Deductions
(a) General..................................... Charges & Other Deductions
(b) Sales Load Percent................................... Withdrawal Charge
(c) Special Purchase Plans.................................. Not Applicable
(d) Commissions.............................. Distribution of the Contracts
(e) Expenses -- Registrant ..................... Charges & Other Deductions
(f) Fund Expenses.................... Summary of Variable Account Expenses;
Expenses of the Funds
(g) Organizational Expenses................................. Not Applicable

7. Contracts.............................................................. ---
(a) Persons with Rights..... Benefits under the Contract; Payout Start Date
for Income Payments; Voting Rights;
Assignments;Beneficiary
(b)(i) Allocation of Purchase Payments..... Allocation of Purchase Payments
(ii) Transfers.................................. Transfers among portfolios
(iii) Exchanges............................................. Not Applicable

<PAGE>

(c) Changes...................................................Modification
(d) Inquiries...........................................Customer Inquiries
8. Annuity Period........................Payout Start Date for Income Payments
(a) Material Factors.................... Amount of Variable Annuity Income
Payments
(b) Dates........................... Payout Start Date for Income Payments
(c) Frequency, duration & level.Amount of Variable Annuity Income Payments
(d) AIR........................ Amount of Variable Annuity Income Payments
(e) Minimum.................... Amount of Variable Annuity Income Payments
(f) -- Change Options.......................... Transfers among Portfolios
-- Transfer........................................................---
9. Death Benefit..................Death Benefit Payable; Death Benefit Amount;
Death Benefit Payment Provisions
10. Purchases & Contract Value..............................................---
(a) Purchases...................................Purchase of the Contracts:
Crediting of Initial Purchase Payments
(b) Valuation................. Accumulation Units; Accumulation Unit Value
(c) Daily Calculation.........Accumulation Units; Accumulation Unit Value;
Allocation of Purchase Payments
(d) Underwriter..............................Distribution of the Contracts
11. Redemptions.............................................................---
(a) -- By Owners...............................................Withdrawals
(b) -- By Annuitant...........................................Income Plans
(c) Texas ORP...............................................Not Applicable
(d) Lapse...................................................Not Applicable
(e) Free Look...................................................Highlights
12. Taxes...................................................Federal Tax Matters
13. Legal Proceedings........................................... Not Applicable
14. SAI Table of Contents.................................SAI Table of Contents

Part B: INFORMATION REQUIRED IN A 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 Contract.......................Contract Maintenance Charge;
Distribution of the Contracts
(c) Custodian............................SAI: Safekeeping of the Variable
Account's Assets

Independent Public Accountant..................................Experts
(d) Assets of Registrant.................SAI: Safekeeping of the Variable
Account Assets
<PAGE>

(e) Affiliated Persons......................................Not Applicable
(f) Principal Underwriter....................Distribution of the Contracts
19. Purchase of Securities Being Offered....................................---
(a) Offering...................................SAI: Purchase of Contracts
(b) Sales load...............................Distribution of the Contracts
20. Underwriters............................................................---
(a) Principal Underwriter....................Distribution of the Contracts
(b) Continuous offering....................... SAI: Purchase of Contracts
(c) Commissions..............................Distribution of the Contracts
(d) Unaffiliated Underwriters..........................................N/A
21. Calculation of Performance Data......................SAI: Performance Data
22. Annuity Payments............................................Income Payments
23. Financial Statements....................................................---
(a) Financial Statements of Registrant................SAI: Not Applicable
(b) Financial Statements of Depositor..............Allstate Life Insurance
Company of New York Financial Statements

Part C: OTHER INFORMATION

24a. Financial Statements..........................Part C. Financial Statements
24b. Exhibits..................................................Part C. Exhibits
25. Directors and Officers.....................Part C. Directors & Officers of
Depositor
26. Persons Controlled By or Under Common
Control with Depositor or Registrant.........Part C. Persons Controlled by
or Under Common Control
with Depositor or
Registrant
27. Number of Contract Owners................Part C. Number of Contract Owners
28. Indemnification....................................Part C. Indemnification
29a. Relationship of Principal Underwriter to
Other Investment Companies...............Part C. Relationship of Principal
Underwriter to Other
Investment Companies
29b. Principal Underwriters......................Part C. Principal Underwriters

29c. Compensation of Underwriter..........Part C. Compensation of Allstate Life
Financial Services, Inc.
30. Location of Accounts and Records..........Part C. Location of Accounts and
Records

31. Management Services............................Part C. Management Services
31. Undertakings..........................................Part C. Undertakings
<PAGE>

ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A

OFFERED BY
ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK
POST OFFICE BOX 9075
FARMINGVILLE, NEW YORK 11738-9075
1-(800) 692-4682

FLEXIBLE PREMIUM DEFERRED VARIABLE
ANNUITY CONTRACTS
---------------

This prospectus describes the AIM Lifetime Plus Variable Annuity, a group
Flexible Premium Deferred Variable Annuity Certificate (hereinafter referred
to as "Contract") designed to aid you in long-term financial planning and
which can be used for retirement planning. The Contracts are issued by
Allstate Life Insurance Company of New York ("Company"), a wholly owned
indirect subsidiary of Allstate Insurance Company. The Contracts are issued as
group Contracts. A certificate is issued that summarizes the provisions of the
group Contract. For convenience, this prospectus refers to both Contracts and
certificates as "Contracts." Purchase payments for the Contracts will be
allocated to a series of Variable Sub-accounts of the Allstate Life of New
York Separate Account A ("Variable Account") and/or to a Fixed Account
option(s) funded through the Company's general account.

The Variable Sub-accounts invest in shares of AIM Variable Insurance Funds,
Inc. (the "Fund Series"). Nine Funds are currently available for investment
within the Variable Account: (1) AIM V.I. Capital Appreciation Fund; (2) AIM
V.I. Diversified Income Fund; (3) AIM V.I. Global Utilities Fund; (4) AIM V.I.
Government Securities Fund; (5) AIM V.I. Growth Fund; (6) AIM V.I. Growth and
Income Fund; (7) AIM V.I. International Equity Fund; (8) AIM V.I. Money Market
Fund; and (9) AIM V.I. Value Fund.

This prospectus presents information you should know before making a
decision to invest in the Contract and the available Investment Alternatives.

THE CONTRACTS MAY BE DISTRIBUTED THROUGH BROKER-DEALERS WHICH HAVE
RELATIONSHIPS WITH BANKS OR OTHER FINANCIAL INSTITUTIONS OR BY EMPLOYEES OF
SUCH BANKS; HOWEVER, THE CONTRACTS AND THE INVESTMENTS IN THE FUNDS ARE NOT
DEPOSITS, OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK, AND THE
FUNDS' SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL. THESE CONTRACTS ARE NOT FDIC INSURED.

The Company has prepared and filed a Statement of Additional Information
dated October , 1996 with the U.S. Securities and Exchange Commission. If
you wish to receive the Statement of Additional Information, you may obtain a
free copy by calling or writing the Company at the address above. For your
convenience, an order form for the Statement of Additional Information may be
found on page B-2 of this prospectus. Before ordering, you may wish to review
the Table of Contents of the Statement of Additional Information on page B-1
of this prospectus. The Statement of Additional Information has been
incorporated by reference into this prospectus.

THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED OR PRECEDED BY A CURRENT
PROSPECTUS FOR AIM VARIABLE INSURANCE FUNDS, INC.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE

The Contract is only available in the State of New York.

At least once each Contract year, the Company will send the Owner an annual
statement that contains certain information pertinent to the individual
Owner's Contract. The annual statement details values and specific Contract
data that applies to each particular Contract. The annual statement does not
contain financial statements of the Company, although the Company's financial
statements are on page F-1 of this prospectus. The Company, however, is
subject to the informational requirements of the Securities Exchange Act of
1934 and in accordance therewith files reports and other information with the
Securities and Exchange Commission. Reports and other information filed by the
Company can be inspected at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and are also
available by personal computer from the SEC's EDGAR database on the World Wide
Web at http://www.sec./gov/edgarhp.htm or through the SEC's web site at
http://www.sec.gov. Copies of such material can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549 at prescribed
rates.

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>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY................................................................... 3
HIGHLIGHTS................................................................. 4
SUMMARY OF VARIABLE ACCOUNT EXPENSES....................................... 5
CONDENSED FINANCIAL INFORMATION............................................ 6
YIELD AND TOTAL RETURN DISCLOSURE.......................................... 6
FINANCIAL STATEMENTS....................................................... 7
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK AND THE VARIABLE ACCOUNT....... 7
Allstate Life Insurance Company of New York............................... 7
The Variable Account...................................................... 7
THE FUND SERIES............................................................ 8
AIM Variable Insurance Funds, Inc......................................... 8
Investment Advisor for the Funds.......................................... 8
FIXED ACCOUNT.............................................................. 9
Example of Interest Crediting During the Guarantee Period................. 9
Withdrawals or Transfers.................................................. 10
Market Value Adjustment................................................... 10
PURCHASE OF THE CONTRACTS.................................................. 10
Purchase Payment Limits................................................... 10
Free-Look Period.......................................................... 11
Crediting of Initial Purchase Payment..................................... 11
Allocation of Purchase Payments........................................... 11
Accumulation Units........................................................ 11
Accumulation Unit Value................................................... 11
Transfers Among Investment Alternatives................................... 11
Dollar Cost Averaging..................................................... 12
Automatic Fund Rebalancing................................................ 12
BENEFITS UNDER THE CONTRACT................................................ 12
Withdrawals............................................................... 12
Income Payments........................................................... 13
Payout Start Date for Income Payments.................................... 13
Variable Account Income Payments......................................... 13
Fixed Amount Income Payments............................................. 13
Income Plans............................................................. 13
DEATH BENEFITS............................................................. 14
Distribution Upon Death Payment Provisions................................ 14
Death Benefit Amount...................................................... 14
CHARGES AND OTHER DEDUCTIONS............................................... 15
Deductions from Purchase Payments......................................... 15
Withdrawal Charge (Contingent Deferred Sales Charge)...................... 15
Contract Maintenance Charge............................................... 15
Administrative Expense Charge............................................. 16
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Mortality and Expense Risk Charge......................................... 16
Taxes..................................................................... 16
Transfer Charges.......................................................... 16
Fund Expenses............................................................. 16
GENERAL MATTERS............................................................ 16
Owner..................................................................... 16
Beneficiary............................................................... 16
Assignments............................................................... 17
Delay of Payments......................................................... 17
Modification.............................................................. 17
Customer Inquiries........................................................ 17
FEDERAL TAX MATTERS........................................................ 17
Introduction.............................................................. 17
Taxation of Annuities in General.......................................... 17
Tax Deferral............................................................. 17
Non-natural Owners....................................................... 17
Diversification Requirements............................................. 18
Ownership Treatment...................................................... 18
Taxation of Partial and Full Withdrawals................................. 18
Taxation of Annuity Payments............................................. 18
Taxation of Annuity Death Benefits....................................... 19
Penalty Tax on Premature Distributions................................... 19
Aggregation of Annuity Contracts......................................... 19
Tax Qualified Contracts.................................................. 19
Restrictions Under Section 403(b) Plans.................................. 19
Income Tax Withholding................................................... 19
DISTRIBUTION OF THE CONTRACTS.............................................. 19
VOTING RIGHTS.............................................................. 20
SELECTED FINANCIAL DATA.................................................... 20
COMPETITION................................................................ 27
EMPLOYEES.................................................................. 27
PROPERTIES................................................................. 27
STATE AND FEDERAL REGULATION............................................... 27
EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY............................ 27
EXECUTIVE COMPENSATION..................................................... 29
LEGAL PROCEEDINGS.......................................................... 30
EXPERTS.................................................................... 30
LEGAL MATTERS.............................................................. 30
FINANCIAL STATEMENTS....................................................... F-1
APPENDIX A--Market Value Adjustment........................................ A-1
STATEMENT OF ADDITIONAL INFORMATION: TABLE OF CONTENTS..................... B-1
ORDER FORM................................................................. B-2
</TABLE>

TABLE OF CONTENTS

2
<PAGE>

GLOSSARY

ACCUMULATION UNIT: A measure of your ownership interest in a Sub-account of
the Variable Account prior to the Payout Start Date. Analogous, though not
identical, to a share owned in a mutual fund.

ACCUMULATION UNIT VALUE: The value of each Accumulation Unit which is
calculated each Valuation Date. Each Sub-account of the Variable Account has
its own distinct Accumulation Unit Value. Analogous, though not identical, to
the share price (net asset value) of a mutual fund.

ANNUITANT(S): The person or persons whose life determines the latest Payout
Start Date and the amount and duration of any income payments for Income Plan
options other than Guaranteed Payments for a Specified Period. Joint
annuitants are only permitted in the payout phase.

BENEFICIARY(IES): The person(s) to whom any benefits are due when a death
benefit is payable and there is no surviving Owner.

COMPANY("WE," "US"): Allstate Life Insurance Company of New York.

CONTRACT: The Allstate Life Insurance Company of New York Flexible Premium
Deferred Variable Annuity Contract, known as the "AIM Lifetime PlusSM Variable
Annuity," that is described in this prospectus.

CONTRACT ANNIVERSARY: An anniversary of the date that the Contract was issued.

CONTRACT VALUE: The value of all amounts accumulated under the Contract prior
to the Payout Start Date, equivalent to the Accumulation Units in each Sub-
account of the Variable Account multiplied by the respective Accumulation Unit
Value, plus the value in the Fixed Account.

CONTRACT YEAR: A period of 12 months starting with the issue date or any
Contract Anniversary.

DEATH BENEFIT ANNIVERSARY: Every seventh Contract Anniversary beginning on the
date that the Contract was issued. For example, the issue date, 7th and 14th
Contract Anniversaries are the first three Death Benefit Anniversaries.

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

FIXED SUB-ACCOUNTS: These Sub-accounts are distinguished by Guarantee
Period(s) and the dates the period(s) begin. The Fixed Sub-accounts are
established when purchase payments are allocated to the Fixed Account; when
previous Sub-accounts expire and a new Guarantee Period is selected; and when
You transfer an amount to the Fixed Account.

GUARANTEE PERIOD: A period of years for which a specified effective annual
interest rate is guaranteed by the Company.

INCOME PLAN: One of several ways in which a series of payments are made after
the Payout Start Date. Income payments are based on the Contract Value
adjusted by any applicable Market Value Adjustment and applicable taxes on the
Payout Start Date. Income payment amounts may vary based on any Sub-account of
the Variable Account and/or may be fixed for the duration of the Income Plan.

INVESTMENT ALTERNATIVES: The Sub-accounts of the Variable Account and the
Fixed Account.

MARKET VALUE ADJUSTMENT: The Market Value Adjustment is the adjustment made to
the money distributed from a Sub-account of the Fixed Account, prior to the
end of the Guarantee Period, to reflect the impact of changes in interest
rates between the time the Sub-account of the Fixed Account was established
and the time of distribution.

NON-QUALIFIED CONTRACTS: Contracts other than Qualified Contracts.

OWNER(S)("YOU"): The person or persons designated as the Owner in the
Contract.

PAYOUT START DATE: The date on which income payments begin.

QUALIFIED CONTRACTS: Contracts issued under plans that qualify for special
federal income tax treatment under Sections 401(a), 403(a), 403(b) and 408 of
the Internal Revenue Code.

VALUATION DATE: Each day that the New York Stock Exchange is open for
business. The Valuation Date does not include such Federal and non-Federal
holidays as are observed by the New York Stock Exchange.

VALUATION PERIOD: The period between successive Valuation Dates, commencing at
the close of regular trading on the New York Stock Exchange (which is normally
4:00 pm Eastern Time) and ending as of the close of regular trading on the New
York Stock Exchange on the next succeeding Valuation Date.

VARIABLE ACCOUNT: Allstate Life of New York Separate Account A, a separate
investment account established by the Company to receive and invest purchase
payments paid under the Contracts.

VARIABLE SUB-ACCOUNT: A portion of the Variable Account invested in shares of
a corresponding Fund. The investment performance of each Variable Sub-account
is linked directly to the investment performance of its corresponding Fund.

3
<PAGE>

HIGHLIGHTS

THE CONTRACT

This Contract is designed for long-term financial planning and retirement
planning. Money can be allocated to any combination of Funds or the Fixed
Account. You have access to your funds either through withdrawals of Contract
Value or through periodic income payments. You bear the entire investment risk
for Contract Values and income payments based upon the Variable Account,
because values will vary depending on the investment performance of the
Fund(s) you select. See "Accumulation Unit Value," page and "Income Plans,"
page . You will also bear the investment risk of adverse changes in interest
rates in the event amounts are prematurely withdrawn or transferred from Sub-
accounts of the Fixed Account. See "Fixed Account," page .

FREE-LOOK

You 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. Purchase payments allocated to the Variable Account will be returned
after an adjustment to reflect investment gain or loss that occurred from the
date of allocation through the date of cancellation, unless a refund of
purchase payments is required by state or federal law. See "Free-Look Period,"
page .

HOW TO INVEST

Your first purchase payment must be at least $5,000 (for Qualified
Contracts, $2,000). Subsequent purchase payments must be at least $500.
Purchase payments may also be made pursuant to an Automatic Addition Program.
See "Purchase Payment Limits," page . At the time of your application, you
will allocate your purchase payment among the Investment Alternatives. The
allocation you specify on the application will be effective immediately. All
allocations must be in whole percents from 0% to 100% (total allocation equals
100%) or in whole dollars. Allocations may be changed by notifying the Company
in writing. See "Allocation of Purchase Payments," page .

INVESTMENT ALTERNATIVES

The Variable Account invests in shares of AIM Variable Insurance Funds, Inc.
(the "Fund Series"). The Fund Series has a total of nine Funds available under
the Contract. The Funds include: (1) AIM V.I. Capital Appreciation Fund; (2)
AIM V.I. Diversified Income Fund; (3) AIM V.I. Global Utilities Fund; (4) AIM
V.I. Government Securities Fund; (5) AIM V.I. Growth Fund; (6) AIM V.I. Growth
and Income Fund; (7) AIM V.I. International Equity Fund; (8) AIM V.I. Money
Market Fund; and (9) AIM V.I. Value Fund. The assets of each Fund are held
separately from the other Funds and each has distinct investment objectives
and policies which are described in the accompanying prospectus for the Fund
Series. In addition to the Variable Account, Owners can also allocate all or
part of their purchase payments to the Fixed Account. See "Fixed Account," on
page .

TRANSFERS AMONG INVESTMENT ALTERNATIVES

Prior to the Payout Start Date, you may transfer amounts among the
Investment Alternatives. The Company reserves the right to assess a $10 charge
on each transfer in excess of twelve per Contract Year. The Company is
presently waiving this charge. Transfers to the Fixed Account must be at least
$500. Certain Fixed Account transfers may be restricted. See "Transfers Among
Investment Alternatives," page . You may want to enroll in a Dollar Cost
Averaging Program or an Automatic Fund Rebalancing Program. See "Dollar Cost
Averaging," page , and "Automatic Fund Rebalancing," page .

CHARGES AND DEDUCTIONS

The costs of the Contract include: a contract maintenance charge ($35
annually), a mortality and expense risk charge (deducted daily, equal on an
annual basis to 1.35% of the Contract's daily net assets of the Variable
Account), and an administrative expense charge (deducted daily, equal on an
annual basis to .10% of the Contract's daily net assets of the Variable
Account). The Company reserves the right to assess a transfer charge ($10 on
each transfer in excess of twelve per Contract Year). Additional deductions
may be made for certain taxes. See "Contract Maintenance Charge," page ,
"Mortality and Expense Risk Charge," page , "Administrative Expense Charge,"
page , "Transfer Charges," page , and "Taxes," page .

WITHDRAWALS

You may withdraw all or part of the Contract Value before the earliest of
the Payout Start Date, the death of any Owner or, if the Owner is not a
natural person, the death of the Annuitant. No withdrawal charges or Market
Value Adjustments will be applied to amounts withdrawn up to 10% of the amount
of purchase payments. Amounts withdrawn in excess of the 10% may be subject to
a withdrawal charge of 0% to 7% depending on how long purchase payments have
been invested in the Contract. Amounts withdrawn from a Sub-account of the
Fixed Account, in excess of the 10%, except during the 30 day period after the
Guarantee Period expires, will be subject to a Market Value Adjustment. See
"Withdrawals," page , "Withdrawals or Transfers," page , and "Taxation of
Annuities in General," page .

4
<PAGE>

DEATH BENEFIT

The Company will pay a death benefit prior to the Payout Start Date on the
death of any Owner or, if the Owner is not a natural person, the death of the
Annuitant. See "Death Benefit Amount," page .

INCOME PAYMENTS

You will receive periodic income payments beginning on the Payout Start Date.
You may choose among several Income Plans to fit your needs. Income payments
may be received for a specified period or for life (either single or joint
life), with or without a guaranteed number of payments. You can select income
payments that are fixed, variable or a combination of fixed and variable. See
"Income Payments," page .

SUMMARY OF VARIABLE ACCOUNT EXPENSES

The following table illustrates all expenses and fees that you will incur.
The expenses and fees set forth in the table are based on charges under the
Contracts and on the expenses of the Variable Account and the underlying Fund
Series.

OWNER TRANSACTION EXPENSES (ALL SUB-ACCOUNTS)

<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of purchase payments)..... None
Contingent Deferred Sales Charge (as a percentage of purchase payments).... *
</TABLE>

<TABLE>
<CAPTION>
APPLICABLE
YEAR APPLICABLE SINCE WITHDRAWAL
PREMIUM PAYMENT ACCEPTED CHARGE PERCENTAGE
------------------------ -----------------
<S> <C>
1st Year............................................ 7%
2nd Year............................................ 6%
3rd Year............................................ 5%
4th Year............................................ 4%
5th Year............................................ 3%
6th Year............................................ 2%
7th Year............................................ 1%
Thereafter.......................................... 0%
Transfer Fee **
Annual Contract Fee................................... $35***
Variable Account Annual Expenses (as a percentage of
the Contract's average net assets in the Variable
Account):
Mortality and Expense Risk Charge..................... 1.35%
Administrative Expense Charge......................... .10%
Total Variable Account Annual Expenses................ 1.45%
</TABLE>
- --------
*Each Contract Year up to 10% of the amount of purchase payments may be
withdrawn without a contingent deferred sales charge or a Market Value
Adjustment.
**No charges will be imposed on the first twelve transfers in any Contract
Year. The Company reserves the right to assess a $10 charge for each
transfer in excess of twelve in any Contract Year, excluding transfers due
to dollar cost averaging and automatic fund rebalancing.
***The annual Contract Fee will be waived if total purchase payments as of a
Contract Anniversary, or upon a full withdrawal, are $50,000 or if the
entire Contract Value is allocated to the Fixed Account.

5
<PAGE>

FUND EXPENSES

(AS A PERCENTAGE OF FUND ASSETS)

<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER ANNUAL
FUND FEES EXPENSES EXPENSES
---- ---------- -------- ----------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund.............. 0.65% 0.10% 0.75%
AIM V.I. Growth and Income Fund................. 0.65% 0.52% 1.17%
AIM V.I. Global Utilities Fund (after expense
reimbursements)................................ 0.65% 1.03% 1.68%
AIM V.I. Diversified Income Fund................ 0.60% 0.28% 0.88%
AIM V.I. Government Securities Fund............. 0.50% 0.69% 1.19%
AIM V.I. Growth Fund............................ 0.65% 0.19% 0.84%
AIM V.I. International Equity Fund.............. 0.75% 0.40% 1.15%
AIM V.I. Value Fund............................. 0.65% 0.10% 0.75%
AIM V.I. Money Market Fund...................... 0.40% 0.13% 0.53%
</TABLE>

EXAMPLE

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

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

<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS
---- ------ -------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund.............................. $78 $109
AIM V.I. Growth and Income Fund................................. $82 $122
AIM V.I. Global Utilities Fund.................................. $87 $137
AIM V.I. Diversified Income Fund................................ $79 $113
AIM V.I. Government Securities Fund............................. $82 $122
AIM V.I. Growth Fund............................................ $79 $112
AIM V.I. International Equity Fund.............................. $82 $121
AIM V.I. Value Fund............................................. $78 $109
AIM V.I. Money Market Fund...................................... $75 $102
</TABLE>

If you do not terminate 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>
FUND 1 YEAR 3 YEARS
---- ------ -------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund.............................. $24 $ 73
AIM V.I. Growth and Income Fund................................. $28 $ 86
AIM V.I. Global Utilities Fund.................................. $33 $101
AIM V.I. Diversified Income Fund................................ $25 $ 77
AIM V.I. Government Securities Fund............................. $28 $ 86
AIM V.I. Growth Fund............................................ $25 $ 76
AIM V.I. International Equity Fund.............................. $28 $ 85
AIM V.I. Value Fund............................................. $24 $ 73
AIM V.I. Money Market Fund...................................... $21 $ 66
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
purpose of the example is to assist you in understanding the various costs and
expenses that you will bear directly or indirectly. No deductions were made
for premium taxes because New York does not charge premium taxes on annuities.

CONDENSED FINANCIAL INFORMATION

Condensed financial information for the Allstate Life of New York Separate
Account A is not included because, as of the date of this prospectus, the
Variable Account had not yet commenced operations and had no assets,
liabilities, or income.

YIELD AND TOTAL RETURN DISCLOSURE

From time to time the Variable Account may advertise the yield and total
return investment performance of one or more Sub-accounts. Standardized yield
and total return advertisements include charges and expenses attributable to
the Contracts. Including these fees has the effect of decreasing the
advertised performance of a Sub-account, so that a Sub-account's investment
performance will not be directly comparable to that of an ordinary mutual
fund.

6
<PAGE>

When a Sub-account advertises its standardized total return it will usually
be calculated for one year, five years, and ten years or since inception if the
Sub-account has not been in existence for such periods. Total return is
measured by comparing the value of an investment in the Sub-account at the end
of the relevant period to the value of the investment at the beginning of the
period.

In addition to the standardized total return, the Sub-account may advertise a
non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described
above, except that the withdrawal charges under the Contract are not deducted.
Therefore, a non-standardized total return for a Sub-account can be higher than
a standardized total return for a Sub-account.

Certain Sub-accounts may advertise yield in addition to total return. Except
in the case of the AIM V.I. Money Market Sub-account, the yield will be
computed in the following manner: the net investment income per unit earned
during a recent one month period is divided by the unit value on the last day
of the period, and then annualized. This figure reflects the recurring charges
at the separate account level.

The AIM V.I. Money Market Sub-account may advertise, in addition to the total
return, either yield or the effective yield. The yield in this case refers to
the income generated by an investment in that Sub-account over a seven-day
period net of recurring charges at the separate account level. The income is
then annualized (i.e., the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment). The effective yield is calculated
similarly but when annualized, the income earned by an investment in the AIM
V.I. Money Market Sub-account is assumed to be reinvested at the end of each
seven-day period. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment during a 52-week
period.

The Variable Account may also disclose yield, standard total return, and non-
standard total return for periods prior to the date that the Variable Account
commenced operations. For periods prior to the date the Variable Account
commenced operations, performance information for the Sub-accounts will be
calculated based on the performance of the underlying Funds and the assumption
that the Sub-accounts were in existence for the same periods as those of the
underlying Funds, with a level of charges equal to those currently assessed
against the Sub-accounts.

Please refer to the Statement of Additional Information for a further
description of the method used to calculate a Sub-account's yield and total
return.

FINANCIAL STATEMENTS

The financial statements of Allstate Life Insurance Company of New York begin
on page F-1 of the prospectus. The financial statements of Allstate Life of New
York Separate Account A are not included because, as of the date of this
Prospectus, the Variable Account had not yet commenced operations and had no
assets, liabilities, or income.

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK AND THE VARIABLE ACCOUNT

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

The Company was incorporated in 1967 as a stock life insurance company under
the laws of New York and was known as "Financial Life Insurance Company" from
1967 to 1978. From 1978 to 1984, the Company was known as "PM Life Insurance
Company." Since 1984 the Company has been known as "Allstate Life Insurance
Company of New York." The Company's operations consist of one business segment
which is the sale of annuities and life insurance. The Company is currently
licensed to operate in New York. The Company's home office is located in
Farmingville, New York.

The Company is an indirect, wholly-owned subsidiary of Allstate Insurance
Company ("Allstate") which is a stock property-liability 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").

THE VARIABLE ACCOUNT

Established on December 22, 1995, the Allstate Life of New York Separate
Account A is a unit investment trust registered with the Securities and
Exchange Commission under the Investment Company Act of 1940. However, 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 Variable Account has been divided into nine Sub-accounts, each of which
invests solely in its corresponding Fund of AIM Variable Insurance Funds, Inc.
Additional Variable Sub-accounts may be added at the discretion of the Company.

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,

7
<PAGE>

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 Company's obligations arising under the Contracts are general
corporate obligations of the Company.

THE FUND SERIES

The Variable Account will invest in shares of the AIM Variable Insurance
Funds, Inc. (the "Fund Series"). The Fund Series is registered with the
Securities and Exchange Commission as an open-end, series, management
investment company. Registration of the Fund Series does not involve
supervision of its management, investment practices or policies by the
Securities and Exchange Commission. The Funds are designed to provide
investment vehicles for variable insurance contracts of various insurance
companies, in addition to the Variable Account.

Shares 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.

AIM VARIABLE INSURANCE FUNDS, INC.

AIM Variable Insurance Funds, Inc. offers nine Funds for use with this
Contract: (1) AIM V.I. Capital Appreciation Fund; (2) AIM V.I. Diversified
Income Fund; (3) AIM V.I. Global Utilities Fund; (4) AIM V.I. Government
Securities Fund; (5) AIM V.I. Growth Fund; (6) AIM V.I. Growth and Income Fund;
(7) AIM V.I. International Equity Fund; (8) AIM V.I. Money Market Fund; and (9)
AIM V.I. Value Fund. Each Fund has different investment objectives and policies
and operates as a separate investment fund. The following is a brief
description of the investment objectives and programs of the Funds:

AIM V.I. CAPITAL APPRECIATION FUND ("CAPITAL APPRECIATION FUND") is a
diversified Fund which seeks to provide capital appreciation through
investments in common stocks, with emphasis on medium-sized and smaller
emerging growth companies.

AIM V.I. DIVERSIFIED INCOME FUND ("DIVERSIFIED INCOME FUND") is a diversified
Fund which seeks to achieve a high level of current income primarily by
investing in a diversified portfolio of foreign and U.S. government and
corporate debt securities, including lower rated high yield debt securities
(commonly known as "junk bonds").

AIM V.I. GLOBAL UTILITIES FUND ("GLOBAL UTILITIES FUND") is a non-diversified
Fund which seeks to achieve a high level of current income and, as a secondary
objective, to achieve capital appreciation, by investing primarily in common
and preferred stocks of public utility companies (either domestic or foreign).

AIM V.I. GOVERNMENT SECURITIES FUND ("GOVERNMENT FUND") is a diversified Fund
which seeks to achieve a high level of current income consistent with
reasonable concern for safety of principal by investing in debt securities
issued, guaranteed or otherwise backed by the U.S. Government.

AIM V.I. GROWTH FUND ("GROWTH FUND") is a diversified Fund which seeks to
provide growth of capital through investments primarily in common stocks of
leading U.S. companies considered by AIM to have strong earnings momentum.

AIM V.I. GROWTH AND INCOME FUND ("GROWTH & INCOME FUND") is a diversified
Fund which seeks to provide growth of capital, with current income as a
secondary objective by investing primarily in dividend paying common stocks
which have prospects for both growth of capital and dividend income.

AIM V.I. INTERNATIONAL EQUITY FUND ("INTERNATIONAL FUND") is a diversified
Fund which seeks to provide long-term growth of capital by investing in
international equity securities, the issuers of which are considered by AIM to
have strong earnings momentum.

AIM V.I. MONEY MARKET FUND ("MONEY MARKET FUND") is a diversified Fund which
seeks to provide as high a level of current income as is consistent with the
preservation of capital and liquidity by investing in a diversified portfolio
of money market instruments.

AIM V.I. VALUE FUND ("VALUE FUND") is a diversified Fund which seeks to
achieve long-term growth of capital by investing primarily in equity securities
judged by AIM to be undervalued relative to the current or projected earnings
of the companies issuing the securities, or relative to current market values
of assets owned by the companies issuing the securities or relative to the
equity markets generally. Income is a secondary objective.

INVESTMENT ADVISOR FOR THE FUNDS

A I M Advisors, Inc., ("AIM") serves as the investment advisor to each Fund.
AIM was organized in 1976 and, together with its affiliates, manages or advises
43 investment company portfolios (including the Funds). AIM is a wholly-owned
subsidiary of A I M Management Group Inc., a holding company. AIM manages
pursuant to a master investment advisory agreement dated October 18, 1993, as
amended April 28, 1994. As of August 30, 1996, total assets advised or managed
by AIM and its affiliates were approximately $55 billion.

There is no assurance that the Funds will attain their respective stated
objectives. Additional information concerning the investment objectives and
policies of the Funds can be found in the current prospectus for the Fund
Series accompanying this prospectus.

8
<PAGE>

You will find more complete information about the Funds, including the risks
associated with each Fund, in the accompanying prospectus. You should read the
prospectus for the Fund Series in conjunction with this prospectus.

THE FUND SERIES PROSPECTUS SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE CONCERNING THE ALLOCATION OF PURCHASE PAYMENTS TO A PARTICULAR VARIABLE
SUB-ACCOUNT.

FIXED ACCOUNT

Purchase payments and transfers allocated to one or more of the Sub-accounts
of the Fixed Account become part of the general account of the Company. Each
Sub-account offers a separate interest rate Guarantee Period. Guarantee Periods
will be offered at the Company's discretion and may range from one to ten
years. Presently, the Company offers Guarantee Periods of one, three, five,
seven and ten years. The Owner must select the Sub-account(s) in which to
allocate each purchase payment and transfer. No less than $500 may be allocated
to any one Sub-account. The Company reserves the right to limit the number of
additional purchase payments. Please consult with your sales representative for
current information.

Interest is credited daily to each Sub-account at a rate which compounds to
the effective annual interest rate declared for each Sub-account's Guarantee
Period that has been selected.

The following example illustrates how the Sub-account value for a Sub-account
of the Fixed Account would grow given an assumed purchase payment, Guarantee
Period, and effective annual interest rate:

EXAMPLE OF INTEREST CREDITING DURING THE GUARANTEE PERIOD:

<TABLE>
<S> <C>
Purchase Payment..................................................... $10,000.00
Guarantee Period..................................................... 5 years
Effective Annual Rate:............................................... 4.35%
</TABLE>

END OF CONTRACT YEAR:

<TABLE>
<CAPTION>
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Beginning Sub-Account
Value $10,000.00
X (1 + Effective Annual
Rate) 1.0435
----------
$10,435.00
Sub-Account Value at end
of Contract $10,435.00
year 1 X (1 + Effective
Annual Rate) 1.0435
----------
$10,888.92
Sub-Account Value at end
of Contract $10,888.92
year 2 X (1 + Effective
Annual Rate) 1.0435
----------
$11,362.59
Sub-Account Value at end
of Contract $11,362.59
year 3 X (1 + Effective
Annual Rate) 1.0435
----------
$11,856.86
Sub-Account Value at end
of Contract $11,856.86
year 4 X (1 + Effective
Annual Rate) 1.0435
----------
Sub-Account Value at end
of Guarantee Period: $12,372.64
==========
</TABLE>

TOTAL INTEREST CREDITED IN GUARANTEE PERIOD: $2,372.64 ($12,372.64 -$10,000.00)

NOTE: The above illustration assumes no withdrawals of any amount during the
entire five year period. A withdrawal charge and a Market Value Adjustment
may apply to any amount withdrawn in excess of 10% of the amount of
purchase payments. The hypothetical interest rate is for illustrative
purposes only and is not intended to predict future interest rates to be
declared under the Contract.

The Company has no specific formula for determining the rate of interest that
it will declare initially or in the future. Such interest rates will be
reflective of investment returns available at the time of the determination. In
addition, the management of the Company may also consider various other factors
in determining interest rates, including regulatory and tax requirements, sales
commissions and administrative expenses borne by the Company, general economic
trends, and competitive factors. The Company guarantees that the interest rates
will never be less that the minimum guaranteed rate shown in the Contract. For
current interest rate information, please contact your sales representative or
the Company's customer support unit at 1(800) 692-4682.

THE MANAGEMENT OF THE COMPANY WILL MAKE THE FINAL DETERMINATION AS TO THE
INTEREST RATES TO BE DECLARED. THE COMPANY CAN NEITHER PREDICT NOR GUARANTEE
FUTURE INTEREST RATES TO BE DECLARED.

Prior to the end of a Guarantee Period, a notice will be mailed to the Owner
outlining the options available at the end of a Guarantee Period. During the 30
day period after a Guarantee Period expires the Owner may:

9
<PAGE>

. take no action and the Company will automatically renew the Sub-account
value to a Guarantee Period of the shortest duration available to be
established on the day the previous Guaranteed Period expired; or

. notify the Company to apply the Sub-account value to a new Guarantee
Period or periods to be established on the day the previous Guarantee
Period expired; or

. notify the Company to apply the Sub-account value to any Sub-account of
the Variable Account on the day we receive the notification; or

. receive a portion of the Sub-account value or the entire Sub-account
value through a partial or full withdrawal that is not subject to a
Market Value Adjustment. In this case, the amount withdrawn will be
deemed to have been withdrawn on the day the guarantee period expired.

The Automatic Laddering Program allows the Owner to choose, in advance, one
renewal Guarantee Period for all renewing Sub-accounts. The Owner can select
the Automatic Laddering Program at any time during the accumulation phase,
including on the issue date. The Automatic Laddering Program will continue
until the Owner gives written notice to the Company. The Company reserves the
right to discontinue this Program. For additional information on the Automatic
Laddering Program, please call the Company's Customer Support Unit at
1(800)692-4682.

WITHDRAWALS OR TRANSFERS

With the exception of transfers made automatically through dollar cost
averaging, all withdrawals and transfers, paid from a Sub-account of the Fixed
Account other than during the 30 day period after a Guarantee Period expires
are subject to a Market Value Adjustment.

The amount received by the Owner under a withdrawal request equals the amount
requested, adjusted by any Market Value Adjustment, less any applicable
withdrawal charge, less premium taxes and withholding (if applicable).

MARKET VALUE ADJUSTMENT

The Market Value Adjustment reflects the relationship between (1) the
Treasury Rate for the time remaining in the Guarantee Period at the time of the
request for withdrawal or transfer, and (2) the Treasury Rate at the time the
Sub-account was established. As such, the Owner bears some investment risk
under the Contract. Treasury Rate means the U.S. Treasury Note Constant
Maturity yield for the preceding week as reported in Federal Reserve Bulletin
Release H.15.

Generally, if the Treasury Rate for the Guarantee Period is higher than the
applicable current Treasury Rate, then the Market Value Adjustment will result
in a higher amount payable to the Owner or transferred. Similarly, if the
Treasury Rate at the time the Sub-account was established is lower than the
applicable Treasury Rate (interest rate for a period equal to the time
remaining in the Sub-account), then the Market Value Adjustment will result in
a lower amount payable to the Owner or transferred.

For example, assume the Owner purchases a Contract and selects an initial
Guarantee Period of five years and the five year Treasury Rate for that
duration is 4.75%. Assume that at the end of 3 years, the Owner makes a partial
withdrawal. If, at that later time, the current two year Treasury Rate is
4.00%, then the Market Value Adjustment will be positive, which will result in
an increase in the amount payable to the Owner. Similarly, if the current two
year Treasury Rate is 7.00%, then the Market Value Adjustment will be negative,
which will result in a decrease in the amount payable to the Owner.

The formula for calculating the Market Value Adjustment is set forth in
Appendix A to this prospectus which also contains additional illustrations of
the application of the Market Value Adjustment.

The Market Value Adjustment will be waived on withdrawals taken to satisfy
IRS required minimum distribution rules for this Contract.

PURCHASE OF THE CONTRACTS

PURCHASE PAYMENT LIMITS

Your first purchase payment must be at least $5,000 unless the Contract is a
Qualified Contract, in which case the first purchase payment must be at least
$2,000. All subsequent purchase payments must be $500 or more and may be made
at any time prior to the Payout Start Date. Subsequent purchase payments may
also be made from your bank account through Automatic Additions. Under an
Automatic Additions Program, the minimum purchase payment for allocation to the
Variable Account is $100 and for allocation to the Fixed Account the minimum
purchase payment is $500. Please consult with your sales representative for
detailed information about Automatic Additions.

We reserve the right to limit the amount of purchase payments we will accept.

10
<PAGE>

FREE-LOOK PERIOD

You 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. Purchase payments allocated to the Variable Account will be returned
after an adjustment to reflect investment gain or loss that occurred from the
date of allocation through the date of cancellation unless a refund of purchase
payments is required by state or federal law.

CREDITING OF INITIAL PURCHASE PAYMENT

The initial purchase payment accompanied by a duly completed application will
be credited to the Contract within two business days of receipt by us at our
home office. If an application is not duly completed, we will credit the
purchase payments to the Contract within five business days or return it at
that time unless you specifically consent to us holding the purchase payment
until the application is complete. We reserve the right to reject any
application. Subsequent purchase payments will be credited to the Contract at
the close of the Valuation Period in which the purchase payment is received by
the Company at its home office.

ALLOCATION OF PURCHASE PAYMENTS

On the application, you instruct us how to allocate the purchase payment
among the Investment Alternatives. Purchase payments may be allocated in whole
percents, from 0% to 100% (total allocation equals 100%) to any Investment
Alternative. Unless you notify us in writing otherwise, subsequent purchase
payments are allocated according to the allocation for the previous purchase
payment.

ACCUMULATION UNITS

Each purchase payment allocated to the Variable Account will be credited to
the Contract as Accumulation Units. 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 Fund.

ACCUMULATION UNIT VALUE

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

The value of an Accumulation Unit in a Variable 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 for a
Valuation Period is a number representing the change, since the last Valuation
Date in the value of Sub-account assets per Accumulation Unit due to investment
income, realized or unrealized capital gain or loss, deductions for taxes, if
any, and deductions for the mortality and expense risk charge and
administrative expense charge.

TRANSFERS AMONG INVESTMENT ALTERNATIVES

Prior to the Payout Start Date, you may transfer amounts among Investment
Alternatives. The Company reserves the right to assess a $10 charge on each
transfer in excess of twelve per Contract Year. The Company is presently
waiving this charge. Transfers to or from more than one Investment Alternative
on the same day are treated as one transfer. Transfers among Investment
Alternatives before the Payout Start Date may be made at any time. See
"Withdrawals or Transfers," page for the requirements on transfers from the
Fixed Account.

After the Payout Start Date, transfers among Sub-accounts of the Variable
Account or from a variable amount income payment to a fixed amount income
payment may be made only once every six months and may not be made during the
first six months following the Payout Start Date. After the Payout Start Date,
transfers from a fixed amount income payment are not allowed.

Telephone transfer requests will be accepted by the Company if received at
1(800) 692-4682 by 4:00 p.m., Eastern Time. Telephone transfer requests
received at any other telephone number or after 4:00 p.m., Eastern Time will
not be accepted by the Company. Telephone transfer requests received before
4:00 p.m., Eastern Time are effected at the next computed value. The Company
utilizes procedures which the Company believes will provide reasonable
assurance that telephone authorized transfers are genuine. Such procedures
include taping of telephone conversations with persons purporting to authorize
such transfers and requesting identifying information from such persons.
Accordingly, the Company disclaims any liability for losses resulting from such
transfers by reason of their allegedly not having been properly authorized.
However, if the Company does not take reasonable steps to help ensure that such
authorizations are valid, the Company may be liable for such losses.

The minimum amount that may be transferred into a Sub-account of the Fixed
Account is $500. Any transfer from a Sub-account of the Fixed Account at a time
other than during the 30 day period after a Guarantee Period expires will be
subject to a Market Value Adjustment. If any transfer reduces the value of a
Sub-account of the Fixed Account to less than $500, the Company will treat the
request as a transfer of the entire Sub-account value.

The Company reserves the right to waive transfer restrictions.

11
<PAGE>

DOLLAR COST AVERAGING

Transfers may be made automatically through Dollar Cost Averaging prior to
the Payout Start Date. Dollar Cost Averaging permits the Owner to transfer a
specified amount every month from the one year Guarantee Period Sub-account of
the Fixed Account or any Sub-account of the Variable Account, to any Sub-
account of the Variable Account. Transfers made through Dollar Cost Averaging
must be $50 or more. Dollar Cost Averaging cannot be used to transfer amounts
to the Fixed Account. Transfers made through Dollar Cost Averaging are not
subject to a Market Value Adjustment. In addition, such transfers are not
assessed a $10 charge and are not included in the twelve free transfers per
Contract Year.

The theory of Dollar Cost Averaging is that, if purchases of equal dollar
amounts are made at fluctuating prices, the aggregate average cost per unit
will be less than the average of the unit prices on the same purchase dates.
However, participation in the Dollar Cost Averaging program does not assure you
of a greater profit from your purchases under the program; nor will it prevent
or alleviate losses in a declining market.

AUTOMATIC FUND REBALANCING

Transfers may be made automatically through Automatic Fund Rebalancing prior
to the Payout Start Date. By electing Automatic Fund Rebalancing, all of the
money allocated to Sub-accounts of the Variable Account will be rebalanced to
the desired allocation on a quarterly basis, determined from the first date
that you decide to rebalance. Each quarter, 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. We are not responsible for
rebalancing that occurs prior to receipt of the written request.

Transfers made through Automatic Fund Rebalancing are not assessed a $10
charge and are not included in the twelve free transfers per Contract Year.

Any money allocated to the Fixed Account will not be included in the
rebalancing.

BENEFITS UNDER THE CONTRACT

WITHDRAWALS

You may withdraw all or part of the Contract Value at any time prior to the
earlier of the death of the Owner (or the Annuitant if the Owner is not a
natural person) or the Payout Start Date. The amount available for withdrawal
is the Contract Value next computed after the Company receives the request for
a withdrawal at its home office, adjusted by any applicable Market Value
Adjustment, less any withdrawal charges, contract maintenance charges and any
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 .

Money can be withdrawn from the Variable Account or the Fixed Account. To
complete the partial withdrawal from the Variable Account, the Company will
redeem Accumulation Units in an amount equal to the withdrawal and any
applicable 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.

The minimum partial withdrawal is $50. If any withdrawal reduces the value of
any Sub-account of the Fixed Account to less than $500, we will treat the
request as a withdrawal of the entire Sub-account value. If the Contract Value
after a partial withdrawal would be less than $1,000, then the Company will
treat the request as one for termination of the Contract and the entire
Contract Value, adjusted by any Market Value Adjustment, less any charges and
premium taxes, will be paid out.

Partial withdrawals may also be taken automatically through Systematic
Withdrawals on a monthly, quarterly, semi-annual or annual basis. Systematic
Withdrawals of $50 or more may be requested at any time prior to the Payout
Start Date. At the Company's discretion, Systematic Withdrawals may not be
offered in conjunction with Dollar Cost Averaging or Automatic Fund
Rebalancing.

Partial and full withdrawals may be subject to income tax and a 10% tax
penalty. This tax and penalty are explained in "Federal Tax Matters," on page
.

After the Payout Start Date, withdrawals are only permitted when payments
from the Variable Account are being made that do not involve life
contingencies. In that case, you may terminate the Variable Account portion of
the income payments at any time and receive a lump sum equal to the commuted
balance of the remaining variable payments due, less any applicable withdrawal
charge.

12
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INCOME PAYMENTS

PAYOUT START DATE FOR INCOME PAYMENTS

The Payout Start Date is the day that income payments will start under the
Contract. You may change the Payout Start Date at any time by notifying the
Company in writing of the change at least 30 days before the scheduled Payout
Start Date. The Payout Start Date must be (a) at least one month after the
issue date; and (b) no later than the day the Annuitant reaches age 90.

VARIABLE ACCOUNT INCOME PAYMENTS

The amount of Variable Account income payments depends upon the investment
experience of the Sub-accounts selected by the Owner and any premium taxes, the
age and sex of the Annuitant, and the Income Plan chosen. The Company
guarantees that the amount of the income payment 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 income payment 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 will be used.

The total income payments received may be more or less than the total
purchase payments made because (a) Variable Account income payments vary with
the investment results of the underlying Funds, and (b) Annuitants may not live
as long as, or may live longer than, expected.

The Income Plan option selected will affect the dollar amount of each income
payment. For example, if an Income Plan for a Life Income is chosen, the income
payments will be greater than income payments under an Income Plan for a Life
Income with Guaranteed Payments.

If the actual net investment experience of the Variable Account 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 Account income
payments, the assumed investment rate is 3 percent. For more detailed
information as to how Variable Account income payments are determined see the
Statement of Additional Information.

FIXED AMOUNT INCOME PAYMENTS

Income payment amounts derived from any monies allocated to Sub-accounts of
the Fixed Account during the accumulation phase are fixed for the duration of
the Income Plan. The fixed amount income payment amount is calculated by
applying the portion of the Contract Value in the Fixed Account on the Payout
Start Date, adjusted by any Market Value Adjustment and less any applicable
premium tax, to the greater of the appropriate value from the income payment
table selected or such other value as we are offering at that time.

INCOME PLANS

The Income Plans include:

INCOME PLAN 1--LIFE INCOME WITH GUARANTEED PAYMENTS

The Company will make payments for as long as the Annuitant lives. If the
Annuitant dies before the selected number of guaranteed payments have been
made, the Company will continue to pay the remainder of the guaranteed
payments.

INCOME PLAN 2--JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS

The Company will make payments for as long as either the Annuitant or Joint
Annuitant, named at the time of Income Plan selection, is living. If both the
Annuitant and the Joint Annuitant die before the selected number of guaranteed
payments have been made, the Company will continue to pay the remainder of the
guaranteed payments.

INCOME PLAN 3--GUARANTEED NUMBER OF PAYMENTS

The Company will make payments for a specified number of months beginning on
the Payout Start Date. These payments do not depend on the Annuitant's life.
The number of months guaranteed may be from 60 to 360. The mortality and
expense risk charge will be deducted from Variable Account assets supporting
these payments even though the Company does not bear any mortality risk.

The Owner may change the Income Plan until 30 days before the Payout Start
Date. 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.
Applicable premium taxes will be assessed.

In the event that an Income Plan is not selected, the Company will make
income payments in accordance with Income Plan 1 with Guaranteed Payments for
120 Months. At the Company's discretion, other Income Plans may be available
upon request. The Company

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<PAGE>

currently uses sex-distinct annuity tables. However, if legislation is passed
by Congress or the State of New York, the Company reserves the right to use
income payment tables which do not distinguish on the basis of sex. Special
rules and limitations may apply to certain qualified contracts.

If the Contract 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 Contract Value adjusted by any Market Value Adjustment and
less any applicable taxes, in a lump sum or change the payment frequency to an
interval which results in income payments of at least $20.

DEATH BENEFITS

DISTRIBUTION UPON DEATH PAYMENT PROVISIONS

A distribution upon death may be paid to the Owner determined immediately
after the death if, prior to the Payout Start Date:

. any Owner dies; or

. the Annuitant dies and the Owner is not a natural person.

If the Owner eligible to receive a distribution upon death is not a natural
person, then the Owner may elect to receive the distribution upon death in one
or more distributions. Otherwise, if the Owner is a natural person, the Owner
may elect to receive a distribution upon death in one or more distributions or
periodic payments through an Income Plan.

A death benefit will be paid: 1) if the Owner elects to receive the death
benefit in a single payment distributed within 180 days of the date of death;
and 2) if the death benefit is paid as of the day the value of the death
benefit is determined. Otherwise, the settlement value will be paid. The
settlement value is the same amount that would be paid in the event of
withdrawal of the Contract Value. The Company will calculate the settlement
value at the end of the Valuation Period coinciding with the requested
distribution date for payment or on the mandatory distribution date of 5 years
after the date of death. In any event, the entire distribution upon death must
be distributed within five years after the date of death unless an Income Plan
is selected or a surviving spouse continues the Contract in accordance with the
following sections:

Payments from the Income Plan must begin within one year of the date of death
and must be payable throughout:

. the life of the Owner; or

. a period not to exceed the life expectancy of the Owner; or

. the life of the Owner with payments guaranteed for a period not to exceed
the life expectancy of the Owner.

If the surviving spouse of the deceased Owner is the new Owner, then the
spouse may elect one of the options listed above or may continue the Contract
in the accumulation phase as if the death had not occurred. The Company will
only permit the Contract to be continued once. If the Contract is continued in
the accumulation phase, the surviving spouse may make a single withdrawal of
any amount within one year of the date of death without incurring a withdrawal
charge. However, any applicable Market Value Adjustment, determined as of the
date of the withdrawal, will apply.

DEATH BENEFIT AMOUNT

Prior to the Payout Start Date, the death benefit is equal to the greatest
of:

(a) the Contract Value on the date the Company determines the death
benefit; or

(b) the amount that would have been payable in the event of a full
withdrawal of the Contract Value on the date the Company determines the
death benefit; or

(c) the Contract Value on the Death Benefit Anniversary immediately
preceding the date we determine the death benefit adjusted by any
purchase payments, withdrawals and charges made between such Death
Benefit Anniversary and the date we determine the death benefit; or

(d) the greatest of the anniversary values as of the date we determine the
death benefit. The anniversary value is equal to the Contract Value on
a Contract Anniversary, increased by purchase payments made since that
anniversary and reduced by the amount of any partial withdrawals since
that anniversary. Anniversary values will be calculated for each
Contract Anniversary prior to the earlier of: (i) the date we determine
the death benefit, or (ii) the deceased's attained age 75 or 5 years
after the date the Contract was established, if later.

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.

The Company will not settle any death claim until it receives due proof of
death.

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<PAGE>

CHARGES AND OTHER DEDUCTIONS

DEDUCTIONS FROM PURCHASE PAYMENTS

No deductions are made from purchase payments. Therefore, the full amount of
every purchase payment is invested in the Investment Alternative(s).

WITHDRAWAL CHARGE (CONTINGENT DEFERRED SALES CHARGE)

You may withdraw the Contract Value at any time before the earliest of the
Payout Start Date, the death of any Owner or, if the Owner is not a natural
person, the death of the Annuitant.

There are no withdrawal charges on amounts withdrawn up to 10% of the amount
of purchase payments. Amounts withdrawn in excess of this may be subject to a
withdrawal charge. Amounts not subject to a withdrawal charge and not withdrawn
in a Contract Year are not carried over to later Contract Years. Withdrawal
charges, if applicable, will be deducted from the amount paid.

For purposes of calculating the amount of the withdrawal charge, withdrawals
are assumed to come from purchase payments first, beginning with the oldest
payment. Withdrawals made after all purchase payments have been withdrawn, will
not be subject to a withdrawal charge. For partial withdrawals, the Contract
Value will be adjusted to reflect the amount of payment received by the Owner,
any withdrawal charge, any applicable taxes and any Market Value Adjustment.

Withdrawals in excess of the preferred withdrawal amount will be subject to a
withdrawal charge as set forth below:

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 withdrawal charges will
cover all distribution expenses in connection with the Contract.

In addition, federal and state income tax may be withheld from withdrawal
amounts. Certain terminations may also be subject to a federal tax penalty. See
"Federal Tax Matters," page .

The Company reserves the right to waive the withdrawal charge with respect to
Contracts issued to employees and registered representatives of any broker-
dealer that has entered into a sales agreement with Allstate Life Financial
Services, Inc. ("ALFS") to sell the Contracts and all wholesalers and their
employees that are under agreement with ALFS to wholesale the Contract. The
withdrawal charge will also be waived on withdrawals taken to satisfy IRS
required minimum distribution rules for this Contract.

CONTRACT MAINTENANCE CHARGE

A contract maintenance charge is deducted annually from the Contract Value to
reimburse the Company for its actual costs in maintaining each Contract and the
Variable Account. The Company guarantees that the amount of this charge will
not exceed $35 per Contract Year over the life of the Contract. This charge
will be waived if the total purchase payments are $50,000 or more on a Contract
Anniversary or if all money is allocated to the Fixed Account on the Contract
Anniversary.

Maintenance costs include but are not limited to expenses incurred in billing
and collecting purchase payments; keeping records; processing death claims,
cash withdrawals, and policy changes; 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 prior to the payout start date, the contract
maintenance charge will be deducted from Sub-accounts of the Variable Account
in the same proportion that the Owner's value in each bears to the total value
in all Sub-accounts of the Variable Account. 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 $35, or $2.92, will be deducted if
there are twelve income payments during the Contract Year. A full contract
maintenance charge will be deducted if the Contract is terminated on any date
other than a Contract Anniversary.

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<PAGE>

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 you have allocated to the Sub-
accounts of 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
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 Contracts. 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

The Company will deduct a mortality and expense risk charge which is equal,
on an annual basis, to 1.35% of the daily net assets you have allocated to the
Sub-accounts of the Variable Account. The Company estimates that .95% is
attributable to the assumption of mortality risks and .40% is attributable to
the assumption of expense risks. The Company guarantees that the amount of this
charge will not increase over the life of the Contract.

The mortality risk arises from the Company's guarantee to cover all death
benefits and to make income payments in accordance with the Income Plan
selected and the Income Payment Tables.

The expense risk arises from the possibility that the contract maintenance
and administrative expense charge, both of which are guaranteed not to
increase, will be insufficient to cover actual administrative expenses.

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.

TAXES

The Company will deduct applicable state premium taxes or other similar
policyholder 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, the charge for applicable premium taxes will be
deducted from each Investment Alternative in the proportion that the Owner's
value in the Investment Alternative bears to the total Contract Value.

TRANSFER CHARGES

The Company reserves the right to assess a $10 charge on each transfer in
excess of twelve per Contract Year, excluding transfers through Dollar Cost
Averaging and Automatic Fund Rebalancing. The Company is presently waiving this
charge.

FUND EXPENSES

A complete description of the expenses and deductions from the Funds is found
in the prospectus for the Fund Series. This prospectus is accompanied by the
prospectus for the Fund Series.

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. The Contract cannot be
jointly owned by both a non-natural person and a natural person.

BENEFICIARY

Subject to the terms of any irrevocable Beneficiary designation, the Owner
may change the Beneficiary at any time by notifying the Company in writing. Any
change will be effective at the time it is signed by the Owner, whether or not
the Annuitant is living when the change is received by the Company. The Company
will not, however, be liable as to any payment or settlement made prior to
receiving the written notice.

Unless otherwise provided in the Beneficiary designation, if a Beneficiary
predeceases the Owner and there are no other surviving beneficiaries, the new
Beneficiary will be: the Owner's spouse if living; otherwise, the Owner's
children, equally, if living; otherwise, the Owner's estate. Multiple
Beneficiaries may be named. Unless otherwise provided in the Beneficiary
designation, if more than one Beneficiary survives the Owner, the surviving
Beneficiaries will share equally in any amounts due.

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<PAGE>

ASSIGNMENTS

The Company will not honor an assignment of 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. Federal law prohibits or restricts the assignment of benefits under
many types of retirement plans and the terms of such plans may themselves
contain restrictions on assignments.

DELAY OF PAYMENTS

Payment of any amounts due from the Variable Account under the Contract will
occur within seven days, unless:

1. The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted;

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

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

Payments or transfers from the Fixed Account may be delayed for up to 6
months.

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 to make any changes required by the Code or by any other
applicable law.

CUSTOMER INQUIRIES

The Owner or any persons interested in the Contract may make inquiries
regarding the Contract by calling or writing your representative or the Company
at:

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
POST OFFICE BOX 9075
FARMINGVILLE, NEW YORK 11738-9075
1-(800)692-4682

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 Regulations,
and (3) the issuing insurance company, instead of the annuity owner, is
considered the owner for federal income tax purposes of any separate account
assets funding the contract.

NON-NATURAL OWNERS

As a general rule, annuity contracts owned by non-natural persons such as
corporations, trusts, or other entities are not treated as annuity contracts
for federal income tax purposes and the income on such contracts is taxed as
ordinary income received or accrued by the owner during the taxable year. There
are several exceptions to the general rule for contracts owned by non-natural
persons which are discussed in the Statement of Additional Information.

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<PAGE>

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 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 Funds or their investments, the Company expects the Funds to meet the
diversification requirements.

OWNERSHIP TREATMENT

In connection with the issuance of the regulations on the adequate
diversification standards, the Department of the Treasury announced that the
regulations do not provide guidance concerning the extent to which contract
owners may direct their investments among Sub-accounts of a variable account.
The Internal Revenue Service has previously stated in published rulings that a
variable contract owner will be considered the owner of separate account assets
if the owner possesses incidents of ownership in those assets such as the
ability to exercise investment control over the assets. At the time the
diversification regulations were issued, Treasury announced that guidance would
be issued in the future regarding the extent that owners could direct their
investments among Sub-accounts without being treated as owners of the
underlying assets of the Variable Account. 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 assets of the Variable Account. In those circumstances, income and gains
from the Variable Account assets would be includible in the Contract Owners'
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'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 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 DATES

If the contract's scheduled maturity date is at a time when the annuitant has
reached an advanced age, e.g., past age 85, it is possible that the contract
would not be treated as an annuity. In that event, the income and gains under
the contract could 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 before the withdrawal
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 the owner's 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. The contract provides a death benefit that in certain
circumstances may exceed the greater of the payments and the contract value. As
described elsewhere in the prospectus, the Company imposes certain charges with
respect to the death benefit. It is possible that some portion of those charges
could be treated for federal tax purposes as a partial withdrawal from the
contract.

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 these ratios, the annuity payments will be fully
taxable. If annuity payments cease because of the death of the annuitant before
the total

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<PAGE>

amount of the investment in the contract is recovered, the unrecovered amount
generally will be allowed as a deduction to the Owner for the 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 owner attaining age 59 1/2.
However, there should be no penalty tax on distributions to owners (1) made on
or after the owner attains age 59 1/2; (2) made as a result of the owner's
death or disability; (3) made in substantially equal periodic payments over
life or life expectancy; (4) made under an immediate annuity; or (5)
attributable to an investment in the contract before August 14, 1982. Similar
rules apply for distributions under certain qualified contracts. A competent
tax advisor should be consulted to determine if any other exceptions to the
penalty apply to your specific circumstances.

AGGREGATION OF ANNUITY CONTRACTS

All non-qualified deferred annuity contracts issued by the Company (or its
affiliates) to the same owner during any calendar year will be aggregated and
treated as one annuity contract for purposes of determining the taxable amount
of a distribution.

TAX QUALIFIED CONTRACTS

Annuity contracts may be used as investments with certain tax qualified plans
such as: (1) Individual Retirement Annuities under Section 408(b) of the Code;
(2) Simplified Employee Pension Plans under Section 408(k) of the Code; (3) Tax
Sheltered Annuities under Section 403(b) of the Code; (4) Corporate and Self
Employed Pension and Profit Sharing Plans; and (5) State and Local Government
and Tax-Exempt Organization Deferred Compensation Plans. In the case of certain
tax qualified plans, the terms of the plans may govern the right to benefits,
regardless of the terms of the contract.

RESTRICTIONS UNDER SECTION 403(B) PLANS

Section 403(b) of the Code provides for tax-deferred retirement savings plans
for employees of certain non-profit and educational organizations. In
accordance with the requirements of Section 403(b), any annuity contract used
for a 403(b) plan must provide that distributions attributable to salary
reduction contributions made after 12/31/88, and all earnings on salary
reduction contributions, may be made only after the employee attains age 59
1/2, separates from service, dies, becomes disabled or on account of hardship
(earnings on salary reduction contributions may not be distributed on the
account of hardship). These limitations do not apply to withdrawals where the
Company is directed to transfer some or all of the contract value to another
Section 403(b) plans.

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.

DISTRIBUTION OF THE CONTRACTS

Allstate Life Financial Services, Inc. ("ALFS"), 3100 Sanders Road,
Northbrook Illinois, an indirect wholly owned subsidiary of Allstate Insurance
Company, acts as the principal underwriter of the Contracts. ALFS is registered
as a broker-dealer under the Securities Exchange Act of 1934 and became a
member of the National Association of Securities Dealers, Inc. on June 30,
1993. Contracts are sold by registered representatives of broker-dealers or
bank employees who are licensed insurance agents appointed by the Company,
either individually or through an incorporated insurance agency. Contracts may
be sold by representatives or employees of banks which may be acting as broker-
dealers without separate registration under the Securities Exchange Act of
1934, pursuant to legal and regulatory exceptions.

Commissions paid may vary, but in aggregate are not anticipated to exceed
6.75% of any purchase payment. In addition, under certain circumstances,
certain sellers of the Contracts may be paid persistency bonuses which will
take into account, among other things, the length of time purchase payments
have been held under a Contract, and the amount of purchase payments. A
persistency bonus is not expected to exceed .25%, on an annual basis, of the
purchase payments considered in connection with the bonus. These commissions
are

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<PAGE>

intended to cover distribution expenses. In addition, sale of the Contract may
count toward incentive program awards for the registered representative. All
Commissions are paid by the Company and not by the separate account.

The underwriting agreement with ALFS provides for indemnification of ALFS by
the Company for liability to Owners arising out of services rendered or
Contracts issued.

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 Fund Series. The Company will solicit and cast each vote
according to the procedures set up by the Fund Series and to the extent
required by law. The Company reserves the right to vote the eligible shares in
its own right, if subsequently permitted by the Investment Company Act of
1940, its regulations or interpretations thereof.

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.

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

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 eligible Fund.

SELECTED FINANCIAL DATA

The following selected financial data for the Company should be read in
conjunction with the financial statements and notes thereto included in this
prospectus beginning on page F-1.

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

SELECTED FINANCIAL DATA
($ IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR-END FINANCIAL DATA 1995 1994 1993 1992 1991
- ----------------------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
For The Years Ended
December 31:
Revenues................. $ 250,854 $ 186,249 $ 227,445 $ 203,890 $186,955
Income from Continuing
Operations.............. 19,522 18,221 13,163 12,225 15,996
Net Income............... 19,522 18,221 13,163 12,225 15,996
As of December 31:
Total Assets............ 1,842,969 1,449,993 1,410,895 1,162,763 943,871
</TABLE>

In 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions," which resulted in a charge
against 1992 earnings of $623 thousand on an after tax basis. Effective
December 31, 1993, the Company adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", which requires that investments
classified as available for sale be carried at fair value. The net effect of
adoption of this statement increased shareholder's equity at December 31, 1993
by $25,391 and did not have a material impact on net income. (See note 3 to
the Financial Statements.)

<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA 1996 1995
- ------------------------ --------- ---------
<S> <C> <C>
For The Quarters Ended June 30:
Revenues.................................................. $ 56,667 $ 59,766
Net Income................................................ 5,313 4,434
As of June 30:
Total Assets............................................. 1,793,492 1,577,384
</TABLE>

20
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following highlights significant factors influencing results of
operations and financial position.

Allstate Life Insurance Company of New York ("the Company"), which is wholly
owned by a wholly-owned subsidiary ("Parent") of Allstate Insurance Company
("Allstate"), markets life insurance and group and individual annuities in the
state of New York, with products consisting predominately of structured
settlement annuities sold through independent brokers. The Company also
utilizes Allstate agencies and direct marketing to distribute its traditional
and universal life and accident and disability insurance products.
Additionally, flexible premium deferred variable annuity contracts and certain
single and flexible premium annuities are marketed to individuals through the
account executives of Dean Witter Reynolds Inc.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
($ IN THOUSANDS)
<S> <C> <C> <C>
Statutory premiums and deposits.............. $ 216,361 $ 153,000 $ 226,993
========== ========== ==========
Invested assets (1).......................... 1,335,854 1,184,024 1,148,709
Separate Account assets (2).................. 220,141 175,918 145,866
---------- ---------- ----------
Invested assets, including Separate Account
assets...................................... 1,555,995 1,359,942 1,294,575
========== ========== ==========
Premium income and contract charges.......... 148,316 88,560 126,913
Net investment income........................ 104,384 96,911 95,956
Policy benefits.............................. 198,055 137,434 175,676
Operating expenses........................... 23,366 20,205 31,894
Early retirement program..................... 1,210
---------- ---------- ----------
Income from operations....................... 31,279 26,622 15,299
Income tax on operations..................... 10,557 8,907 5,110
---------- ---------- ----------
Net operating income......................... 20,722 17,715 10,189
Realized capital gains and losses, after tax. (1,200) 506 2,974
---------- ---------- ----------
Net income................................... $ 19,522 $ 18,221 $ 13,163
========== ========== ==========
</TABLE>
- --------
(1) Fixed income securities included in invested assets are carried at
amortized cost in the table above and at fair value in the statements of
financial position.
(2) Separate Accounts are included at fair value.

STATUTORY PREMIUMS AND DEPOSITS

Statutory premiums, which include premiums and deposits for all products,
increased $63.4 million or 41.4% in 1995 from 1994. The increase is primarily
due to growth in sales of individual annuities, which comprised 77.3% of
statutory premiums and deposits in 1995. Increased sales of structured
settlement annuities in 1995 were partially offset by a decrease in the sales
of variable annuities. In 1994, statutory premiums decreased 32.6% from 1993
levels. The decrease was due primarily to lower sales of structured settlement
annuities.

PREMIUM INCOME, CONTRACT CHARGES AND PROVISION FOR POLICY BENEFITS

Premium income and contract charges under generally accepted accounting
principles ("GAAP") increased 67.5% in 1995 and decreased 30.2% in 1994. Under
GAAP, revenues exclude deposits on most annuities and premiums on universal
life insurance policies. The changes in premium and contract charges in 1995
and 1994 reflect fluctuations primarily in the level of sales of structured
settlement annuities sold with life contingencies. Policy benefits increased
$60.6 million, or 44.1% during 1995, and decreased $38.2 million or 21.8% in
1994. These changes also reflect fluctuations primarily in the level of sales
of structured settlement annuities with life contingencies.

NET INVESTMENT INCOME

Pre-tax net investment income increased 7.7% in 1995 and was essentially
unchanged in 1994. The increase in 1995 was related to the 12.8% or $151.8
million increase in invested assets resulting primarily from growth in new
business, partially offset by surrenders and other benefits paid.

21
<PAGE>

OPERATING EXPENSES

Operating expenses increased by $2.0 million, or 9.1%, resulting from an
increase in amortization of deferred acquisition costs, partially offset by the
costs of an early retirement program recorded in 1994. The decrease of $10.5
million, or 32.9%, in 1994 operating expense is attributable to a decrease in
amortization of deferred acquisition costs, which were higher in 1993 as a
result of annuity contract surrenders.

In 1994, an after tax charge of $0.8 million related to the cost of an early
retirement program offered to certain home office employees was recorded. The
program provides one year of salary continuation and related benefits during
the salary continuation period, and an enhanced retirement benefit.

NET OPERATING INCOME

Net operating income increased 17.0% in 1995 from 1994, which in turn
increased 73.9% from 1993. The increase in net operating income in 1995 was
primarily due to higher margins and growth in revenues. The increase in 1994
over 1993 was primarily due to a decrease in operating expenses.

REALIZED CAPITAL GAINS AND LOSSES

Net realized capital losses were reported in 1995 as compared to net realized
capital gains in 1994. Capital losses in 1995 were realized primarily from
writedowns of mortgage loans, partially offset by gains on sales of fixed
income securities. Realized capital gains in 1994 decreased from gains realized
in 1993. While the Company experienced lower asset writedowns in 1994, realized
capital gains from sales of securities and bond calls were also significantly
lower than the prior year. Realized capital gains in 1993 included the effect
of sales related to repositioning a portion of the investment portfolio to
improve the matching of assets with related liabilities.

FINANCIAL POSITION

INVESTMENTS

The Company follows an investment strategy that combines the goals of safety,
stability, liquidity, growth and total return. It seeks to balance preservation
of principal with after-tax yield while maintaining portfolio diversification.
The composition of the portfolio is the result of various interrelated
investment considerations including protection of principal, appreciation
potential, tax consequences, and yield, as well as asset/liability management
issues such as cash flow and duration matching. To achieve an economic balance
between assets and liabilities, the investment portfolios are segmented by type
of insurance product.

The composition of the investment portfolio at December 31, 1995 is presented
in the table below (see Notes 2 and 6 to the financial statements for
investment accounting policies and additional information).

<TABLE>
<CAPTION>
PERCENT
($ IN THOUSANDS) TO TOTAL
---------------- --------
<S> <C> <C>
Fixed income securities
Privately placed corporate bonds..................... $ 466,208 30.2%
U.S. government and agencies......................... 435,555 28.3
Publicly traded corporate bonds...................... 258,829 16.8
Mortgage-backed securities........................... 225,560 14.6
State and municipal.................................. 38,741 2.5
---------- -----
Total fixed income securities....................... $1,424,893 92.4
Mortgage loans........................................ 86,394 5.6
Policy loans.......................................... 22,785 1.5
Short-term and other.................................. 7,257 .5
---------- -----
Total............................................... $1,541,329 100.0%
========== =====
</TABLE>

FIXED INCOME SECURITIES

The Company generally holds its fixed income securities for the long term,
but has classified all of these securities at December 31, 1995, as "available
for sale" which are carried in the statement of financial position at fair
value, to allow maximum flexibility in portfolio management. At December 31,
1995, net unrealized capital gains on the fixed income securities portfolio
totaled $205.5 million compared to an unrealized capital loss of $11.5 million
as of December 31, 1994. The significant change in the unrealized gain/loss
position is primarily attributable to declining interest rates.

As of December 31, 1995, the fixed income securities portfolio included
$466.2 million or 30.2% of the portfolio invested in privately placed corporate
obligations, stated at fair value. Compared to public securities, private
placements generally afford the advantages of higher yields, improved cash flow
predictability through pro-rata sinking funds on many bonds, and a combination
of

22
<PAGE>

covenant and call protection features designed to better protect the holder
against losses resulting from credit deterioration, reinvestment risk, and
losses resulting from fluctuations in interest rates. The relative
disadvantages of private placements include the fact that the securities are
generally less liquid than public securities and that access to information
regarding privately placed securities is generally more restricted than for
public securities. The Company determines the fair value of privately placed
fixed income securities based on discounted cash flows using current interest
rates for similar securities.

At December 31, 1995 the Company had $225.6 million or 14.6% of the portfolio
invested in mortgage-backed securities ("MBS"). These securities provide
higher-than-average credit quality and liquidity. The Company mitigates credit
risk primarily by purchasing securities with underlying collateral that is
guaranteed by U.S. government entities.

MBS are subject to risks associated with repayment of principal, which may
result in the securities having a different actual maturity and yield than
anticipated at the time of purchase. Securities that have an amortized cost
greater than par value, will incur a decrease in yield if mortgages repay
faster than expected. Those securities that have an amortized cost lower than
par value generate an increase in yield if mortgages repay faster than
expected. The degree to which a security is susceptible to changes in yield is
influenced by the difference between its amortized cost and par value, the
relative sensitivity to repayment of the underlying mortgages backing the
securities in a changing interest rate environment, and the repayment priority
of the securities in the overall securitization structure. The Company attempts
to limit repayment risk by purchasing MBS whose cost does not significantly
exceed par value, and with repayment protection to provide a more certain cash
flow to the Company. At December 31, 1995, the amortized cost of the MBS
portfolio was below par value by $8.1 million.

The Company closely monitors its fixed income portfolio for declines in value
that are other than temporary. Securities are placed on non-accrual status when
they are in default or when the receipt of interest payments is in doubt. The
total pretax provisions for losses attributable to fixed income securities for
1995, 1994 and 1993 were $2.4, $0.6 and $1.2 million, respectively.

The Company monitors the quality of its fixed income portfolio, in part, by
categorizing certain investments as problem, restructured or potential problem.
Problem fixed income securities as securities in default with respect to
principal and/or interest and/or securities issued by companies that went into
bankruptcy subsequent to acquisition of the security. Restructured fixed income
securities have modified terms and conditions that were not at current market
rates or terms at the time of the restructuring. Potential problem fixed income
securities are current with respect to contractual principal and/or interest,
but because of other facts and circumstances, management has serious doubts
regarding the borrower's ability to pay future interest and principal, which
causes management to believe these securities may be classified as problem or
restructured in the future.

There were no problem and potential problem fixed income investments as of
December 31, 1995, compared to $7.0 million of potential problem fixed income
securities at December 31, 1994. The $7.0 million of potential problem fixed
income securities at December 31, 1994 related to a single security and has
been removed from the potential problem category due to its improved status.

FINANCIAL FUTURES CONTRACTS

As part of its asset/liability management, the Company generally utilizes
futures contracts to hedge its interest rate risk related to anticipatory
investment purchases as well as to enhance asset/liability management. The
Company does not hold or issue these instruments for trading purposes. At
December 31, 1995, the Company had $22.9 million in notional amount of futures
contracts outstanding, all of which mature within one year.

MORTGAGE LOANS

The Company's $86.4 million investment in mortgage loans at December 31, 1995
is comprised primarily of loans secured by first mortgages on developed,
commercial real estate. Geographical and property type diversification are key
considerations used to manage the Company's mortgage loan risk.

The Company closely monitors its commercial mortgage loan portfolio on a
loan-by-loan basis. Loans with an estimated collateral value less than the
loan's balance, as well as loans with other characteristics indicative of a
higher than normal credit risk, are reviewed by financial and investment
management for purposes of establishing valuation allowances and placing loans
on non-accrual status. The underlying collateral values are based upon
discounted property cash flow projections, which are updated at least annually
or as conditions change. The total pretax provisions for loan losses were $2.2,
$0.7 and $1.2 million, during 1995, 1994 and 1993, respectively.

The Company defines problem commercial mortgage loans as loans that are in
foreclosure, loans for which a principal or interest payment is over 60 days
past due, or are current with respect to interest payments, but considered in
substance foreclosed. Restructured commercial loans have modified terms and
conditions that were not at prevailing market rates or terms at the time of the
restructuring. Potential problem commercial mortgage loans are current with
respect to interest payments, or less than 60 days delinquent as to contractual
principal and interest payments, but because of other facts and circumstances,
management has serious doubts regarding the borrower's ability to pay future
interest and principal which causes management to believe these loans may be
classified as problem or restructured in the future.

23
<PAGE>

At December 31, 1995 and December 31, 1994 total problem, restructured and
potential problem loans, net of valuation allowances, were $9.6 million and
$8.4 million, respectively. The net carrying value of impaired loans (see Note
6 of the financial statements) at December 31, 1995 was $9.6 million. All
problem, restructured and potential problem loans were considered to be
impaired at December 31, 1995.

SEPARATE ACCOUNTS

Separate Account balances increased 25.1% from $175.9 million at December 31,
1994 to $220.1 million at December 31, 1995 due to sales of flexible premium
deferred variable annuity contracts, transfers from fixed annuities to variable
annuities and favorable investment performance of the Separate Accounts,
partially offset by surrenders.

RESERVE FOR LIFE INSURANCE POLICY BENEFITS

The reserve for life insurance policy benefits increased 33.4% to $838.7
million at December 31, 1995, resulting primarily from the sales of structured
settlement annuities with life contingencies.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal source of funds consists primarily of premiums and
annuity deposits and collections of principal and income from the investment
portfolio. The Company generates substantial positive cash flows from operating
activities. The major use of these funds are policyholder claims and benefits,
contract maturities, surrenders and other operating costs.

FINANCIAL RATINGS AND STRENGTH

Liquidity for life insurance companies is measured by their ability to pay
contractual benefits, pay operating expenses and fund investment commitments.
Independent insurance industry rating organizations rate life insurance
companies based on their overall performance and ability to meet their
policyholder obligations over a long period of time. Such ratings are directed
toward the protection of policyholders, not investors. Claims-paying ability
ratings at December 31, 1995 assigned to the Company include AA+ and A+(g) from
Standard & Poor's and A.M. Best, respectively. In addition, Moody's assigned
the Company an Aa3 financial stability rating at December 31, 1995.

The National Association of Insurance Commissioners ("NAIC") has a standard
for assessing the solvency of insurance companies, which is referred to as
"risk-based capital" ("RBC"). The requirement consists of a formula for
determining each insurer's RBC and a model law specifying regulatory actions if
an insurer's RBC falls below specified levels. The RBC formula for life
insurance companies establishes capital requirements relating to insurance
risk, business risk, asset risk and interest rate risk. At December 31, 1995,
RBC for the Company was significantly above levels which would require
regulatory action.

24
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1996

GENERAL

The following highlights significant factors influencing results of
operations and changes in financial position of Allstate Life Insurance Company
of New York (the "Company"). It should be read in conjunction with the
discussion and analysis and financial statements thereto found under Items 7
and 8 of Part II of the Allstate Life Insurance Company of New York Annual
Report on Form 10-K.

The Company, which is wholly owned by a wholly-owned subsidiary ("Parent") of
Allstate Insurance Company ("Allstate"), markets life insurance and group and
individual annuities in the state of New York, with products consisting
predominately of structured settlement annuities sold through independent
brokers. The Company also utilizes Allstate agencies and direct marketing to
distribute its traditional and universal life and accident and disability
insurance products. Certain single and flexible premium annuities are marketed
to individuals through the account executives of Dean Witter Reynolds Inc. The
Company issues flexible premium deferred variable annuity contracts, also sold
through the account executives of Dean Witter Reynolds Inc., the assets and
liabilities of which are legally segregated and reflected in the accompanying
statements of financial position as the assets and liabilities of the Separate
Accounts.

Separate Account assets and liabilities are carried at fair value in the
statements of financial position. Investment income and realized gains and
losses of the Separate Account investments accrue directly to the
contractholders (net of fees) and, therefore are not included in the Company's
statements of operations.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- -----------
($ IN THOUSANDS) ($ IN THOUSANDS)
<S> <C> <C> <C> <C>
Statutory premiums and deposits. $ 44,541 $ 47,465 $ 89,359 $ 118,751
========== ========== ========== ===========
Invested assets (1)............. $1,396,589 $1,259,751 $1,396,589 $ 1,259,751
Separate Account assets......... 238,347 195,438 238,347 195,438
---------- ---------- ---------- -----------
Invested assets, including
Separate Account assets........ $1,634,936 $1,455,189 $1,634,936 $ 1,455,189
========== ========== ========== ===========
Premium income and contract
charges........................ $ 28,417 $ 34,829 $ 57,221 $ 86,445
Net investment income........... 27,830 25,455 55,424 50,682
Policy benefits................. 42,372 46,864 85,389 109,771
Operating expenses.............. 5,759 6,276 11,379 12,177
Income from operations.......... 8,116 7,144 15,877 15,179
Income tax on operations........ 3,076 2,374 5,867 5,098
---------- ---------- ---------- -----------
Net operating income............ 5,040 4,770 10,010 10,081
---------- ---------- ---------- -----------
Realized capital gains and
losses, after tax.............. 273 (336) 228 (1,386)
---------- ---------- ---------- -----------
Net income...................... $ 5,313 $ 4,434 $ 10,238 $ 8,695
========== ========== ========== ===========
</TABLE>
- --------
(1) Fixed income securities are included in invested assets at amortized cost
in the table above and are carried at fair value in the statements of
financial position. Separate Accounts are included at fair value in both
the table above and the statements of financial position.

STATUTORY PREMIUMS AND DEPOSITS

Statutory premiums, which include premiums and deposits for all products,
decreased $2.9 million, or 6.2% for the second quarter of 1996 from $47.5
million for the same period in 1995. For the first six months of 1996,
statutory premiums decreased $29.4 million or 24.8% from $118.8 million for the
same period in 1995. The decreases for both periods are due primarily to lower
sales of structured settlement annuities, partially offset by increases in
sales of variable annuity and life products.

PREMIUM INCOME, CONTRACT CHARGES AND PROVISION FOR POLICY BENEFITS

Premium income and contract charges under generally accepted accounting
principles ("GAAP") decreased 18.4% for the three-month period ended June 30,
1996 and decreased 33.8% for the first six months of 1996 from the same periods
in 1995. Under GAAP, revenues exclude deposits on most annuities and premiums
on universal life insurance policies. The decrease in premium and contract
charges in 1996 is primarily the result of lower sales of structured settlement
annuities with life contingencies. Policy benefits decreased $4.5 million, or
9.6% during the second quarter of 1996, and decreased $24.4 million, or 22.2%
for the six months ended June 30,

25
<PAGE>

1996, also reflecting the decreased sales of structured settlement annuities
with life contingencies, partially offset by higher mortality costs resulting
from growth in the life insurance block of business.

NET INVESTMENT INCOME

Pre-tax net investment income increased 9.3% in the second quarter of 1996
and 9.4% for the six months ended June 30, 1996, compared to the same periods
in 1995. The increases were primarily related to the 10.9% or $136.8 million
increase in invested assets. The overall portfolio yield declined slightly, as
proceeds from calls and maturities as well as new premiums and deposits were
invested in securities yielding less than the average portfolio rate.

OPERATING EXPENSES

Operating expenses decreased by $517 thousand, or 8.2%, in the second quarter
of 1996 and $798 thousand, or 6.6%, for the six months ended June 30, 1996,
compared to the same periods in 1995. The decrease is primarily attributable to
reduced acquisition costs due to lower sales of structured settlement
annuities. First quarter 1995 operating expenses reflected a one-time $303
thousand benefit related to a reduced rate of amortization of deferred policy
acquisition costs, due to favorable universal life insurance persistency.

NET OPERATING INCOME

Net operating income increased by 5.7% in the second quarter of 1996,
compared to the same period in 1995. The increase for the quarter is primarily
attributable to higher mortality margins and reduced operating expenses. Net
operating income for the first six months of 1996 remained essentially
unchanged as compared to the same period in 1995, since 1995 included the
nonrecurring benefit attributable to the amortization of deferred acquisition
costs as described above.

REALIZED CAPITAL GAINS AND LOSSES

Net realized after-tax capital gains were $273 thousand and $228 thousand for
the three- and six-month periods ending June 30, 1996, compared to net realized
after-tax losses of $336 thousand and $1.4 million for the comparable periods
in 1995. The increases in capital gains are primarily attributable to lower
commercial mortgage loan losses in 1996.

INVESTMENTS

FIXED INCOME SECURITIES

The Company monitors the quality of its fixed income portfolio, in part, by
categorizing certain investments as problem, restructured or potential problem
investments. Problem fixed income securities are securities in default with
respect to principal and/or interest and/or securities issued by companies that
went into bankruptcy subsequent to acquisition of the security. Restructured
fixed income securities have modified terms and conditions that were not at
current market rates or terms at the time of the restructuring. Potential
problem fixed income securities are current with respect to contractual
principal and/or interest, but because of other facts and circumstances,
management has serious doubts regarding the borrower's ability to pay future
interest and principal, which causes management to believe these securities may
be classified as problem or restructured in the future. At June 30, 1996,
problem, restructured and potential problem fixed income securities were $3.8
million. There were no problem, restructured, and potential problem fixed
income securities at December 31, 1995.

MORTGAGE LOANS

The Company monitors the quality of its mortgage loans by categorizing
certain loans as problem, restructured or potential problem. Problem commercial
mortgage loans are loans that are in foreclosure, loans for which a principal
or interest payment is over 60 days past due, or are current with respect to
interest payments, but considered in-substance foreclosed. Restructured
commercial mortgage loans have modified terms and conditions that were not at
current market rates or terms at the time of the restructuring. Potential
problem commercial mortgage loans are current with respect to interest
payments, or less than 60 days delinquent as to contractual principal and/or
interest payments, but because of other facts and circumstances, management has
serious doubts regarding the borrower's ability to pay future interest and
principal which causes management to believe these loans may be classified as
problem or restructured in the future. Total problem, restructured and
potential problem loans, net of valuation allowances, were $6.5 million and
$9.6 million at June 30, 1996 and December 31, 1995, respectively.

The total pre-tax provision for loan losses was $104 thousand and $2.2
million for the six months ended June 30, 1996 and 1995, respectively. The
carrying value of impaired loans was $4.4 million and $9.6 million as of June
30, 1996 and December 31, 1995, respectively.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal source of funds consists primarily of premiums and
annuity deposits and collections of principal and income from the investment
portfolio. The Company generates substantial positive cash flows from operating
activities. The major uses of these funds are policyholder claims and benefits,
acquisition of investments, contract maturities, surrenders and other operating
costs.

26
<PAGE>

COMPETITION

The Company is engaged in a business that is highly competitive because of
the large number of stock and mutual life insurance companies and other
entities competing in the sale of insurance and annuities. There are
approximately 2,000 stock, mutual and other types of insurers in business in
the United States. Several independent rating agencies regularly evaluate life
insurer's claims-paying ability, quality of investments and overall stability.
A.M. Best Company assigns A+g (Superior) to the Company. A.M. Under Best's
rating policy and procedure, the Company is assigned the Best's rating of its
parent Company, and is based on the consolidated performance of the parent and
its subsidiary. Standard & Poor's Insurance Rating Services assigns AA+
(Excellent) to the Company and Moody's assigns an Aa3 (Excellent) financial
stability rating to the Company. These ratings do not relate to the investment
performance of the Variable Account.

EMPLOYEES

As of December 31, 1995, the Company had approximately 80 employees at its
home office in Farmingville, New York who work primarily on the Company's
matters.

PROPERTIES

The Company occupies office space in Farmingville, New York which is owned by
its parent company.

STATE AND FEDERAL REGULATION

The insurance business of the Company is subject to comprehensive and
detailed regulation and supervision in the State of New York. The laws of New
York establish a supervisory agency with broad administrative powers with
respect to licensing to transact business, overseeing trade practices,
licensing agents, approving policy forms, establishing reserve requirements,
fixing maximum interest rates on life insurance policy loans and minimum rates
for accumulation of surrender values, prescribing the form and content of
required financial statements and regulating the type and amounts of
investments permitted. Each insurance company is required to file detailed
annual reports with the supervisory agency and its operations and accounts are
subject to examination by such agency at regular intervals.

Under insurance guaranty fund law, for the State of New York, insurers doing
business therein can be assessed up to prescribed limits for contract owner
losses incurred as a result of company insolvencies. The amount of any future
assessments on the Company under these laws cannot be reasonably estimated.
These laws do provide, however, that an assessment may be excused or deferred
if it would threaten an insurer's own financial strength.

In addition, the State of New York regulates affiliated groups of insurers,
such as the Company and its affiliates, under insurance holding company
legislation. Under such laws, intercompany transfers of assets and dividend
payments from insurance subsidiaries may be subject to prior notice or
approval, depending on the size of such transfers and payments in relation to
the financial positions of the companies.

Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Current and proposed federal measures which may
significantly affect the insurance business include employee benefit
regulation, controls on medical care costs, removal of barriers preventing
banks from engaging in the securities and insurance business, tax law changes
affecting the taxation of insurance companies, the tax treatment of insurance
products and its impact on the relative desirability of various personal
investment vehicles, and proposed legislation to prohibit the use of gender in
determining insurance and pension rates and benefits.

EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY

The directors and executive officers are listed below, together with
information as to their ages, dates of election and principal business
occupations during the last five years (if other than their present business
occupations).

LOUIS G. LOWER, II, 50, Chairman of the Board and President (1992)*

He is also President and Chairman of the Board of Directors of Allstate Life
Insurance Company, Northbrook Life Insurance Company, Glenbrook Life and
Annuity Company, Glenbrook Life Insurance Company, and The Northbrook
Corporation; Chairman of the Board of Directors and Chief Executive Officer of
Surety Life Insurance Company and Lincoln Benefit Life Company; Chairman of the
Board of Directors of Allstate Settlement Corporation; Director and Senior Vice
President of Allstate Insurance Company; Vice President of the Allstate
Foundation; and Director of Allstate Life Financial Services, Inc., Allstate
Indemnity Company, Allstate Property and Casualty Insurance Company, Deerbrook
Insurance Company, Northbrook Indemnity Company, Northbrook National Insurance
Company, Northbrook Property and Casualty Insurance Company, Allstate
International, Inc. and Saison Life Insurance Company, Ltd. Prior to 1990, he
was Executive Vice President of Allstate Life Insurance Company. From 1992 to
1995, in addition to his position as Chairman of the Board, he was also
President of the Company.

27
<PAGE>

MICHAEL J. VELOTTA, 50, Vice President, Secretary, General Counsel, and
Director (1993)*

He is also Vice President, Secretary, General Counsel and Director of
Allstate Life Insurance Company, Northbrook Life Insurance Company, Glenbrook
Life Insurance Company and Glenbrook Life and Annuity Company; Secretary and
Director of Allstate Settlement Corporation, Allstate Life Financial Services,
Inc. and The Northbrook Corporation; and Director of Surety Life Insurance
Company and Lincoln Benefit Life Company. Prior to 1993, he was Vice President
and Assistant General Counsel of Allstate Insurance Company.

SHARMAINE M. MILLER, 42, Director and Chief Administrative Officer (1996)*

Prior to 1996, she was a Department manager for Allstate Insurance Company.

PETER H. HECKMAN, 50, Vice President (1992)*

He is also Vice President and Director of Allstate Life Insurance Company,
Northbrook Life Insurance Company, Glenbrook Life Insurance Company, Allstate
Settlement Corporation and Glenbrook Life and Annuity Company; Vice President
and Controller of The Northbrook Corporation; and Director of Surety Life
Insurance Company and Lincoln Benefit Life Company. Prior to 1992, he was Vice
President and Director of Allstate Life Insurance Company, Northbrook Life
Insurance Company, Glenbrook Life Insurance Company and Glenbrook Life and
Annuity Company.

TIMOTHY H. PLOHG, 49, Vice President and Director (1995)*

Timothy H. Plohg is also Vice President and Director of Allstate Life
Insurance Company. Prior to 1995, he was Vice President of the ALSC; Assistant
Vice President Sales, Regional Vice President.

KEVIN R. SLAWIN, 39, Vice President and Director, (1996).*

He is also currently a Director of Allstate Life Financial Services, Inc.,
Vice President and Director of Allstate Life Insurance Company, Glenbrook Life
and Annuity Company, Allstate Settlement Corporation; Director of Laughlin
Group Holdings, Inc. and Northbrook Life Insurance Company, Vice President of
the Northbrook Corporation and Assistant Treasurer of the Allstate Corporation
and Forestview Mortgage Insurance Company. From 1995 to 1996 he served in
various capacities within the Allstate Corporation. Prior to 1995, he was
Assistant Treasurer and Director for Sears Roebuck and Company.

MARCIA D. ALAZRAKI, 54, Director (1993)*

Marcia D. Alazraki is an attorney practicing with the firm of Simpson,
Thacher & Bartlett, New York, New York. Prior to 1991, she practiced with the
firm of Shea & Gould, New York, New York.

JOSEPH F. CARLINO, 78, Director (1983)*

Joseph F. Carlino is a self-employed practicing attorney in Mineola, New
York.

CLEVELAND JOHNSON, JR., 60, Director (1983)*

Cleveland Johnson, Jr. is currently a Business Development Advocate for the
Town of Islip, Division of Economic Development. Previously he was a Vice
President with State University of New York in Farmingdale, New York.

PHILLIP E. LAWSON, 42, Director (1994)*

Phillip E. Lawson is also a Regional Vice President of Allstate Insurance
Company. Prior to 1990, he was a Director of Allstate Insurance Company.

GERARD F. MCDERMOTT, 49, Director (1995)*

Gerard F. McDermott is also a Regional Vice president of Allstate Insurance
Company. Prior to 1992, he held various management positions.

JOSEPH P. MCFADDEN, 56, Director (1992)*

Joseph P. McFadden is also a Territorial Vice President of Allstate
Insurance Company. Prior to 1992, he was a Claim Vice President of Allstate
Insurance Company.

JOHN R. RABEN, JR., 50, Director (1988)*

John R. Raben, Jr. is a Vice President & Municipal Bond/Public Finance
Liaison with J.P. Morgan Securities, Inc.

THEODORE A. SCHNELL, 47, Assistant Vice President and Director (1995)*

Theodore A. Schnell is also Assistant Treasurer of Glenbrook Life & Annuity
Company, Glenbrook Life Insurance Company and Allstate Life Insurance Company.

SALLY A. SLACKE, 62, Director (1983)*

Sally A. Slacke is also President of Slacke Test Boring, Inc.

28
<PAGE>

CASEY J. SYLLA, 52, Chief Investment Officer (1995)*

Casey J. Sylla is also Director of Allstate Insurance Company, Allstate
Indemnity Company, Allstate Property and Casualty Insurance Company, Deerbrook
Insurance Company, First Assurance Company, Northbrook Indemnity Company,
Northbrook National Insurance Company, Northbrook Property and Casualty
Insurance Company. He is also Chief Investment Officer of Glenbrook Life and
Annuity Company, Allstate Settlement Corporation, The Northbrook Corporation,
Allstate Insurance Company, Allstate Indemnity Company, Allstate Property and
Casualty, Deerbrook Insurance Company, First Assurance Company, Northbrook
Indemnity Company, Northbrook National Insurance Company, Northbrook Property
and Casualty Insurance Company. Prior to 1995, he was Senior Vice President and
Executive Officer Investments for Northwestern Mutual Life Insurance Company.

BARRY S. PAUL, 40, Assistant Vice President and Controller (1992)*

He is also Assistant Vice President and Controller of Allstate Life Insurance
Company, Northbrook Life Insurance Company, Glenbrook Life and Annuity Company
and Glenbrook Life Insurance Company. Prior to 1992, he was Assistant Vice
President of Allstate Life Insurance Company and Northbrook Life Insurance
Company.

JAMES P. ZILS, 44, Treasurer (1995)*

James P. Zils is also Treasurer of Allstate Life Financial Services, Inc.,
Allstate Settlement Corporation, Allstate Life Insurance Company, Glenbrook
Life and Annuity Company, Glenbrook Life Insurance Company, Northbrook Life
Insurance Company, The Northbrook Corporation. He is Treasurer and Vice
President of AEI Group, Inc., Allstate International Inc., Allstate Motor Club,
Inc., Direct Marketing Center, Inc., Enterprises Services Corporation, The
Allstate Foundation, Forestview Mortgage Insurance Company, Allstate Indemnity
Company, Allstate Property and Casualty, Deerbrook Insurance Company, First
Assurance Company, Northbrook Indemnity Company, Northbrook National Insurance
Company, Northbrook Property and Casualty Insurance Company. Prior to 1995 he
was Vice President of Allstate Life Insurance Company. Prior to 1993 he held
various management positions.
- --------
*Date elected/appointed to current office.

EXECUTIVE COMPENSATION

Executive officers of the Company also serve as officers of its parent
company and receive no compensation directly from the Company. Some of the
officers also serve as officers of other companies affiliated with the Company.
Allocations have been made as to each individual's time devoted to his or her
duties as an executive officer of the Company. However, no officer's
compensation allocated to the Company exceeded $100,000 in 1994. The allocated
cash compensation of all officers of the Company as a group for services
rendered in all capacities to the Company during 1994 totaled $9,216.31.
Directors of the Company receive no compensation in addition to their
compensation as employees of the Company.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------- ------------ ----------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION STOCK OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) AWARD(S) (#) ($) ($)
- ------------------ ---- -------- -------- ------------ ---------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Louis G. Lower, II...... 1995 $416,000 $266,175 $17,044 $199,890 N/A $411,122 $5,250(1)
President and Chairman
of the Board of
Directors
1994 $389,050 $ 26,950 $25,889 $170,660 N/A 0 $1,890(1)
1993 $374,200 $294,683 $52,443 $318,625 N/A $ 13,451 $6,296(1)
James J. Brazda(2)...... 1995 $115,870 $ 27,808 $ 175 0 N/A 0 $5,761(3)
Chief Administrative
Officer and Director
1994 $108,195 $ 21,707 0 $ 16,935 N/A 0 $1,608(3)
</TABLE>
- --------
(1) Amount received by Mr. Lower which represents the value allocated to his
account from employer contributions under The Profit Sharing Fund and to
its predecessor, The Savings and Profit Sharing Fund of Sears employees.
(2) Mr. Brazda no longer serves in this capacity for Allstate Life Insurance
Company of New York.
(3) Amount received by Mr. Brazda which represents the value allocated to his
account from employer contributions under The Profit Sharing Fund and to
its predecessor, The Savings and Profit Sharing Fund of Sears employees.

Shares of the Company are not directly owned by any director or officer of
the Company. The percentage of shares of The Allstate Corporation beneficially
owned by any director, and by all directors and officers of the Company as a
group, does not exceed one percent of the class outstanding.

29
<PAGE>

LEGAL PROCEEDINGS

From time to time the Company is involved in pending and threatened
litigation in the normal course of its business in which claims for monetary
damages are asserted. Management, after consultation with legal counsel, does
not anticipate the ultimate liability arising from such pending or threatened
litigation to have a material effect on the financial condition of the Company.

EXPERTS

The financial statements of the Company as of December 31, 1995 and 1994 and
for each of the three years in the period ended December 31, 1995 and the
related financial statement schedules included in this prospectus have been
audited by Deloitte & Touche LLP, Two Prudential Plaza, 180 North Stetson
Avenue, Chicago, Illinois, 60601-6779, independent auditors, as stated in their
report appearing herein, and are included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.

LEGAL MATTERS

Sutherland, Asbill and Brennan, of Washington, D.C., has provided advice on
certain legal matters relating to the federal securities laws applicable to the
issue and sale of the Contracts. 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 the Company.

30
<PAGE>

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying Statements of Financial Position of
Allstate Life Insurance Company of New York as of December 31, 1995 and 1994,
and the related Statements of Operations, Shareholder's Equity and Cash Flows
for each of the three years in the period ended December 31, 1995. Our audits
also included Schedule IV--Reinsurance and Schedule V--Valuation and
Qualifying Accounts. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Allstate Life Insurance Company of New
York as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1995 in conformity with generally accepted accounting principles. Also, in our
opinion, Schedule IV--Reinsurance and Schedule V--Valuation and Qualifying
Accounts, when considered in relation to the basic financial statements taken
as a whole, present fairly, in all material respects, the information set
forth therein.

As discussed in Note 3 to the financial statements, in 1993 the Company
changed its method of accounting for investments in fixed income securities.

/s/ Deloitte & Touche LLP

Chicago, Illinois
March 1, 1996

F-1
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
---------- ----------
($ IN THOUSANDS)
<S> <C> <C>
Assets
Investments
Fixed income securities
Available for sale, at fair value (amortized cost
$1,219,418 and $468,518)............................ $1,424,893 $ 457,018
Held to maturity, at amortized cost (fair value
$583,000)........................................... 601,359
Mortgage loans........................................ 86,394 86,435
Policy loans.......................................... 22,785 20,500
Short-term............................................ 7,257 7,212
---------- ----------
Total investments................................... 1,541,329 1,172,524
Deferred acquisition costs............................. 53,944 50,699
Accrued investment income.............................. 18,828 16,518
Reinsurance recoverable................................ 3,331 10,365
Deferred income taxes.................................. 17,443
Cash................................................... 1,472 1,763
Other assets........................................... 3,924 4,763
Separate Accounts...................................... 220,141 175,918
---------- ----------
Total assets........................................ $1,842,969 $1,449,993
========== ==========
Liabilities
Reserve for life insurance policy benefits............. $ 838,739 $ 626,316
Contractholder funds................................... 499,548 483,812
Deferred income taxes.................................. 23,659
Other liabilities and accrued expenses................. 8,950 13,304
Net payable to affiliates.............................. 1,865 1,402
Separate Accounts...................................... 220,141 175,918
---------- ----------
Total liabilities................................... 1,592,902 1,300,752
---------- ----------
Shareholder's Equity
Common stock, $25 par value, 80,000 shares authorized,
issued and outstanding................................ 2,000 2,000
Additional capital paid-in............................. 45,787 45,787
Unrealized net capital gains (losses).................. 74,413 (6,891)
Retained income........................................ 127,867 108,345
---------- ----------
Total shareholder's equity.......................... 250,067 149,241
---------- ----------
Total liabilities and shareholder's equity.......... $1,842,969 $1,449,993
========== ==========
</TABLE>

See notes to financial statements.

F-2
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1995 1994 1993
-------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Premium income (net of reinsurance ceded of
$2,147, $2,198 and $4,929)....................... $126,713 $ 70,070 $110,051
Contract charges.................................. 21,603 18,490 16,862
Net investment income............................. 104,384 96,911 95,956
Realized capital (losses) gains................... (1,846) 778 4,576
-------- -------- --------
250,854 186,249 227,445
-------- -------- --------
Costs and expenses
Provision for policy benefits (net of reinsurance
recoveries of $1,581, $1,860 and $1,773)......... 198,055 137,434 175,676
Amortization of deferred acquisition costs ....... 5,502 3,875 10,319
Operating costs and expenses...................... 17,864 16,330 21,575
Early retirement program.......................... 1,210
-------- -------- --------
221,421 158,849 207,570
-------- -------- --------
Income before income taxes......................... 29,433 27,400 19,875
Income tax expense................................. 9,911 9,179 6,712
-------- -------- --------
Net income......................................... $ 19,522 $ 18,221 $ 13,163
======== ======== ========
</TABLE>

STATEMENTS OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
UNREALIZED
NET
ADDITIONAL CAPITAL
COMMON CAPITAL GAINS RETAINED
STOCK PAID-IN (LOSSES) INCOME TOTAL
------- ---------- ---------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992.... $ 2,000 $45,787 -- $ 76,961 $124,748
Net income................... 13,163 13,163
Change in unrealized net
capital gains and losses.... $25,391 25,391
------- ------- ------- -------- --------
Balance, December 31, 1993.... 2,000 45,787 25,391 90,124 163,302
Net income................... 18,221 18,221
Change in unrealized net
capital gains and losses.... (32,282) (32,282)
------- ------- ------- -------- --------
Balance, December 31, 1994.... 2,000 45,787 (6,891) 108,345 149,241
Net income................... 19,522 19,522
Change in unrealized net
capital gains and losses.... 81,304 81,304
------- ------- ------- -------- --------
Balance, December 31, 1995.... $ 2,000 $45,787 $74,413 $127,867 $250,067
======= ======= ======= ======== ========
</TABLE>

See notes to financial statements.

F-3
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1995 1994 1993
-------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.................................... $ 19,522 $ 18,221 $ 13,163
Adjustments to reconcile net income to net
cash from operating activities:
Realized capital losses (gains).............. 1,846 (778) (4,576)
Depreciation, amortization and other non-cash
items....................................... (22,348) (18,969) (14,618)
Interest credited to contractholder funds.... 26,924 27,233 26,476
Increase in reserve for policy benefits and
contractholder funds........................ 103,513 55,233 101,348
Increase in deferred acquisition costs....... (5,537) (6,850) (2,396)
Increase in accrued investment income........ (2,497) (102) (114)
Change in deferred income taxes.............. (2,674) (5,993) 7,564
Changes in other operating assets and
liabilities................................. 3,894 (18,082) (3,609)
-------- --------- ---------
Net cash from operating activities.......... 122,643 49,913 123,238
-------- --------- ---------
Cash flows from investing activities:
Proceeds from sales
Fixed income securities available for sale... 13,526 49,903
Fixed income securities...................... 46,496
Investment collections
Fixed income securities available for sale... 30,871 54,796
Fixed income securities held to maturity..... 3,067 17,186
Fixed income securities...................... 153,518
Mortgage loans............................... 6,499 9,744 2,382
Investment purchases
Fixed income securities available for sale... (142,205) (137,684)
Fixed income securities held to maturity..... (32,046) (38,709)
Fixed income securities...................... (282,979)
Mortgage loans............................... (9,864) (10,132) (15,642)
Change in short-term investments, net......... (45) 41,528 4,254
Change in policy loans, net................... (859) (2,133) 84
-------- --------- ---------
Net cash from investing activities.......... (131,056) (15,501) (91,887)
-------- --------- ---------
Cash flows from financing activities:
Contractholder fund deposits.................. 76,534 57,468 84,024
Contractholder fund withdrawals............... (68,412) (92,574) (115,698)
-------- --------- ---------
Net cash from financing activities.......... 8,122 (35,106) (31,674)
-------- --------- ---------
Net decrease in cash........................... (291) (694) (323)
Cash at beginning of year...................... 1,763 2,457 2,780
-------- --------- ---------
Cash at end of year............................ $ 1,472 $ 1,763 $ 2,457
======== ========= =========
</TABLE>

See notes to financial statements.

F-4
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

1.ORGANIZATION AND NATURE OF OPERATIONS

Allstate Life Insurance Company of New York (the "Company") is wholly owned
by a wholly-owned subsidiary ("Parent") of Allstate Insurance Company
("Allstate"), a wholly-owned subsidiary of The Allstate Corporation (the
"Corporation"). On June 30, 1995, Sears, Roebuck and Co. ("Sears") distributed
its 80.3% ownership in the Corporation to Sears common shareholders through a
tax-free dividend (the "Distribution").

The Company markets life insurance and group and individual annuities in the
state of New York, with products consisting predominately of structured
settlement annuities sold through independent brokers. The Company also
utilizes Allstate agencies and direct marketing to distribute its traditional
and universal life and accident and disability insurance products.
Additionally, flexible premium deferred variable annuity contracts and certain
single and flexible premium annuities are marketed to individuals through the
account executives of Dean Witter Reynolds, Inc. ("Dean Witter") (Note 4).

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. The fixed income securities supporting these obligations have
been selected to meet the anticipated cash flow requirements of the related
liabilities: however, in a low interest rate environment, funds from maturing
investments may be reinvested at substantially lower interest rates than those
which prevailed when the funds were previously invested. In addition, single
and flexible premium annuity contracts issued by the Company are subject to
discretionary withdrawal or surrender by the contractholder, subject to
applicable surrender charges. The Company utilizes various modeling techniques
in managing the relationship between assets and liabilities and employs
strategies to minimize the Company's exposure to interest rate risk and to
maintain investments which are sufficiently liquid to meet obligations to
contractholders in various interest rate scenarios.

The Company monitors economic and regulatory developments which have the
potential to impact its business. Currently, there is proposed legislation
which would permit banks greater participation in securities businesses, which
could eventually present an increased level of competition for sales of the
Company's annuity contracts. Furthermore, the federal government may enact
changes which could possibly eliminate the tax-advantaged nature of annuities
or eliminate consumers' need for tax deferral, thereby reducing the incentive
for customers to purchase the Company's products. While it is not possible to
predict the outcome of such issues with certainty, management evaluates the
likelihood of various outcomes and develops strategies, as appropriate, to
respond to such challenges.

To conform with the 1995 presentation, certain items in the prior year's
financial statements and notes have been reclassified.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

LIFE INSURANCE ACCOUNTING

The Company writes traditional life, accident and disability insurance. The
Company also writes long-duration insurance contracts with terms that are not
fixed and guaranteed, including single premium life insurance contracts, which
are considered universal life-type contracts. The Company also sells long-
duration contracts that do not involve significant risk of policyholder
mortality or morbidity (principally single and flexible premium fixed and
variable annuities and structured settlement annuities when sold without life
contingencies), which are considered investment contracts. Limited payment
contracts (policies with premiums paid over a period shorter than the contract
period) primarily consist of group annuities and structured settlement
annuities, when sold with life contingencies.

Premiums for traditional life insurance are recognized as revenue when due.
Accident and disability premiums are earned on a pro rata basis over the policy
period. Revenues on universal life-type contracts are comprised of contract
charges and fees and are recognized when assessed against the policyholder
account balance. Revenues on investment contracts include contract charges and
fees for contract administration and surrenders. These revenues are recognized
when levied against the contract balances. Gross premiums in excess of the net
premium on limited payment contracts are deferred and recognized over the
contract period.

The reserve for life insurance policy benefits, which relates to traditional
life, group annuities and structured settlement annuities with life
contingencies, and accident and disability insurance, is computed on the basis
of assumptions as to future investment yields, mortality, morbidity,
terminations and expenses. These assumptions, which for traditional life are
applied using the net level premium method, include provisions for adverse
deviation and generally vary by such characteristics as plan, year of issue and
policy duration. Reserve interest rates ranged from 6.2% to 9.5% during 1995.
To the extent that unrealized gains on available for sale securities would
result in a premium deficiency had those gains actually been realized, the
related increase in reserves is recorded as a reduction of the unrealized gains
included in shareholder's equity.

F-5
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Contractholder funds arise from the issuance of individual contracts that
include an investment component, including most annuities and universal life-
type contracts. Payments received are recorded as interest-bearing
liabilities. Contractholder funds are equal to deposits received and interest
accrued to the benefit of the contractholder less withdrawals, mortality
charges, and administrative expenses. Credited interest rates on
contractholder funds ranged from 3.0% to 6.8% for those contracts with fixed
interest rates and from 3.6% to 8.5% for those with flexible rates during
1995.

Certain costs of acquiring insurance business, principally agents'
compensation, premium taxes, certain underwriting costs and direct mail
solicitation expenses, are deferred and amortized to income. For traditional
life, limited payment contracts and accident and disability, these costs are
amortized in proportion to the estimated revenues on such business. For
universal life-type and investment contracts, the costs are amortized in
relation to the present value of estimated gross profits on such business.
Changes in the amount or timing of estimated gross profits will result in
adjustments in the cumulative amortization of these costs. To the extent that
unrealized gains or losses on fixed income securities carried at fair value
would result in an adjustment of deferred acquisition costs had those gains or
losses actually been realized, the related unamortized deferred acquisition
costs are recorded as a reduction of the unrealized gains or losses included
in shareholder's equity.

SEPARATE ACCOUNTS

The Company issues flexible premium deferred variable annuity contracts, the
assets and liabilities of which are legally segregated and reflected in the
accompanying statements of financial position as assets and liabilities of the
Separate Accounts. Assets and liabilities of the Separate Accounts represent
funds of Allstate Life of New York Variable Annuity Account and Allstate Life
of New York Variable Annuity Account II ("Separate Accounts"), unit investment
trusts registered with the Securities and Exchange Commission. The assets and
liabilities of the Separate Accounts are carried at fair value. Investment
income and realized capital gains and losses of the Separate Accounts accrue
directly to the contractholders and, therefore, are not included in the
accompanying statements of operations. Revenues to the Company from the
Separate Accounts consist of contract maintenance fees, administration fees
and mortality and expense risk charges.

INVESTMENTS

Fixed income securities include bonds and mortgage-backed securities. Fixed
income securities which may be sold prior to their contractual maturity
("available for sale") are carried at fair value. The difference between
amortized cost and fair value, net of deferred income taxes, certain deferred
acquisition costs and reserves for life insurance policy benefits, is
reflected as a component of shareholder's equity. Fixed income securities
which the Company has both the ability and positive intent to hold to maturity
("held to maturity") are carried at amortized cost. Provisions are made to
write down the value of fixed income securities for declines in value that are
other than temporary. Such writedowns are included in realized capital gains
and losses.

Mortgage loans are carried at outstanding principal balance, net of
unamortized premium or discount and valuation allowances. Valuation allowances
are established for impaired loans when it is probable that contractual
principal and interest will not be collected. Valuation allowances for
impaired loans reduce the carrying value to the fair value of the collateral
or the present value of the loan's expected future repayment cash flows,
discounted at the loan's original effective interest rate. Valuation
allowances on loans not considered to be impaired are established based on
consideration of the underlying collateral, borrower financial strength,
current and future market conditions and other factors. While the Company
believes its mortgage loans were carried at appropriate levels at December 31,
1995, further allowances may be required if market conditions or other
circumstances surrounding the loans change.

Short-term investments are carried at cost which approximates fair value.
Policy loans are carried at the unpaid principal balances.

Investment income consists primarily of interest, which is recognized on an
accrual basis. Interest income on mortgage-backed securities is determined on
the effective yield method, based on estimated principal repayments. Accrual
of income is suspended for fixed income securities and mortgage loans that are
in default or when the receipt of interest payments is in doubt. Realized
capital gains and losses are determined on a specific identification basis.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company designates financial futures contracts as hedges of fixed income
securities and anticipated transactions when certain criteria are met. These
criteria require financial futures contracts to reduce the interest rate risk
associated with designated assets or

F-6
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

anticipated transactions. In addition, at the inception of the hedge and
throughout the hedge period, high correlation between changes in the market
value of the financial future contract and the fair value of, or interest
income or expense associated with, the hedged item must exist. The Company only
hedges those anticipated transactions that are probable of occurrence and whose
significant terms and expected characteristics can be identified.

When the hedged item is an existing asset, gains and losses on financial
futures contracts are deferred as an adjustment to the amortized cost basis of
the hedged item and are reported net of tax in shareholder's equity.

When the hedged item is an anticipated transaction, gains and losses on
financial futures contracts are deferred as other liabilities and accrued
expenses. Once the anticipated transaction occurs, the deferred gains or losses
are considered part of the amortized cost basis of the hedged asset.
Accordingly, they are recognized in net investment income over the life of the
hedged asset or are included in the recognition of gain or loss from
disposition of that asset.

Initial margin deposits are reported in short-term investments. Fees and
commissions on financial futures contracts are deferred as an adjustment to the
amortized cost basis of the hedged item.

If, subsequent to entering into a hedge transaction, the financial futures
contract becomes ineffective (including if the hedged item is sold or otherwise
extinguished), the Company terminates the contract position. Gains and losses
on these terminations are reported in realized capital gains (losses) in the
period they occur. The Company may also terminate financial futures contracts
as a result of other events or circumstances. Gains and losses on these
terminations are reported in shareholder's equity, consistent with the
accounting for the hedged item.

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS

Commitments to extend mortgage loans have only off-balance-sheet risk because
their contractual amounts are not recorded in the Company's statements of
financial position.

REINSURANCE

Certain premiums and policy benefits are ceded and reflected net of such
cessions in the statements of operations. Reinsurance recoverable and the
related reserves for policy benefits are reported separately in the statements
of financial position. Reinsurance ceded arrangements do not discharge the
Company as the primary insurer.

INCOME TAXES

The income tax provision is calculated under the liability method. Deferred
tax assets and liabilities are recorded based on the difference between the
financial statement and tax bases of assets and liabilities and the enacted tax
rates. The principal assets and liabilities giving rise to such differences are
insurance reserves and deferred policy acquisition costs. Deferred income taxes
also arise from unrealized capital gains or losses on fixed income securities
carried at fair value.

USE OF ESTIMATES

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

3.ACCOUNTING CHANGES

Effective January 1, 1995, the Company adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan" and SFAS No. 118, "Accounting by Creditors
for Impairment of a Loan-Income Recognition and Disclosures." SFAS No. 114
defines impaired loans as loans in which it is probable that a creditor will be
unable to collect all amounts contractually due under the terms of a loan
agreement and requires that impaired loans be measured based on the present
value of expected future cash flows discounted at the loan's effective interest
rate, at the loan's observable market price, or at the fair value of the
collateral. SFAS No. 118 amends SFAS No. 114 to allow a creditor to use
existing methods for recognizing interest income on impaired loans. The
adoption of these statements did not have a material impact on net income or
financial position.

F-7
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

3.ACCOUNTING CHANGES (CONTINUED)

Effective December 31, 1993, the Company adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," which requires that
investments classified as available for sale be carried at fair value.
Previously, fixed income securities classified as available for sale were
carried at the lower of amortized cost or fair value, determined in the
aggregate. Unrealized holding gains and losses are reflected as a separate
component of shareholder's equity, net of deferred income taxes, certain life
deferred acquisition costs and reserves for life insurance policy benefits. The
net effect of adoption of this statement increased shareholder's equity at
December 31, 1993 by $25,391 and did not have a material impact on net income.

4.RELATED PARTY TRANSACTIONS

REINSURANCE

The Company cedes business to the Parent under reinsurance treaties. Premiums
and policy benefits ceded totaled $1,259 and $278 in 1995, $1,181 and $1,877 in
1994, and $4,109 and $1,288 in 1993. Included in the reinsurance recoverable at
December 31, 1995 and 1994 are amounts due from the Parent of $1,212 and
$1,120, respectively.

STRUCTURED SETTLEMENT ANNUITIES

Allstate, through an affiliate, purchased $11,243, $7,568 and $24,778 of
structured settlement annuities from the Company in 1995, 1994 and 1993,
respectively. Included in premium income are $4,164, $1,221 and $7,170, for
1995, 1994 and 1993, respectively, for the amounts related to structured
settlement annuities with life contingencies. Additionally, the provision for
policy benefits was increased by approximately 94% of such premium received in
each of these years.

BUSINESS OPERATIONS

The Company utilizes services and business facilities owned or leased, and
operated by Allstate in conducting its business activities. The Company
reimburses Allstate for the operating expenses incurred by Allstate on its
behalf. The cost to the Company is determined by various allocation methods and
is primarily related to the level of the services provided. Expenses allocated
to the Company were $21,288, $17,320 and $16,313 in 1995, 1994 and 1993,
respectively. A portion of these expenses related to the acquisition of
insurance business is deferred and amortized over the policy period.

DEAN WITTER

Dean Witter is the primary distributor of the Company's single and flexible
premium annuities. Dean Witter is also the distributor of flexible premium
deferred variable annuity contracts and the investment manager for the Dean
Witter Variable Investment Series, the fund in which the assets of the Separate
Accounts are invested. Additionally, Dean Witter loans funds to an affiliate of
the Parent under the terms of a strategic alliance.

5.INCOME TAXES

A consolidated federal income tax return will be filed by the Parent and its
life insurance subsidiaries, including the Company. Tax liabilities and
benefits realized by the consolidated group are allocated as generated by the
respective subsidiaries, whether or not such benefits generated by the
subsidiaries would be available on a separate return basis. The Corporation and
its domestic subsidiaries, including the Company, (the "Allstate Group"), will
be eligible to file a consolidated tax return beginning in the year 2000.

Prior to the Distribution, the Allstate Group joined with Sears and its
domestic business units (the "Sears Group") in the filing of a consolidated
federal income tax return (the "Sears Tax Group") and were parties to a federal
income tax allocation agreement (the "Tax Sharing Agreement"). As a member of
the Sears Tax Group, the Corporation was jointly and severally liable for the
consolidated income tax liability of the Sears Tax Group. Under the Tax Sharing
Agreement, the Company, through the Corporation, paid to or received from the
Sears Group the amount, if any, by which the Sears Tax Group's federal income
tax liability was affected by virtue of inclusion of the Allstate Group in the
consolidated federal income tax return. Effectively, this resulted in the
Company's annual income tax provision being computed as if the Company filed a
separate return, except that items such as net operating losses, capital
losses, or similar items, which might not be immediately recognizable in a
separate return, were allocated according to the Tax Sharing Agreement and
reflected in the Company's provision to the extent that such items reduced the
Sears Tax Group's federal tax liability.

F-8
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

5.INCOME TAXES (CONTINUED)

The Allstate Group and Sears Group have entered into an agreement which
governs their respective rights and obligations with respect to federal income
taxes for all periods prior to the Distribution ("Consolidated Tax Years"). The
agreement provides that all Consolidated Tax Years will continue to be governed
by the Tax Sharing Agreement with respect to the Company's federal income tax
liability and taxes payable to or recoverable from the Sears Group.

The components of the deferred income tax assets and liabilities at December
31, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Deferred assets
Reserve for policy benefits................................ $ 25,562 $ 21,447
Difference in tax bases of investments..................... 1,536 1,708
Loss on disposal of discontinued operations................ 376 378
Reserve for postretirement benefits........................ 496 446
Unrealized loss on fixed income securities................. 3,711
Other assets............................................... 1,701 2,402
-------- --------
Total deferred assets..................................... 29,671 30,092
-------- --------
Deferred liabilities
Unrealized gain on fixed income securities................. (40,069)
Policy acquisition costs................................... (12,655) (12,116)
Prepaid commission expense................................. (578) (520)
Other liabilities.......................................... (28) (13)
-------- --------
Total deferred liabilities................................ (53,330) (12,649)
-------- --------
Net deferred (liability) asset............................ $(23,659) $ 17,443
======== ========
</TABLE>

The components of income tax expense are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Current.............................................. $12,589 $15,172 $12,821
Deferred............................................. (2,678) (5,993) (6,109)
------- ------- -------
Income tax expense.................................. $ 9,911 $ 9,179 $ 6,712
======= ======= =======
</TABLE>

The Company paid income taxes of $11,000, $27,682 and $13,079 in 1995, 1994
and 1993, respectively to the Parent under the Tax Sharing Agreement.
Additionally, the Company had income taxes payable to the Parent of $1,729 and
$141 at December 31, 1995 and 1994, respectively.

Prior to January 1, 1984, the Company was entitled to exclude certain amounts
from taxable income and accumulate such amounts in a "policyholder surplus"
account. The balance in this account at December 31, 1995 of approximately $389
will result in taxes payable of $136 if distributed to the Company's
shareholder. The Company has no plan to distribute amounts from the
policyholder surplus account, and no further additions to the account are
allowed by the Tax Reform Act of 1984.

6.INVESTMENTS

In 1995, the Company transferred its held to maturity fixed income securities
portfolio, with an amortized cost of $644,005 to the available for sale fixed
income portfolio. The fair value of these fixed income securities was $726,820,
resulting in an increase to shareholder's equity of $82,815 after adjustment
for deferred income taxes, certain deferred acquisition costs and reserves for
life insurance policy benefits. While the Company's investment philosophy has
not changed, management chose to transfer these fixed income securities to
available for sale to maximize the Company's flexibility in responding to
changes in market conditions.

F-9
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

6.INVESTMENTS (CONTINUED)

FAIR VALUES

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

<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ----------------
DECEMBER 31, 1995 COST GAINS LOSSES FAIR VALUE
- ----------------- ---------- -------- ------- ----------
<S> <C> <C> <C> <C>
Available for sale
U.S. government and agencies............ $ 336,331 $ 99,750 $ 526 $ 435,555
State and municipal..................... 36,002 2,831 92 38,741
Corporate............................... 633,731 92,073 767 725,037
Mortgage-backed securities.............. $ 213,354 12,370 164 225,560
---------- -------- ------- ----------
Total available for sale............... $1,219,418 $207,024 $ 1,549 $1,424,893
========== ======== ======= ==========
<CAPTION>
GROSS UNREALIZED
AMORTIZED ----------------
DECEMBER 31, 1994 COST GAINS LOSSES FAIR VALUE
- ----------------- ---------- -------- ------- ----------
<S> <C> <C> <C> <C>
Available for sale
U.S. government and agencies............ $ 28,621 $ 299 $ 825 $ 28,095
State and municipal..................... 33,939 303 1,024 33,218
Corporate............................... 221,740 3,871 6,748 218,863
Mortgage-backed securities.............. 184,218 1,188 8,564 176,842
---------- -------- ------- ----------
Total available for sale............... $ 468,518 $ 5,661 $17,161 $ 457,018
========== ======== ======= ==========
Held to maturity
U.S. government and agencies............ $ 267,521 $ 5,203 $24,723 $ 248,001
Corporate............................... 328,194 8,462 7,377 329,279
Mortgage-backed securities.............. 5,644 92 16 5,720
---------- -------- ------- ----------
Total held to maturity................. $ 601,359 $ 13,757 $32,116 $ 583,000
========== ======== ======= ==========
</TABLE>

SCHEDULED MATURITIES

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

<TABLE>
<CAPTION>
AMORTIZED COST FAIR VALUE
-------------- ----------
<S> <C> <C>
Due in one year or less.............................. $ 21,352 $ 21,841
Due after one year through five years................ 78,391 83,922
Due after five years through ten years............... 165,998 182,739
Due after ten years.................................. 740,323 910,831
---------- ----------
1,006,064 1,199,333
Mortgage-backed securities........................... 213,354 225,560
---------- ----------
Total............................................... $1,219,418 $1,424,893
========== ==========
</TABLE>

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

UNREALIZED NET CAPITAL GAINS AND LOSSES

Unrealized net capital gains and losses on fixed income securities available
for sale included in shareholder's equity at December 31, 1995 are as follows:

<TABLE>
<CAPTION>
AMORTIZED UNREALIZED NET
COST FAIR VALUE GAINS/(LOSSES)
---------- ---------- --------------
<S> <C> <C> <C>
Fixed income securities available for
sale..................................... $1,219,418 $1,424,893 $205,475
========== ==========
Reserves for life insurance policy
benefits................................. (89,600)
Deferred income taxes..................... (40,068)
Deferred acquisition costs................ (1,394)
--------
Total.................................... $ 74,413
========
</TABLE>

F-10
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

6.INVESTMENTS (CONTINUED)

The change in unrealized net capital gains and losses for fixed income
securities is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1995 1994
-------- --------
<S> <C> <C>
Fixed income securities available for sale.................. $216,975 $(52,740)
Reserves for life insurance policy benefits................. (89,600)
Deferred income taxes....................................... (43,779) 17,382
Deferred acquisition costs.................................. (2,292) 3,076
-------- --------
Change in unrealized net capital gains and losses.......... $ 81,304 $(32,282)
======== ========
</TABLE>

INVESTMENT INCOME

Investment income by type of investment is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Fixed income securities............................... $ 95,212 $88,149 $87,524
Mortgage loans........................................ 7,999 8,092 7,435
Policy loans.......................................... 1,309 1,153 1,017
Short-term............................................ 1,435 1,093 1,385
-------- ------- -------
Investment income, before expense..................... 105,955 98,487 97,361
Investment expense.................................... 1,571 1,576 1,405
-------- ------- -------
Net investment income................................. $104,384 $96,911 $95,956
======== ======= =======
</TABLE>

REALIZED CAPITAL GAINS AND LOSSES

Realized capital gains and losses on investments are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
------------------------
1995 1994 1993
------- ------ -------
<S> <C> <C> <C>
Fixed income securities............................... $ 422 $1,570 $ 5,657
Mortgage loans........................................ (2,268) (792) (1,081)
------- ------ -------
Realized capital (losses) gains...................... (1,846) 778 4,576
Income tax (benefit) expense......................... (646) 272 1,602
------- ------ -------
Realized capital (losses) gains...................... $(1,200) $ 506 $ 2,974
======= ====== =======
</TABLE>

PROCEEDS FROM SALES OF FIXED INCOME SECURITIES

The proceeds from sales of investments in fixed income securities, excluding
calls, and related gross realized gains and losses are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Proceeds............................................. $13,526 $49,903 $46,496
------- ------- -------
Gross realized gains................................. $ 172 $ 1,743 $ 1,780
Gross realized losses................................ (105) (973) (30)
------- ------- -------
Net realized gains.................................. $ 67 $ 770 $ 1,750
======= ======= =======
</TABLE>

INVESTMENT LOSS PROVISIONS AND VALUATION RESERVES

Pretax provisions for investment losses, principally relating to other than
temporary declines in value on fixed income securities, and valuation
allowances on mortgage loans were $2,448, $627 and $1,200 in 1995, 1994 and
1993, respectively.

F-11
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

6.INVESTMENTS (CONTINUED)

MORTGAGE LOAN IMPAIRMENT

A mortgage loan is impaired when it is probable that the Company will be
unable to collect all amounts due according to the contractual terms of the
loan agreement. The components of impaired loans at December 31, 1995 are as
follows:

<TABLE>
<S> <C>
Net carrying value of impaired loans with valuation allowances......... $ 9,353
Less: valuation allowances............................................. (1,934)
Without valuation allowances........................................... 2,228
-------
Total................................................................. $ 9,647
=======
</TABLE>

All impaired loans were measured at the fair value of the collateral at
December 31, 1995.

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

<TABLE>
<S> <C>
Balance at January 1.................................................... $1,179
Additions.............................................................. 1,930
Direct write-downs..................................................... (1,157)
------
Balance at December 31.................................................. $1,952
======
</TABLE>

Interest income is recognized on a cash basis for impaired loans carried at
the fair value of collateral, beginning at the time of impairment. For other
impaired loans, interest is accrued based on the net carrying value. The
Company recognized interest income of $1,398 on impaired loans during the
period, of which $1,193 was received in cash. The average recorded investment
in impaired loans during the period was $8,900.

INVESTMENT CONCENTRATION AND OTHER INVESTMENT INFORMATION

The Company maintains a diversified portfolio of municipal bonds. The largest
concentrations in the portfolio are presented below. Except for the following,
holdings in no other state exceed 5.0% of the carrying value of the portfolio
at December 31, 1995.

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Ohio................................................................ 26.8% 26.9%
California.......................................................... 23.1 23.0
Illinois............................................................ 19.7 22.0
Maryland............................................................ 7.6 9.0
Maine............................................................... 5.7 5.9
New York............................................................ 5.3 6.1
Minnesota........................................................... 5.2 --
</TABLE>

The Company's mortgage loans are collateralized primarily by a variety of
commercial real estate property types, located throughout the United States.
Substantially all of the commercial mortgage loans are non-recourse to the
borrower. The three states with the largest portion of the commercial mortgage
loan portfolio are as listed below. Holdings in no other state exceed 5.0% of
the portfolio at December 31:

(% of commercial mortgage portfolio carrying value)

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
California.......................................................... 56.7% 58.5%
Illinois............................................................ 22.9 16.3
New York............................................................ 11.1 10.9
</TABLE>

F-12
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

6.INVESTMENTS (CONTINUED)

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

(% of commercial mortgage portfolio carrying value)

<TABLE>
<CAPTION>
1995 1994
----- -----
<S> <C> <C>
Retail............................................................ 39.5% 31.4%
Warehouse......................................................... 32.1 36.8
Office............................................................ 16.0 19.3
Industrial........................................................ 6.9 7.1
Apartment......................................................... 4.5 4.4
Other............................................................. 1.0 1.0
----- -----
100.0% 100.0%
===== =====
</TABLE>

At December 31, 1995, fixed income securities with a carrying value of $1,988
were on deposit with regulatory authorities as required by law.

During 1995, the Company held one fixed income security which exceeded 10% of
shareholder's equity, the State of Israel Government Loan Trust, with a fair
value of $83,980. This security, issued through the United States Agency for
International Development, is secured by the credit of the United States
government and is backed by government guaranteed loans to Israel.

7.FINANCIAL INSTRUMENTS

In the normal course of business, the Company invests in various financial
assets, incurs various financial liabilities and enters into agreements
involving derivative financial instruments. The fair value estimates of
financial instruments presented below are not necessarily indicative of the
amounts the Company might pay or receive in actual market transactions.
Potential taxes and other transaction costs have not been considered in
estimating fair value. As a number of the Company's significant assets,
including deferred acquisition costs and deferred income taxes, and
liabilities, including traditional and universal life-type life insurance
reserves, are not considered financial instruments, the disclosures that follow
do not reflect the fair value of the Company as a whole.

FINANCIAL ASSETS

<TABLE>
<CAPTION>
CARRYING
AT DECEMBER 31, 1995 VALUE FAIR VALUE
- -------------------- ---------- ----------
<S> <C> <C>
Fixed income securities.................................. $1,424,893 $1,424,893
Mortgage loans........................................... 86,394 89,517
Short-term investments................................... 7,257 7,257
Policy loans............................................. 22,785 22,785
Accrued investment income................................ 18,828 18,828
Cash..................................................... 1,472 1,472
Other financial assets................................... 7,169 7,169
Separate Accounts........................................ 220,141 220,141
<CAPTION>
CARRYING
AT DECEMBER 31, 1994 VALUE FAIR VALUE
- -------------------- ---------- ----------
<S> <C> <C>
Fixed income securities.................................. $1,058,377 $1,040,018
Mortgage loans........................................... 86,435 80,785
Short-term investments................................... 7,212 7,212
Policy loans............................................. 20,500 20,500
Accrued investment income................................ 16,518 16,518
Cash..................................................... 1,763 1,763
Other financial assets................................... 4,763 4,763
Separate Accounts........................................ 175,918 175,918
</TABLE>

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

F-13
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

7.FINANCIAL INSTRUMENTS (CONTINUED)

Fair value for fixed income securities are based on quoted market prices
where available. Non-quoted securities are valued based on discounted cash
flows using current interest rates for similar securities. Mortgage loans are
valued based on discounted contractual cash flows. Discount rates are selected
using current rates at which loans would be made to borrowers with similar
characteristics, using similar properties as collateral. Loans that exceed
100% loan-to-value are valued at the estimated fair value of the underlying
collateral. Short-term investments are highly liquid investments with
maturities of less than one year whose carrying value approximates fair value.
The fair value of policy loans is estimated at book value since the loan may
be repaid at any time. Accrued investment income and other financial assets
are valued at their carrying value as they are short-term in nature. Assets of
the Separate Accounts are carried in the statements of financial position at
fair value.

FINANCIAL LIABILITIES

The Company had the following financial liabilities:

<TABLE>
<CAPTION>
CARRYING FAIR
AT DECEMBER 31, 1995 VALUE VALUE
- -------------------- -------- --------
<S> <C> <C>
Contractholder funds on investment contracts.................. $366,481 $392,111
Other financial liabilities................................... 5,383 5,383
Separate Accounts............................................. 220,141 220,141
<CAPTION>
CARRYING FAIR
AT DECEMBER 31, 1994 VALUE VALUE
- -------------------- -------- --------
<S> <C> <C>
Contractholder funds on investment contracts.................. $368,780 $362,221
Other financial liabilities................................... 7,725 7,725
Separate Accounts............................................. 175,918 175,918
</TABLE>

The fair value of contractholder funds on investment contracts is based on
the terms of the underlying contracts. Reserves on investment contracts with
no stated maturities (single premium and flexible premium deferred annuities)
are valued at the account balance less surrender charge. The fair value of
immediate annuities and annuities without life contingencies with fixed terms
are estimated using discounted cash flow calculations based on interest rates
currently offered for contracts with similar terms and durations. Other
financial liabilities are generally valued at their carrying value due to
their short-term nature. Separate Accounts liabilities are carried at the fair
value of the underlying assets.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses financial futures contracts to reduce its exposure to
interest rate risk on its invested assets, as well as to improve
asset/liability management. The Company does not hold or issue these
instruments for trading purposes. The following table summarizes the contract
or notional amount and carrying value of the Company's financial futures
contracts:

<TABLE>
<CAPTION>
CONTRACT/NOTIONAL CARRYING VALUE
AT DECEMBER 31, 1995 AMOUNT ASSET/(LIABILITY)
- -------------------- ----------------- ----------------
<S> <C> <C>
Financial futures........................... $22,900 $576
<CAPTION>
CONTRACT/NOTIONAL CARRYING VALUE
AT DECEMBER 31, 1994 AMOUNT ASSET/(LIABILITY)
- -------------------- ----------------- ----------------
<S> <C> <C>
Financial futures........................... $20,700 $(65)
</TABLE>

The contract or notional amounts are used to calculate the exchange of
contractual payments under the agreements and are not representative of the
potential gain or loss on these agreements.

Financial futures contracts are commitments to either purchase or sell
designated financial instruments at a future date for a specified price or
yield. They may be settled in cash or through delivery. As part of its
asset/liability management, the Company generally utilizes futures contracts
to hedge its interest rate risk related to anticipatory investment purchases.
Hedges of anticipatory transactions pertain to identified transactions which
are probable to occur and are generally completed within ninety days. Futures
contracts have limited off-balance-sheet credit exposure as they are executed
on organized exchanges and require security deposits, as well as the daily
cash settlement of margins.

F-14
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

7.FINANCIAL INSTRUMENTS (CONTINUED)

Market risk is the risk that future changes in market conditions may cause
an instrument to become less valuable or more costly to settle. Market risk
exists for the financial futures contracts that the Company currently holds.
The Company mitigates this risk through established risk limits set by senior
management. In addition, the change in the value of the Company's financial
futures contracts are generally offset by the change in the value of certain
on-balance-sheet items or anticipated transactions.

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS

Commitments to extend new mortgage loans are agreements to lend to a
customer provided there is no violation of any condition established in the
contract. The Company enters these agreements to commit to future loan
fundings at a predetermined interest rate. Commitments generally have fixed
expiration dates or other termination clauses. Commitments to extend mortgage
loans, which are secured by the underlying properties, are valued based on
estimates of fees charged by other institutions to make similar commitments to
similar borrowers. At December 31, 1994, the Company had $3,075 in mortgage
loan commitments which had a fair value of $31. No such commitments existed at
December 31, 1995.

8.BENEFIT PLANS

PENSION PLANS

Defined benefit pension plans, sponsored by Allstate, cover all domestic
full-time employees and certain part-time employees. Benefits under the
pension plans are based upon the employee's length of service, average annual
compensation and estimated social security retirement benefits. Allstate's
funding policy for the pension plans is to make annual contributions in
accordance with accepted actuarial cost methods. The costs to the Company
included in income were $446, $344 and $340 for the pension plans in 1995,
1994 and 1993, respectively.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

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

PROFIT SHARING FUND

Employees of Allstate and its domestic subsidiaries are also eligible to
become members of the Savings and Profit Sharing Fund of Allstate Employees
("Allstate Plan"). Allstate contributions are based on 6% of consolidated
income, as defined, with Allstate contributions limited to 70% of eligible
deposits. The Allstate Plan includes an Employee Stock Ownership Plan
("Allstate ESOP") to pre-fund a portion of the Company's anticipated
contribution through 2004. The Allstate Plan and the Allstate ESOP split from
The Savings and Profit Sharing Fund of Sears Employees, which included a
leveraged employee stock ownership plan ("Sears ESOP") feature, on June 30,
1995, the date of the Distribution. Fifty percent of the unallocated shares of
the Sears ESOP and 50% of the amount of the Sears ESOP debt (payable to Sears)
were transferred to the Allstate Plan. In connection with this transfer,
Allstate paid Sears $327 million, an amount equal to 50% of the Sears ESOP
debt. Concurrently, Allstate received a note from the Allstate ESOP for a like
principal amount with interest rate and maturity identical to the debt
obligation transferred from the Sears ESOP. Allstate will make contributions
to the Allstate ESOP annually in the amount necessary to allow the Allstate
ESOP to fund interest and principal payments.

The Company's contribution to The Savings and Profit Sharing Fund of
Allstate Employees was $141 in 1995. The costs to the Company prior to the
Distribution and the split from the Savings and Profit Sharing Fund of Sears
Employees were $123 and $176 in 1994 and 1993, respectively.

EARLY RETIREMENT PROGRAM

During 1994, Allstate offered a voluntary early retirement incentive program
to eligible home office employees. The Company's portion of the total cost of
the program of $1,210 was charged to 1994 income.

F-15
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

($ IN THOUSANDS)

9.STATUTORY FINANCIAL INFORMATION

The following tables reconcile net income and shareholder's equity as
reported herein in conformity with generally accepted accounting principles
with statutory net income and capital and surplus, determined in accordance
with statutory accounting practices prescribed or permitted by insurance
regulatory authorities:

<TABLE>
<CAPTION>
NET INCOME
-------------------------
YEAR ENDED DECEMBER 31, 1995 1994 1993
- ----------------------- ------- ------- -------
<S> <C> <C> <C>
Balance per generally accepted accounting
principles......................................... $19,522 $18,221 $13,163
Deferred acquisition costs......................... (5,537) (6,849) (2,397)
Income taxes....................................... (3,109) (8,337) (6,074)
Non-admitted assets and statutory reserves......... 12,786 6,900 20,157
Other postretirement and postemployment benefits... 71 105 (54)
Other.............................................. (533) 901 1,236
------- ------- -------
Balance per statutory accounting practices.......... $23,200 $10,941 $26,031
======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
SHAREHOLDER'S
EQUITY DECEMBER
31,
------------------
1995 1994
-------- --------
<S> <C> <C>
Balance per generally accepted accounting principles........ $250,067 $149,241
Deferred acquisition costs................................. (53,944) (50,699)
Income taxes............................................... 20,839 (17,443)
Unrealized net capital gains (losses)...................... (114,500) 11,500
Non-admitted assets and statutory reserves................. 43,624 31,074
Other postretirement and postemployment benefits........... 1,058 1,036
Other...................................................... 1,153 106
-------- --------
Balance per statutory accounting practices.................. $148,297 $124,815
======== ========
</TABLE>

PERMITTED STATUTORY ACCOUNTING PRACTICES

The Company prepares its statutory financial statements in accordance with
accounting principles and practices prescribed or permitted by the New York
state insurance department. Prescribed statutory accounting principles include
a variety of publications of the National Association of Insurance
Commissioners, as well as state laws, regulations and general administrative
rules. Permitted statutory accounting practices encompass all accounting
practices not so prescribed. The Company does not follow any permitted
statutory accounting practices that have a material effect on statutory
surplus or risk-based capital.

DIVIDENDS

The ability of the Company to pay dividends is dependent, in part, on
business conditions, income, cash requirements of the Company and other
relevant factors and is subject to New York Insurance Regulations. Under New
York Insurance Law, a notice of intention to distribute any dividend must be
filed with the New York Superintendent of Insurance not less than 30 days
prior to the distribution. Such proposed declaration is subject to the
Superintendent's disapproval.

F-16
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

SCHEDULE IV--REINSURANCE

($ IN THOUSANDS)

<TABLE>
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1995 AMOUNT CEDED AMOUNT
- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Life insurance in force....................... $8,513,295 $ 398,025 $8,115,270
========== ========== ==========
Premiums and contract charges:
Life and annuities........................... $ 146,732 $ 1,246 $ 145,486
Accident and health.......................... 3,731 901 2,830
---------- ---------- ----------
$ 150,463 $ 2,147 $ 148,316
========== ========== ==========
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1994 AMOUNT CEDED AMOUNT
- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Life insurance in force....................... $7,598,374 $ 321,623 $7,276,751
========== ========== ==========
Premiums and contract charges:
Life and annuities........................... $ 87,562 $ 1,193 $ 86,369
Accident and health.......................... 3,276 1,005 2,271
---------- ---------- ----------
$ 90,838 $ 2,198 $ 88,640
========== ========== ==========
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1993 AMOUNT CEDED AMOUNT
- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Life insurance in force....................... $6,853,083 $1,746,724 $5,106,359
========== ========== ==========
Premiums and contract charges:
Life and annuities........................... $ 128,816 $ 4,122 $ 124,694
Accident and health.......................... 3,026 807 2,219
---------- ---------- ----------
$ 131,842 $ 4,929 $ 126,913
========== ========== ==========
</TABLE>

SCHEDULE V--VALUATION AND QUALIFYING ACCOUNTS

($ IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF PERIOD EXPENSES DEDUCTION OF PERIOD
- ----------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Year Ended December 31, 1995
Allowance for estimated losses on
mortgage loans..................... $1,179 $2,170 $1,397 $1,952
Year Ended December 31, 1994
Allowance for estimated losses on
mortgage loans..................... $2,297 $ 667 $1,785 $1,179
Year Ended December 31, 1993
Allowance for estimated losses on
mortgage loans..................... $2,531 $1,225 $1,459 $2,297
</TABLE>

F-17
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

FINANCIAL STATEMENTS

FOR THE QUARTER ENDED JUNE 30, 1996

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

STATEMENTS OF FINANCIAL POSITION

($ IN THOUSANDS)

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
Assets
Investments
Fixed income securities available for sale, at fair
value (amortized cost $1,257,814 and $1,219,418)... $1,323,712 $1,424,893
Mortgage loans...................................... 83,403 86,394
Policy loans........................................ 23,920 22,785
Short-term.......................................... 31,452 7,257
---------- ----------
Total investments.................................. 1,462,487 1,541,329
---------- ----------
Deferred acquisition costs........................... 58,127 53,944
Accrued investment income............................ 19,047 18,828
Reinsurance recoverable.............................. 3,009 3,331
Deferred income taxes................................ 6,306
Cash................................................. 1,957 1,472
Other assets......................................... 4,212 3,924
Separate Accounts.................................... 238,347 220,141
---------- ----------
Total assets....................................... $1,793,492 $1,842,969
========== ==========
Liabilities
Reserve for life insurance policy benefits........... $ 824,929 $ 838,739
Contractholder funds................................. 509,737 499,548
Deferred income taxes................................ 23,659
Other liabilities and accrued expenses............... 8,957 8,950
Net payable to affiliates............................ 1,057 1,865
Separate Accounts.................................... 238,347 220,141
---------- ----------
Total liabilities.................................. 1,583,027 1,592,902
---------- ----------
Shareholder's equity
Common stock, $25 par value, 80,000 shares
authorized, issued and outstanding.................. 2,000 2,000
Additional capital paid-in........................... 45,787 45,787
Unrealized net capital gains......................... 24,573 74,413
Retained income...................................... 138,105 127,867
---------- ----------
Total shareholder's equity......................... 210,465 250,067
---------- ----------
Total liabilities and shareholder's equity......... $1,793,492 $1,842,969
========== ==========
</TABLE>

See notes to financial statements.

F-18
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

STATEMENTS OF OPERATIONS

($ IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------- -----------------
1996 1995 1996 1995
------- ------- -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Premium income (net of reinsurance ceded
of $610 and $560; $1,194 and $1,066)..... $21,813 $29,285 $ 44,916 $ 76,607
Contract charges.......................... 6,604 5,544 12,305 9,838
Net investment income..................... 27,830 25,455 55,424 50,682
Realized capital gains and (losses)....... 420 (518) 351 (2,133)
------- ------- -------- --------
56,667 59,766 112,996 134,994
------- ------- -------- --------
Costs and expenses
Provision for policy benefits (net of
reinsurance recoveries of $1,305 and
$(135); $2,170 and $178)................. 42,372 46,865 85,389 109,771
Amortization of deferred acquisition
costs.................................... 1,818 813 2,965 1,760
Operating costs and expenses.............. 3,941 5,462 8,414 10,417
------- ------- -------- --------
48,131 53,140 96,768 121,948
------- ------- -------- --------
Income before income taxes................. 8,536 6,626 16,228 13,046
Income tax expense......................... 3,223 2,192 5,990 4,351
------- ------- -------- --------
Net income................................. $ 5,313 $ 4,434 $ 10,238 $ 8,695
======= ======= ======== ========
</TABLE>

See notes to financial statements.

F-19
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

STATEMENTS OF CASH FLOWS

($ IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
----------------
1996 1995
------- -------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities
Net income.................................................. $10,238 $ 8,695
Adjustments to reconcile net income to net cash provided by
operating activities
Realized capital (gains) and losses........................ (351) 2,133
Depreciation, amortization and other noncash items......... (12,571) (10,647)
Interest credited to contractholder funds.................. 11,326 12,999
Increase in reserve for policy benefits and contractholder
funds..................................................... 38,824 67,050
Increase in deferred policy acquisition costs.............. (3,083) (3,265)
Increase in accrued investment income...................... (219) (343)
Change in deferred income taxes............................ (3,128) (3,298)
Changes in other operating assets and liabilities.......... 75 1,004
------- -------
Net cash provided by operating activities................. 41,111 74,328
------- -------
Cash flows from investing activities
Proceeds from sales
Fixed income securities available for sale................. 6,097
Investment collections
Fixed income securities available for sale................. 38,404 14,931
Fixed income securities held to maturity................... 2,864
Mortgage loans............................................. 3,360 2,475
Investment purchases
Fixed income securities available for sale................. (65,089) (57,638)
Fixed income securities held to maturity................... (21,273)
Mortgage loans............................................. (2,895)
Change in short-term investments, net........................ (24,195) (10,639)
Change in other investments, net............................. (1,135) (937)
------- -------
Net cash used in investing activities..................... (48,655) (67,015)
------- -------
Cash flows from financing activities
Contractholder fund deposits................................ 31,615 39,709
Contractholder fund withdrawals............................. (23,586) (47,081)
------- -------
Net cash provided by (used in) financing activities....... 8,029 (7,372)
------- -------
Net increase (decrease) in cash.............................. 485 (59)
Cash at beginning of period.................................. 1,472 1,763
------- -------
Cash at end of period........................................ $ 1,957 $ 1,704
======= =======
</TABLE>

See notes to financial statements.

F-20
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)
($ IN THOUSANDS)

1.BASIS OF PRESENTATION

The statements of financial position as of June 30, 1996, the statements of
operations for the three-month and six-month periods ended June 30, 1996 and
1995, and the statements of cash flows for the six-month periods then ended are
unaudited. The interim financial statements reflect all adjustments (consisting
only of normal recurring accruals) which are, in the opinion of management,
necessary for the fair presentation of the financial position, results of
operations and cash flows for the interim periods. The financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Allstate Life Insurance Company of New York Annual Report on
Form 10K for 1995. The results of operations for the interim periods should not
be considered indicative of results to be expected for the full year.

To conform with the 1996 presentation, certain items in the prior year's
financial statements have been reclassified.

F-21
<PAGE>

APPENDIX A

MARKET VALUE ADJUSTMENT

The Market Value Adjustment is based on the following:

I = the Treasury Rate for a maturity equal to the Sub-account's Guarantee
Period for the week preceding the establishment of the Sub-account.

N = the number of whole and partial years from the date we receive the
withdrawal, or death benefit request, or from the Payout Start Date to
the end of the Sub-account's Guarantee Period.

J = the Treasury Rate for a maturity of length N for the week preceding the
receipt of the withdrawal request, death benefit request, or income
payment request. If a Note with a maturity of length N is not
available, a weighted average will be used. If N is one year or less, J
will be the 1-year Treasury Rate.

Treasury Rate means the U.S. Treasury Note Constant Maturity yield as
reported in Federal Reserve Bulletin Release H.15.

The Market Value Adjustment factor is determined from the following formula:

.9 X (I-J) X N

Any transfer, withdrawal in excess of the preferred withdrawal amount, or
death benefit paid from a Sub-account of the Fixed Account will be multiplied
by the Market Value Adjustment factor to determine the Market Value Adjustment.

ILLUSTRATION

EXAMPLE OF MARKET VALUE ADJUSTMENT

<TABLE>
<S> <C>
Purchase Payment: $10,000
Guarantee Period: 5 Years
Guaranteed
Interest Rate: 4.35%
5 Year Treasury
Rate at the time
the Sub-account
is established: 5.55%
Full Withdrawal: End of Contract Year 3
</TABLE>

NOTE: THIS ILLUSTRATION ASSUMES THAT PREMIUM TAXES WERE NOT APPLICABLE.

EXAMPLE 1: (ASSUMES DECLINING INTEREST RATES)

Step 1:
Calculate Account Value at End of Contract Year 3:
=10,000.00 X (1.0435)/3/ = $11,362.59

Step 2:
Calculate the Preferred Withdrawal Amount:
=10% X (10,000.00) = $1,000.00

Step 3:
Calculate the Market Value Adjustment:
I = 5.55%
J = 5.05%
N = 730 days = 2
-----
365 days

Market Value Adjustment Factor: .9 X (I-J) X N
= .9 X (.0555-.0505) X 2 = .009

Market Value Adjustment = Factor X Amount Subject to Market Value Adjustment:
= .009 X (11,362.59 - 1,000) = $93.26

Step 4:
Calculate the Withdrawal Charge:
= .05 X (10,000.00 - 1,000.00 + $93.26) = $454.66

Step 5:
Calculate The Amount Received by Customers as a Result of a Full
Withdrawal at the end of Contract Year 3:
= 11,362.59 - 454.66 + 93.26 = $11,001.19

A-1
<PAGE>

EXAMPLE 2: (ASSUMES RISING INTEREST RATES)

Step 1:
Calculate Account Value at End of Contract Year 3:
= 10,000.00 X (1.0435)/3/ = $11,362.59

Step 2:
Calculate the Preferred Withdrawal Amount
= 10% X (10,000.00) = $1,000.00

Step 3:
Calculate the Market Value Adjustment:
I = 5.55%
J = 6.05%
N = 730 days = 2
-----
365 days

Market Value Adjustment Factor: .9 X (I-J) X N
= .9 X (.0555-.0605) X (2) = -.009

Market Value Adjustment = Factor X Amount Subject to Market Value Adjustment:
= -.009 X ($11,362.59 - 1,000) = -93.26

Step 4:
Calculate the Withdrawal Charge:
= .05 X (10,000.00 - 1,000.00-93.26) = $445.34

Step 5:
Calculate The Net Withdrawal Value at End of Contract Year 3:
= 11,362.59 - 445.34 - 93.26 = $10,823.99

A-2
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION: TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS....................... 3
REINVESTMENT............................................................... 3
THE CONTRACT............................................................... 4
Purchase of Contracts..................................................... 4
Performance Data.......................................................... 4
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers).............. 5
Premium Taxes............................................................. 6
Tax Reserves.............................................................. 6
INCOME PAYMENTS............................................................ 6
Calculation of Variable Annuity Unit Values............................... 6
GENERAL MATTERS............................................................ 7
Incontestability.......................................................... 7
Settlements............................................................... 7
Safekeeping of the Variable Account's Assets.............................. 7
FEDERAL TAX MATTERS........................................................ 7
Introduction.............................................................. 7
Taxation of Allstate Life Insurance Company of New York................... 8
Exceptions to the Non-Natural Owner Rule.................................. 8
IRS Required Distribution at Death Rules.................................. 8
Qualified Plans........................................................... 9
Types of Qualified Plans.................................................. 9
VARIABLE ACCOUNT FINANCIAL STATEMENTS...................................... 11
</TABLE>

B-1
<PAGE>

ORDER FORM

Please send me a copy of the most recent Statement of Additional Information
for the Allstate Life of New York Separate Account A.

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

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

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

Send to:

Allstate Life Insurance Company of New York
Post Office Box 9075
Farmingville, New York 11738-9075

Attention: VA Customer Service Unit

B-2
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A

OFFERED BY

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
POST OFFICE BOX 9075
FARMINGVILLE, NEW YORK 11738-9075
1-(800) 692-4682

GROUP FLEXIBLE PREMIUM DEFERRED
VARIABLE ANNUITY CONTRACTS

This Statement of Additional Information supplements the information in the
prospectus for the Group Flexible Premium Deferred Variable Annuity 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. The prospectus may be obtained from Allstate Life
Insurance Company of New York by writing or calling the address or telephone
number listed above.

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

The prospectus, dated October , 1996, has been filed with the United States
Securities and Exchange Commission.

Dated October , 1996
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION: TABLE OF CONTENTS

PAGE
----
<S> <C>
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS................ 3
REINVESTMENT........................................................ 3
THE CONTRACT........................................................ 4
Purchase of Contracts............................................. 4
Performance Data.................................................. 4
Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers)...... 5
Premium Taxes..................................................... 6
Tax Reserves...................................................... 6
INCOME PAYMENTS..................................................... 6
Calculation of Variable Annuity Unit Values....................... 6
GENERAL MATTERS..................................................... 7
Incontestability.................................................. 7
Settlements....................................................... 7
Safekeeping of the Variable Account's Assets...................... 7
FEDERAL TAX MATTERS................................................. 7
Introduction...................................................... 7
Taxation of Allstate Life Insurance Company of New York........... 8
Exceptions to the Non-Natural Owner Rule.......................... 8
IRS Required Distribution at Death Rules.......................... 8
Qualified Plans................................................... 9
Types of Qualified Plans.......................................... 9
VARIABLE ACCOUNT FINANCIAL STATEMENTS...............................11
</TABLE>

2
<PAGE>

ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS

The Company retains the right, subject to any applicable law, to make
additions to, deletions from or substitutions for the Fund shares held by any
Sub-account of the Variable Account. The Company reserves the right to eliminate
the shares of any of the Funds and to substitute shares of another Fund of the
Fund Series, or of another open-end, registered investment company, if the
shares of the Fund are no longer available for investment, or if, in the
Company's judgment, investment in any Fund 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 or series of Sub-
accounts of the Variable Account. Each additional Sub-account would purchase
shares in a new Fund of the Fund Series 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 offered
in conjunction with the Contract 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 Funds are
automatically reinvested in shares of the distributing Fund at their net asset
value.

THE CONTRACT

PURCHASE OF THE CONTRACTS

The Contracts are offered to the public through brokers as well as banks
licensed under the federal securities laws and state insurance laws. The
Contracts are distributed through the principal underwriter for the Variable
Account, Allstate Life Financial Services, Inc., an affiliate of Allstate Life
Insurance Company of New York. The offering of the Contracts is continuous and
the Company does not anticipate discontinuing

3
<PAGE>

the offering of the Contracts. However, the Company reserves the right to
discontinue the offering of the Contracts.

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 AIM V.I. Money Market Sub-account) will
always be accompanied by total return quotations. Performance figures used by
the Variable Account are based on actual historical performance of its Sub-
accounts for specified periods, and the figures are not intended to indicate
future performance. The Variable Account may also disclose yield, standard total
return, and non-standard total return for periods prior to the date that the
Variable Account commenced operations. For periods prior to the date the
Variable Account commenced operations, performance information for the Sub-
accounts will be calculated based on the performance of the underlying Funds and
the assumption that the Sub-accounts were in existence for the same periods as
those of the underlying Funds, with a level of charges equal to those currently
assessed against the Sub-accounts.

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, when compounded annually, will
accumulate a hypothetical $1,000 purchase payment to the redeemable value at the
end of the 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 average annual total return is obtained by dividing the ending
redeemable value, after deductions for any 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 withdrawal charges assessed upon redemption are computed as follows:
the preferred withdrawal amount is not assessed a withdrawal charge. Withdrawal
charges are charged on the amount of redemption equal to the purchase payment,
reduced by the amount of the preferred withdrawal amount, if any. The remaining
amount of the redemption, if any, is not assessed a withdrawal charge. The
withdrawal charge schedule specifies rates based on the number of complete years
since each purchase payment was made. The contract maintenance charge ($35 per
contract) used in the total return calculation is normally prorated using the
following method: The total amount of annual Contract fees collected during the
year is divided by the total average net assets of all the Sub-accounts. The
resulting percentage is then multiplied by the ending Contract 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 withdrawal 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 per unit change
calculation. This calculation is based on 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"; "'n' most recent Calendar Years"; and "Inception
(commencement of the Sub-account's operation) to date" (day of the
advertisement).

4
<PAGE>

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-account 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 return information for the Sub-account (including
deduction of the Surrender Charge) is as follows:
<TABLE>
<CAPTION>

For the Period
Subaccount and Date of For the 1-Year For the 5-Year from Inception
Inception of Period Ended Period Ended of the Portfolio
Corresponding Portfolio 6/30/96 6/30/96 to 6/30/96
- ----------------------- -------------- -------------- ----------------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund*......... 15.88% N/A 19.13%
AIM V.I. Diversified Income Fund*........... 2.25% N/A 3.89%
AIM V.I. Global Utilities Fund**............ 10.42% N/A 8.21%
AIM V.I. Government Securities Fund*........ -3.52% N/A 1.26%
AIM V.I. Growth Fund*....................... 11.97% N/A 12.83%
AIM V.I. Growth and Income Fund**........... 14.62% N/A 15.72%
AIM V.I. International Equity Fund*......... 15.07% N/A 12.27%
AIM V.I. Value Fund*........................ 8.98% N/A 16.13%
AIM V.I. Money Market Fund*................. N/A N/A N/A
</TABLE>
- ---------------------
* Portfolio inception date of May 5, 1993
**Portfolio inception date of May 2, 1994

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 desribed
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
advertisments 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 the deduction of the Surrender Charge) is as follows:
<TABLE>
<CAPTION>

Subaccount and Date of For the 1-Year For the 5-Year from Inception
Inception of Period Ended Period Ended of the Portfolio
Corresponding Portfolio 6/30/96 6/30/96 to 6/30/96
----------------------- -------------- -------------- ----------------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund*........ 21.40% N/A 20.01%
AIM V.I. Diversified Income Fund*.......... 7.76% N/A 5.08%

</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
AIM V.I. Global Utilities Fund**............ 15.93% N/A 10.25%
AIM V.I. Government Securities Fund*........ 2.00% N/A 2.51%
AIM V.I. Growth Fund*....................... 17.48% N/A 13.83%
AIM V.I. Growth and Income Fund**........... 20.14% N/A 17.60%
AIM V.I. International Equity Fund*......... 20.59% N/A 13.27%
AIM V.I. Value Fund*........................ 14.49% N/A 17.06%
AIM V.I. Money Market Fund*................. N/A N/A N/A
</TABLE>
- ---------------------
* Portfolio inception date of May 5, 1993
**Portfolio inception date of May 2, 1994

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"); (c) A.M. Best Company; (d)
Bank Rate Monitor; and (e) Morningstar.

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" and transfers 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 among Non-Qualified
Contracts, TSAs, IRAs and other Qualified Contracts 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.

TAX RESERVES

Company does not establish capital gains tax reserves for the Sub-account
nor deduct charges for tax reserves because the Company believes that capital
gains attributable to the Variable Account will not be taxable. However, the
Company reserves the right to deduct charges to establish tax reserves for
potential taxes on realized or unrealized capital gains.

INCOME PAYMENTS

CALCULATION OF VARIABLE ANNUITY UNIT VALUES

6
<PAGE>

The amount of the first income payment is calculated by applying the
Contract Value allocated to each Variable 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.

Annuity units in each variable 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 variable Sub-account at the end of any Valuation Period is calculated by:
(a) multiplying the annuity unit Value at the end of the immediately preceding
Valuation Period by the Sub-accounts'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 income payment tables used to determine the dollar amount of the
first variable annuity income payment, and is at an effective annual rate which
is disclosed in the Contract.

The amount of the first income payment paid under an income plan is
determined using the interest rate and mortality table disclosed in the
Contract. Due to judicial or legislative developments regarding the use of
tables which do not differentiate on the basis of sex, different annuity tables
may be used.

GENERAL MATTERS

INCONTESTABILITY

The Contract will not be contested after it is issued.

SETTLEMENTS

Due proof of the Owner(s) death (or Annuitant's death if there is a non-
natural Owner) 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 Fund shares held by each of the variable Sub-accounts.

The 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 custodian of the Fund.

FEDERAL TAX MATTERS

7
<PAGE>

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. Since the Variable Account is not an entity
separate from the Company, and its operations form a part of the Company, it
will not be taxed separately as a "Regulated Investment Company" under
Subchapter M of the Code. Investment income and realized capital gains are
automatically applied to increase reserves under the contract. Under existing
federal income tax law, the Company believes that the Variable Account
investment income and realized net capital gains will not be taxed to the extent
that such income and gains are applied to increase the reserves under the
contract.

Accordingly, the Company does not anticipate that it will incur any federal
income tax liability attributable to the Variable Account, and therefore the
Company does not intend to make provisions for any such taxes. However, if
changes in the federal tax laws or interpretations thereof result in the Company
being taxed on income or gains attributable to the Variable Account, then the
Company may impose a charge against the Variable Account (with respect to some
or all contracts) in order to set aside provisions to pay such taxes.

EXCEPTIONS TO THE NON-NATURAL OWNER RULE

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

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

8
<PAGE>

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

QUALIFIED PLANS

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

TYPES OF QUALIFIED PLANS

INDIVIDUAL RETIREMENT ANNUITIES

Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity.
Individual Retirement Annuities are subject to limitations on the amount that
can be contributed and on the time when distributions may commence. Certain
distributions from other types of qualified plans may be "rolled over" on a tax-
deferred basis into an Individual Retirement Annuity. IRAs generally may not
provide life insurance, but they may provide a death benefit that equals the
greater of the premiums paid and the contract's cash value. The contract
provides a death benefit that in certain circumstances may exceed the greater of
the payments and the contract value. It is possible that the Death Benefit could
be viewed as violating the prohibition on investment in life insurance contracts
with the result that the Contract would not be viewed as satisfying the
requirements of an IRA.

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. Employers intending to use
the contract in connection with such plans should seek competent advice. In
particular, employers should consider that IRAs generally may not provide life
insurance, but they may provide a death benefit that equals the greater of the
premiums paid and the contract's cash value. The contract provides a death
benefit that in certain circumstances may exceed the greater of the payments and
the contract value. It is possible that the death benefit could be viewed as

9
<PAGE>

violating the prohibition on investment in life insurance contracts with the
result that the contract would not be viewed as satisfying the requirements of
the IRS.

TAX SHELTERED ANNUITIES

Section 403(b) of the Code permits public school employees and employees of
certain types of tax-exempt organizations (specified in Section 501(c)(3) of the
Code) to have their employers purchase annuity contracts for them, and subject
to certain limitations, to exclude the purchase payments from the employees'
gross income. An annuity contract used for a Section 403(b) plan must provide
that distributions attributable to salary reduction contributions made after
12/31/88, and all earnings on salary reduction contributions, may be made only
after the employee attains age 59 1/2, separates from service, dies, becomes
disabled or on the account 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 Section 403(b) plan. Purchasers of the contracts
for such purposes should seek competent advice as to eligibility, limitations on
permissible amounts of purchase payments and other tax consequences associated
with the contracts. In particular, purchasers should consider that the contract
provides a death benefit that in certain circumstances may exceed the greater of
the payments and the contract value. It is possible that such death benefit
could be characterized as an incidental death benefit. If the death benefit were
so characterized, this could result in currently taxable income to purchasers.
In addition, there are limitations on the amount of incidental death benefits
that may be provided under a tax-sheltered annuity. Even if the death benefit
under the contract were characterized as an incidental death benefit, it is
unlikely to violate those limits unless the purchaser also purchases a life
insurance contract as part of his or her tax-sheltered annuity 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. The contract provides a death benefit that in certain
circumstances may exceed the greater of the payments and the contract value. It
is possible that such death benefit could be characterized as an incidental
death benefit. There are limitations on the amount of incidental benefits that
may be provided under pension and profit currently taxable income to
participants. Employers intending to use the contract in connection with such
plans should seek competent advice.

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

Section 457 of the Code permits employees of state and local governments
and tax-exempt organizations to defer a portion of their compensation without
paying current taxes. The employees must be participants in an eligible deferred
compensation plan. Under these plans, contributions made for the benefit of the
employees will not be includible in the employees' gross income until
distribution from the plan. However, under a Section 457 plan all the
compensation deferred under the plan must remain solely the

10
<PAGE>

property of the employer, subject only to the claims of the employer's general
creditors, until such time as made available to the employee or a beneficiary.

VARIABLE ACCOUNT FINANCIAL STATEMENTS

The financial statements of Allstate Life of New York Separate Account A
are not included herein because, as of the date hereof, the Variable Account had
not yet commenced operations, had no assets or liabilities and received no
income. The financial statements of the Variable Account will be audited on an
annual basis once the Variable Account commences operations.

11
<PAGE>

PART C
OTHER INFORMATION

24A. FINANCIAL STATEMENTS

PART A: Allstate Life Insurance Company of New York Financial Statements
and Financial Statement Schedules will be filed by pre-effective amendment.

The financial statements of Allstate Life Insurance Company of New York
Separate Account A are not included herein because, as of the date hereof, the
Variable Account had not yet commenced operations, had no assets or liabilities
and received no income. The financial statements of the Variable Account will be
audited on an annual basis once the Variable Account commences operations.

24B. EXHIBITS

The following exhibits:

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

(1) Form of Resolution of the Board of Directors of Allstate Life
Insurance Company of New York authorizing establishment of the
Allstate Life Insurance Company of New York Separate Account A*

(2) Not applicable

(3) Form of Underwriting Agreement

(4) Contract

(5) 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 and Consent of Michael J. Velotta, 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) Schedule of Computation of Performance Quotation

<PAGE>

(99) Powers of Attorney.
- --------------

* Previously filed and incorporated by reference in Registrant's N-4
registration statement dated December 26, 1995 (33-65381).

<PAGE>

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 & President
*Michael J. Velotta Vice President, Secretary, General Counsel
& Director
**Sharmiane M. Miller Administrative Officer & Director
*Karen C. Gardner Vice President
*Peter H. Heckman Vice President
*Thomas A. McAvity, Jr. Vice President
*Timothy H. Plohg Vice President & Director
*Kevin R. Slawin Vice President & Director
**Marcia D. Alazraki Director
**Joseph F. Carlino Director
**Cleveland Johnson, Jr. Director
**Phillip E. Lawson Director
**Gerard F. McDermott Director
**Joseph P. McFadden Director
**John R. Raben, Jr. Director
**Sally A. Slacke Director
*James P. Zils Treasurer
*Casey J. Sylla Chief Investment Officer
*Richard L. Baker Assistant Vice President
*Dorothy E. Even Assistant Vice President
*Marla G. Friedman Assistant Vice President
*Judith P. Greffin Assistant Vice President
*John R. Hunter Assistant Vice President
*Brenda D. Sneed Assistant Vice President
*Mark A. Bishop Assistant Treasurer
*Barbara S. Brown Assistant Treasurer
*David M. Crew Assistant Treasurer
*Anthony D. Frook Assistant Treasurer
*Stephanie L. Holowach Assistant Treasurer
*Peter S. Horos Assistant Treasurer
*Thomas C. Jensen Assistant Treasurer
*Robert T. Jostes Assistant Treasurer
*Emma M. Klaidjian Assistant Secretary
*Paul N. Kierig Assistant Secretary & Assistant General Counsel
*Kenneth S. Klimala Assistant Treasurer
*Steven M. Laude Assistant Treasurer
*Mary J. McGinn Assistant Secretary
*Barry S. Paul Assistant Vice President and Controller
*Robert N. Roeters Assistant Vice President
*Theodore A. Schnell Assistant Vice President and Director
*Mark D. Senkpiel Assistant Treasurer
*Steven E. Shebik Assistant Treasurer
*C. Nelson Strom Assistant Vice President & Corporate Actuary
*William F. Wein Assistant Treasurer
*Patricia A. Wilson Assistant Vice President

*The principal business address of the foregoing officers and directors is
Allstate Plaza, Northbrook, IL 60062

**The principal business address of the foregoing officers and directors is One
Allstate Drive, Farmingville, New York 11738

<PAGE>

26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH DEPOSITOR OR
REGISTRANT

See 10-K Commission File #1-11840, The Allstate Corporation.

27. NUMBER OF CONTRACT OWNERS

Not Applicable

28. INDEMNIFICATION

The by-laws of both Allstate Life Insurance Company of New York (Depositor)
and Allstate Life Financial Services, Inc. (Distributor), provide for the
indemnification of its Directors, Officers and Controlling Persons, against
expenses, judgments, fines and amounts paid in settlement as incurred by such
person, if such person acted properly. No indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of a duty
to the Company, unless a court determines such person is entitled to such
indemnity.

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

- Glenbrook Life and Annuity Company Separate Account A

- Glenbrook Life and Annuity Company Variable Annuity Account

- Glenbrook Life Multi-Manager Variable Account

29b. PRINCIPAL UNDERWRITER

Name and Principal Business Allstate Life Financial
Address Of Each Such Person Services, Inc. ("ALFS")

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

Louis G. Lower, II Director

Kevin R. Slawin Director

<PAGE>

Michael J. Velotta Director & Secretary

Robert J. Kelly President & Chief Executive Officer

Diane Bellas Vice President & Controller

Andrea J. Schur Vice President

Brent H. Hamann Vice President

James P. Zils Treasurer

John R. Hedrick General Counsel
& Assistant Secretary

Lisa A. Burnell Assistant Vice President
& Compliance Officer

Robert N. Roeters Assistant Vice President

Emma M. Kalaidjian Assistant Secretary

Paul N. Kierig Assistant Secretary

Steven E. Shebik Assistant Treasurer

The principal address of ALFS is 3100 Sanders Road, Northbrook, Illinois

29c. COMPENSATION OF ALLSTATE LIFE FINANCIAL SERVICES, INC.

None

30. LOCATION OF ACCOUNTS AND RECORDS

The Depositor, Allstate Life Insurance Company of New York, is located at
One Allstate Drive, Farmington, New York, 11783.

The Underwriter, Allstate Life Financial Services, Inc., is located at 3100
Sanders Road, Northbrook, Illinois 60062.

Each company maintains those accounts and records required to be maintained
pursuant to Section 31(a) of the Investment Company Act and the rules
promulgated thereunder.

<PAGE>

31. MANAGEMENT SERVICES

None

32. UNDERTAKINGS

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

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

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

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the registrant, Allstate Life Insurance Company
of New York Separate Account A, has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, and its
seal to be hereunto affixed and attested, all in the Township of Northfield,
State of Illinois, on the 20th day of September, 1996.

ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
(Registrant)

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
(Depositor)

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

Pursuant to the Requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, This Registration Statement has been signed
below by the following Directors and Officers of Allstate Life Insurance Company
of New York on this 20th day of September, 1996.

*/LOUIS G. LOWER, II Chairman of the Board 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

*/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
- ---------------------
Kevin R. Slawin

<PAGE>

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

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

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

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

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

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

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

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

*/THEODORE A. SCHNELL Director
- ------------------------
Theodore A. Schnell

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

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

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

*/ By Michael J. Velotta, Pursuant to Power of Attorney

<PAGE>

UNDERWRITING AGREEMENT
----------------------

THIS AGREEMENT, is entered into on this day of __________________________,
1996, by and among ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK ("Allstate Life
of New York" or "Company"), a life insurance company organized under the laws of
the State of New York, and ALLSTATE LIFE FINANCIAL SERVICES, INC., ("Principal
Underwriter"), a corporation organized under the laws of the state of Delaware.

RECITALS

WHEREAS, Company proposes to issue to the public certain flexible premium
deferred variable annuity contracts identified in the Attachment A
("Contracts"); and

WHEREAS, the Separate Account is registered with the Securities and
Exchange Commission ("Commission") as a unit investment trust under the
Investment Company Act of 1940 (File No. 811-07467); and

WHEREAS, the Contracts to be issued by Company are registered with the
Commission under the Securities Act of 1933 and the Investment Company Act of
1940 (File No. 033-65355, 033-65381) for offer and sale to the public and
otherwise are in compliance with all applicable laws; and

WHEREAS, Principal Underwriter, a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. ("NASD"), proposes to act as principal underwriter on
an agency (best efforts) basis in the marketing and distribution of said
Contracts; and

WHEREAS, Company desires to obtain the services of Principal Underwriter as
an underwriter and distributor of said Contracts issued by Company;

NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, the Company, the Separate Account, and the Principal Underwriter
hereby agree as follows:

1. AUTHORITY AND DUTIES
--------------------

(a) Principal Underwriter will serve as an underwriter and distributor on
an agency basis for the Contracts which will be issued by the Company.

(b) Principal Underwriter will use its best efforts to provide information
and marketing assistance to licensed insurance agents and broker-
dealers on

1
<PAGE>

a continuing basis. However, Principal Underwriter shall be
responsible for compliance with the requirements of state broker-
dealer regulations and the Securities Exchange Act of 1934 as each
applies to Principal Underwriter in connection with its duties as
distributor of said Contracts. Moreover, Principal Underwriter shall
conduct its affairs in accordance with the rules of Fair Practice of
the NASD.

(c) Subject to agreement with the Company, Principal Underwriter may enter
into selling agreements with broker-dealers which are registered under
the Securities Exchange Act of 1934 and authorized by applicable law
or exemptions to sell single payment deferred annuity contracts issued
by Company. Any such contractual arrangement is expressly made subject
to this Agreement, and Principal Underwriter will at all times be
responsible to Company for supervision of compliance with the federal
securities laws regarding distribution of Contracts.

2. WARRANTIES
----------

(a) The Company represents and warrants to Principal Underwriter that:

(i) Registration Statements on Form S-1 for each of the Contracts
identified in Attachment A have been filed with the Commission
in the form previously delivered to Principal Underwriter and
that copies of any and all amendments thereto will be forwarded
to Principal Underwriter at the time that they are filed with
Commission;

(ii) The Registration Statement and any further amendments or
supplements thereto will, when they become effective, conform
in all material respects to the requirements of the Securities
Act of 1933, and the rules and regulations of the Commission
under such Acts, and will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and
warranty shall not apply to any statement or omission made in
reliance upon and in conformity with information furnished in
writing to Company by Principal Underwriter expressly for use
therein;

(iii) The Company is validly existing as a stock life insurance
company in good standing under the laws of the State of New
York, with power to own its properties and conduct its business
as described in the Prospectus, and has been duly qualified for
the transaction

2
<PAGE>

of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or
conducts any business;

(iv) Those persons who offer and sell the Contracts are to be
appropriately licensed or appointed to comply with the state
insurance laws;

(v) The performance of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in
a violation of any of the provisions of or default under any
statute, indenture, mortgage, deed of trust, note agreement or
other agreement or instrument to which Company is a party or by
which Company is bound (including Company's Charter or By-laws
as a stock life insurance company, or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over Company or any of its properties);

(vi) There is no consent, approval, authorization or order of any
court or governmental agency or body required for the
consummation by Company of the transactions contemplated by
this Agreement, except such as may be required under the
Securities Exchange Act of 1934 or state insurance or
securities laws in connection with the distribution of the
Contracts; and

(vii) There are no material legal or governmental proceedings pending
to which Company is a party or of which any property of Company
is the subject (other than as set forth in the Prospectus
relating to the Contracts, or litigation incident to the kind
of business conducted by the Company) which, if determined
adversely to Company, would individually or in the aggregate
have a material adverse effect on the financial position,
surplus or operations of Company.

(b) Principal Underwriter represents and warrants to Company that:

(i) It is a broker-dealer duly registered with the Commission
pursuant to the Securities Exchange Act of 1934, is a member in
good standing of the NASD, and is in compliance with the
securities laws in those states in which it conducts business
as a broker-dealer;

3
<PAGE>

(ii) As a principal underwriter, it shall permit the offer and sale
of Contracts to the public only by and through persons who are
appropriately licensed under the securities laws and who are
appointed in writing by the Company to be authorized insurance
agents;

(iii) The performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or
violation of any of the terms or provisions of or constitute a
default under any statute, indenture, mortgage, deed of trust,
note agreement or other agreement or instrument to which
Principal Underwriter is a party or by which Principal
Underwriter is bound (including the Certificate of
Incorporation or By-laws of Principal Underwriter or any order,
rule or regulation of any court or governmental agency or body
having jurisdiction over either Principal Underwriter or its
property); and

(iv) To the extent that any statements made in the Registration
Statement, or any amendment or supplement thereto, are made in
reliance upon and in conformity with written information
furnished to Company by Principal Underwriter expressly for use
therein, such statements will, when they become effective or
are filed with the Commission, as the case may be, conform in
all material respects to the requirements of the Securities Act
of 1933 and the rules and regulations of the Commission
thereunder, and will not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading.

3. BOOKS AND RECORDS
-----------------

(a) Principal Underwriter shall keep, in a manner and form approved by
Company and in accordance with Rules 17a-3 and 17a-4 under the
Securities Exchange Act of 1934, correct records and books of account
as required to be maintained by a registered broker-dealer, acting as
principal underwriter, of all transactions entered into on behalf of
Company with respect to its activities under this Agreement. Principal
Underwriter shall make such records and books of account available for
inspection by the Commission, and Company shall have the right to
inspect, make copies of or take possession of such records and books
of account at any time upon demand.

4
<PAGE>

(b) Subject to applicable Commission or NASD restrictions, Company will
send confirmations of Contract transactions to Contract Owners.
Company will make such confirmations and records of transactions
available to Principal Underwriter upon request.

4. SALES MATERIALS
---------------

(a) After authorization to commence the activities contemplated herein,
Principal Underwriter will utilize the currently effective prospectus
relating to the subject Contracts in connection with its underwriting,
marketing and distribution efforts. As to other types of sales
material, Principal Underwriter hereby agrees and will require any
participating or selling broker-dealers to agree that they will use
only sales materials which have been authorized for use by Company,
which conform to the requirements of federal and state laws and
regulations, and which have been filed where necessary with the
appropriate regulatory authorities, including the NASD.

(b) Principal Underwriter will not distribute any prospectus, sales
literature or any other printed matter or material in the underwriting
and distribution of any Contract if, to the knowledge of Principal
Underwriter, any of the foregoing misstates the duties, obligation or
liabilities of Company or Principal Underwriter.

5. COMPENSATION
------------

Principal Underwriter shall be entitled to such remuneration for its services
and reimbursement for its fees, charges and expenses as will be contained in
such Schedules as attached hereto as Attachment B. Said Schedules may be amended
from time to time at the mutual consent of the undersigned parties.

6. UNDERWRITING TERMS
------------------

(a) Principal Underwriter makes no representations or warranties regarding
the number of Contracts to be sold by licensed broker-dealers and
registered representatives of broker-dealers or the amount to be paid
thereunder. Principal Underwriter does, however, represent that it
will actively engage in its duties under this Agreement on a
continuous basis while there is an effective registration statement
with the Commission.

(b) Principal Underwriter will use its best efforts to ensure that the
Contracts shall be offered for sale by registered broker-dealers and

5
<PAGE>

registered representatives (who are duly licensed as insurance agents)
on the terms described in the currently effective prospectus
describing such Contracts.

(c) It is understood and agreed that Principal Underwriter may render
similar services to other companies in the distribution of other
variable contracts.

(d) The Company will use its best efforts to assure that the Contracts are
continuously registered under the Securities Act of 1933 (and under
any applicable state "blue sky" laws) and to file for approval under
state insurance laws when necessary.

(e) The Company reserves the right at any time to suspend or limit the
public offering of the subject Contracts upon one day's written notice
to Principal Underwriter.

7. LEGAL AND REGULATORY ACTIONS
----------------------------

(a) The Company agrees to advise Principal Underwriter immediately of:

(i) any request by the Commission for amendment of the Registration
Statement or for additional information relating to the
Contracts;

(ii) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement relating to the
Contracts or the initiation of any proceedings for that
purpose; and

(iii) the happening of any known material event which makes untrue
any statement made in the Registration Statement relating to
the Contracts or which requires the making of a change therein
in order to make any statement made therein not misleading.

(b) Each of the undersigned parties agrees to notify the other in writing
upon being apprised of the institution of any proceeding,
investigation or hearing involving the offer or sale of the subject
Contracts.

(c) During any legal action or inquiry, Company will furnish to Principal
Underwriter such information with respect the Contracts in such form
and signed by such of its officers as Principal Underwriter may
reasonably request and will warrant that the statements therein
contained when so signed are true and correct.

6
<PAGE>

9. TERMINATION
-----------

(a) This Agreement will terminate automatically upon its assignment.

(b) This Agreement shall terminate without the payment of any penalty by
either party upon sixty (60) days' advance written notice.

(c) This Agreement shall terminate at the option of the Company upon
institution of formal proceedings against Principal Underwriter by the
NASD or by the Commission, or if Principal Underwriter or any
representative thereof at any time:

(i) employs any device, scheme, artifice, statement or omission to
defraud any person;

(ii) fails to account and pay over promptly to the Company money due
it according to the Company's records; or

(iii) violates the conditions of this Agreement.

10. INDEMNIFICATION
---------------

The Company agrees to indemnify Principal Underwriter for any liability that it
may incur to a Contract owner or party-in-interest under a Contract:

(a) arising out of any act or omission in the course of or in connection
with rendering services under this Agreement; or

(b) arising out of the purchase, retention or surrender of a contract;
provided, however, that the Company will not indemnify Principal
Underwriter for any such liability that results from the willful
misfeasance, bad faith or gross negligence of Principal Underwriter or
from the reckless disregard by such Principal Underwriter of its
duties and obligations arising under this Agreement.

11. GENERAL PROVISIONS
------------------

(a) This Agreement shall be subject to the laws of the State of ILLINOIS.

(b) This Agreement, along with any Schedules attached hereto and
incorporated herein by reference, may be amended from time to time by
the mutual agreement and consent of the undersigned parties.

7
<PAGE>

(c) In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in way be affected or impaired thereby.

IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be duly executed, to be effective as of ____________________________, 1996.

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

BY:
---------------------------- ------------------------------
President Date

ALLSTATE LIFE FINANCIAL SERVICES, INC.

BY:
---------------------------- ------------------------------
President & COO Date

8
<PAGE>

Attachment A

UNDERWRITING AGREEMENT
----------------------

"CONTRACTS" FORM #
- ----------- ------

Flexible Premium Deferred Variable Annuity Group Certificate NYLU349

9
<PAGE>

Attachment B

UNDERWRITING AGREEMENT
----------------------

COMPENSATION
- --------------------------------------------------------------------

<PAGE>

Flexible Premium Deferred
Variable Annuity Certificate

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK, A Stock Company
Home Office: One Allstate Drive, Farmingville, New York 11783

This Certificate is issued to customers of insurance agencies or broker/dealers
that sell AIM mutual funds according to the terms of Master Policy number
64900005 issued by Allstate Life Insurance Company of New York to A I M
Management Group, Inc. A I M Management Group, Inc. is called the Master
Policyholder. This Certificate is issued in the state of New York and is
governed by New York law.

Throughout this Certificate, "you" and "your" refer to the Certificate owner(s).
"We", "us" and "our" refer to Allstate Life Insurance Company of New York.

CERTIFICATE SUMMARY
This flexible premium deferred variable annuity provides a cash withdrawal
benefit and a death benefit during the Accumulation Phase and periodic income
payments beginning on the Payout Start Date during the Payout Phase.

The dollar amount of income payments or other values provided by this
Certificate, when based on the investment experience of the Variable Account,
varies to reflect the performance of the Variable Account. The smallest annual
rate of net investment return on the Variable Account assets required to keep
Variable Account income payments from decreasing is 3%. An annualized
Certificate Maintenance Charge of $35 and 1.45% per year (assessed daily) will
be deducted in equal parts from Variable Account. For amounts in the Fixed
Account, the withdrawal benefit, transfers to other sub-accounts and any
periodic income payments may be subject to a Market Value Adjustment which may
result in an upward or downward adjustment of the amount distributed. For
amounts in the Fixed Account, the death benefit may be subject to a positive
Market Value Adjustment when the cash surrender value is greater than the
Certificate Value.

This Certificate and Master Policy do not pay dividends.

The tax status of this Certificate as it applies to the owner should be reviewed
each year.

PLEASE READ YOUR CERTIFICATE CAREFULLY.

This is a legal contract between the Certificate owner(s) and Allstate Life
Insurance Company of New York.

Return Privilege
If you are not satisfied with this Certificate for any reason, you may return it
to us or our agent within 10 days after you receive it. We will refund any
purchase payments allocated to the Variable Account, adjusted to reflect
investment gain or loss from the date of allocation to the date of cancellation,
plus any purchase payments allocated to the Fixed Account. If this Certificate
is qualified under Section 408 of the Internal Revenue Code, we will refund the
greater of any purchase payments or the Certificate Value.

If you have any questions about your Allstate Life Insurance Company of New York
variable annuity, please contact us at (800) 692-4682.

/s/ Michael J. Velotta /s/ Louis G. Lower, II
Michael J. Velotta Louis G. Lower, II
Secretary Chief Executive Officer

Page 1
<PAGE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------
<S> <C>

THE PERSONS INVOLVED.................................................. 4

ACCUMULATION PHASE.................................................... 5

PAYOUT PHASE.......................................................... 11

INCOME PAYMENT TABLES................................................. 13

GENERAL PROVISIONS.................................................... 14
</TABLE>

Page 2
<PAGE>

ANNUITY DATA

CERTIFICATE NUMBER:................................................... 444444444

ISSUE DATE:........................................................ JULY 1, 1995

INITIAL PURCHASE PAYMENT:............................................ $10,000.00

INITIAL ALLOCATION OF PURCHASE PAYMENT:
RATE
ALLOCATED GUARANTEED GUARANTEED
AMOUNT (%) INTEREST RATE THROUGH
--------- ------------- ----------
<S> <C> <C> <C>
VARIABLE SUB-ACCOUNTS
AIM V.I. CAPITAL APPRECIATION FUND 5%
AIM V.I. DIVERSIFIED INCOME FUND 5%
AIM V.I. GLOBAL UTILITIES FUND 5%
AIM V.I. GOVERNMENT SECURITIES FUND 5%
AIM V.I. GROWTH FUND 5%
AIM V.I. GROWTH AND INCOME FUND 5%
AIM V.I. INTERNATIONAL EQUITY FUND 5%
AIM V.I. MONEY MARKET FUND 5%
AIM V.I. VALUE FUND 10%

FIXED ACCOUNT
1 YEAR GUARANTEE PERIOD 10% 5.00% 06/30/1995
3 YEAR GUARANTEE PERIOD 10% 6.40% 06/30/1997
5 YEAR GUARANTEE PERIOD 10% 7.00% 06/30/1999
7 YEAR GUARANTEE PERIOD 10% 7.20% 06/30/2001
10 YEAR GUARANTEE PERIOD 10% 7.35% 06/30/2004
</TABLE>

MINIMUM GUARANTEED RATE FOR FIXED ACCOUNT:................................ 3.00%

PAYOUT START DATE:................................................. JULY 1, 2050

OWNER:................................................................. JOHN DOE
....................................................................... JANE DOE

ANNUITANT:............................................................. JOHN DOE
AGE AT ISSUE:................................................................ 35
SEX:...................................................................... MALE

RELATIONSHIP
BENEFICIARY TO OWNER PERCENTAGE
- ----------- ------------ ----------
JANE DOE WIFE 100%

NYDP349
<PAGE>

- --------------------------------------------------------------------------------
THE PERSONS INVOLVED
- --------------------------------------------------------------------------------

OWNER. The person named at the time of application is the owner of this
Certificate unless subsequently changed. As owner, you will receive any
periodic income payments, unless you have directed us to pay them to someone
else.

You may exercise all rights stated in this Certificate, subject to the rights of
any irrevocable beneficiary.

You may change the owner or beneficiary at any time. If the owner is a natural
person, you may change the annuitant prior to the Payout Start Date. Once we
have received a satisfactory written request for an owner, beneficiary or
annuitant change, the change will take effect as of the date you signed it. We
are not liable for any payment we make or other action we take before receiving
any written request for a change from you.

You may not assign an interest in this Certificate as collateral or security for
a loan. However, you may assign periodic income payments under this Certificate
prior to the Payout Start Date. We are bound by an assignment only if it is
signed by the assignor and filed with us. We are not responsible for the
validity of an assignment.

If the sole surviving owner dies prior to the Payout Start Date, the beneficiary
becomes the new owner. If the sole surviving owner dies after the Payout Start
Date, the beneficiary becomes the new owner and will receive any subsequent
guaranteed income payments.

If more than one person is designated as owner:

owner as used in this certificate refers to all people named as owners,
unless otherwise indicated;

any request to exercise ownership rights must be signed by all owners; and

on the death of any person who is an owner, the surviving person(s) named as
owner will continue as owner.

ANNUITANT. The annuitant is the person named on the Annuity Data Page, but may
be changed by the owner, as described above. The annuitant must be a natural
person. If the annuitant dies prior to the Payout Start Date, the new annuitant
will be:

the youngest owner; otherwise,

the youngest beneficiary.

BENEFICIARY. The beneficiary is the person(s) named on the Annuity Data Page,
but may be changed by the owner, as described above. We will determine the
beneficiary from the most recent written request we have received from you. If
you do not name a beneficiary or if the beneficiary named is no longer living,
the beneficiary will be:

your spouse if living; otherwise

your children equally if living; otherwise

your estate.

The beneficiary may become the owner under the circumstances described above.

The beneficiary may assign benefits under the Certificate, as described above,
once they are payable to the beneficiary. We are bound by an assignment only if
it is signed by the assignor and filed with us. We are not responsible for the
validity of an assignment.

4
<PAGE>

- --------------------------------------------------------------------------------
ACCUMULATION PHASE
- --------------------------------------------------------------------------------

ACCUMULATION PHASE DEFINED. The "Accumulation Phase" is the first of two phases
during your Certificate. The Accumulation Phase begins on the issue date stated
on the Annuity Data Page. This phase will continue until the Payout Start Date
unless the Certificate is terminated before that date.

CERTIFICATE YEAR. The one year period beginning on the issue date and on each
anniversary of the issue date.

PURCHASE PAYMENTS. You may make subsequent purchase payments during the
Accumulation Phase. The number of purchase payments is unlimited. The minimum
subsequent purchase payment amount is $500. We reserve the right to reduce the
minimum purchase payment. We may limit the maximum amount of purchase payments
we will accept.

We will invest the purchase payments in the Investment Alternatives you select.
You may allocate any portion of your purchase payment in whole percents from 0%
to 100% or in exact dollar amounts to any of the Investment Alternatives. The
total allocation must equal 100%. For each purchase payment, the minimum amount
that may be allocated to the Fixed Account is $500.

The allocation of the initial purchase payment is shown on the Annuity Data
Page. Allocation of each subsequent purchase payment will be the same as for
the most recent purchase payment unless you change the allocation. You may
change the allocation of subsequent purchase payments at any time, without
charge, simply by giving us written notice. Any change will be effective at the
time we receive the notice.

INVESTMENT ALTERNATIVES. Investment Alternatives are the Sub-accounts of the
Variable Account and the Sub-accounts of the Fixed Account shown on the Annuity
Data Page.

VARIABLE ACCOUNT. The "Variable Account" for this Certificate is the Allstate
Life of New York Separate Account A. This account is a separate investment
account to which we allocate assets contributed under this and certain other
certificates. These assets will not be charged with liabilities arising from
any other business we may have.

VARIABLE SUB-ACCOUNTS. The Variable Account is divided into Sub-accounts. Each
Sub-account invests solely in the shares of the mutual fund underlying that Sub-
account.

FIXED ACCOUNT. The Fixed Account is divided into Sub-accounts. A Sub-account
is identified by the Guarantee Period and the date the Guarantee Period begins.
You create a Sub-account when:

you make a purchase payment; or

you select a new Guarantee Period after the prior Sub-account expires; or

you transfer an amount from an existing Sub-account of the Variable Account
or the Fixed Account.

A Sub-account continues until the end of the Guarantee Period.

You must select the Guarantee Period for all purchase payments and transfers
allocated to the Fixed Account. If you do not select a Guarantee Period for a
purchase payment or transfer, we will assign the shortest Guarantee Period
available under the Certificate for such payment or transfer. Guarantee Periods
are offered at our discretion and may range from one to ten years. We may
change the Guarantee Periods available for future purchase payments or transfers
allocated to the Fixed Account.

Page 5
<PAGE>

We will mail you a notice prior to the expiration of each Sub-account outlining
the options available at the end of a Guarantee Period. During the 30 day period
after a Guarantee Period expires you may:

take no action and we will automatically renew the Sub-account value to a
Guarantee Period of the shortest duration available to be established on
the day the previous Guarantee Period expired; or

notify us to apply the Sub-account value to a new Guarantee Period(s) to be
established on the day the previous Guarantee Period expired; or

notify us to apply the Sub-account value to any Sub-account of the Variable
Account on the day we receive the notification; or

receive a portion of the Sub-account value or the entire Sub-account value
through a partial or full withdrawal that is not subject to a Market Value
Adjustment. In this case, the amount withdrawn will be deemed to have been
withdrawn on the day the Guarantee Period expired.

The minimum amount that can be allocated to a new Sub-account is $500.

CREDITING INTEREST. We credit interest daily to money allocated to the Fixed
Account at a rate which compounds over one year to the interest rate we
guaranteed when the money was allocated. We will credit interest to the initial
purchase payment from the issue date. We will credit interest to subsequent
purchase payments from the date we receive them. We will credit interest to
transfers from the date the transfer is made. The interest rates will never be
less than the minimum guaranteed rate shown on the Annuity Data Page.

TRANSFERS. Prior to the Payout Start Date, you may transfer amounts between
Investment Alternatives. You may make 12 transfers per Certificate Year without
charge. Each transfer after the 12th transfer in any Certificate Year may be
assessed a $10 transfer fee. Transfers are subject to the following
restrictions.

The minimum amount that may be transferred into a Sub-account of the Fixed
Account is $500.

Any transfer from a Sub-account of the Fixed Account at a time other than
during the 30 day period after a Guarantee Period expires will be subject
to a Market Value Adjustment.

If any transfer reduces the value of a Sub-account of the Fixed Account to
less than $500, we will treat the request as a transfer of the entire Sub-
account value.

We reserve the right to waive the transfer fees and restrictions contained in
this Certificate.

CERTIFICATE VALUE. Your "Certificate Value" is equal to the sum of:

the number of Accumulation Units you hold in each Sub-account of the
Variable Account multiplied by the Accumulation Unit Value for that Sub-
account on the most recent Valuation Date; plus

the sum of Sub-account values in the Fixed Account.

ACCUMULATION UNITS AND ACCUMULATION UNIT VALUE. Amounts which you allocate to a
Sub-account of the Variable Account are used to purchase Accumulation Units in
that Sub-account. The Accumulation Unit Value for each Sub-account at the end of
any Valuation Period is calculated by multiplying the Accumulation Unit Value at
the end of the immediately preceding Valuation Period by the Sub-account's Net
Investment Factor for the Valuation Period. The Accumulation Unit Values may go
up or down. Additions or transfers to a Sub-account of the Variable Account will
increase the number of Accumulation Units for that Sub-account. Withdrawals or
transfers from a Sub-account of the Variable Account will decrease the number of
Accumulation Units for that Sub-account.

Page 6
<PAGE>

VALUATION PERIOD AND VALUATION DATE. A "Valuation Period" is the time interval
between the closing of the New York Stock Exchange on consecutive Valuation
Dates. A "Valuation Date" is any date the New York Stock Exchange is open for
trading.

NET INVESTMENT FACTOR. For each Sub-account of the Variable Account, the "Net
Investment Factor" for a Valuation Period is (A) divided by (B), minus (C)
where:

(A) is the sum of:

(1) the net asset value per share of the mutual fund 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 mutual fund underlying the Sub-account during the current
Valuation Period.

(B) is the net asset value per share of the mutual fund underlying the Sub-
account determined as of the end of the immediately preceding Valuation
Period.

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

CHARGES. The charges for this Certificate include Administrative Expense
Charges, Mortality and Expense Risk Charges, Certificate Maintenance Charges,
transfer charges, and taxes. If withdrawals are made, the Certificate may also
be subject to Withdrawal Charges and Market Value Adjustments.

ADMINISTRATIVE EXPENSE CHARGE. The annualized Administrative Expense Charge
will never be greater than 0.10%. (See Net Investment Factor for a description
of how this charge is applied.)

MORTALITY AND EXPENSE RISK CHARGE. The annualized Mortality and Expense Risk
Charge will never be greater than 1.35%. (See Net Investment Factor for a
description of how this charge is applied.)

Our actual mortality and expense experience will not adversely affect the dollar
amount of variable benefits or other contractual payments or values under this
Certificate.

CERTIFICATE MAINTENANCE CHARGE. Prior to the Payout Start Date, a Certificate
Maintenance Charge will be deducted from your Certificate Value on each
certificate anniversary. The charge will be deducted on a pro-rata basis from
each Sub-account of the Variable Account in the proportion that your value in
each bears to your total value in all Sub-accounts of the Variable Account. A
full Certificate Maintenance Charge will be deducted if the Certificate is
terminated on any date other than a certificate anniversary. After the Payout
Start Date the Certificate Maintenance Charge will be deducted in equal parts
from each income payment. The annualized charge will never be greater than $35
per certificate year. The Certificate Maintenance Charge will be waived if total
purchase payments are $50,000 or more or if all money is allocated to the Fixed
Account on the certificate anniversary.

TAXES. Any premium tax or income tax withholding relating to this Certificate
may be deducted from purchase payments or the Certificate Value when the tax is
incurred or at a later time.

WITHDRAWAL. You have the right to withdraw part or all of your Certificate
Value at any time during the Accumulation Phase. A withdrawal must be at least
$50. If any withdrawal reduces the value of any Sub-account of the Fixed Account
to less than $500, we will treat the request as a withdrawal of the entire Sub-
account value. If any withdrawal reduces the Certificate Value to less than
$1,000, we will treat the request as a withdrawal of the entire Certificate
Value. If you withdraw the entire Certificate Value, the Certificate will
terminate.

You must specify the Investment Alternative(s) from which you wish to make a
withdrawal. When you make a withdrawal, your Certificate Value will be reduced
by the amount paid to you and any applicable Withdrawal Charge, Market Value
Adjustment, and taxes. Any Withdrawal Charge will be waived on withdrawals taken
to satisfy IRS minimum distribution rules.

Page 7
<PAGE>

PREFERRED WITHDRAWAL AMOUNT. Each Certificate Year the Preferred Withdrawal
Amount is equal to 10% of the amount of purchase payments. Each Certificate Year
you may withdraw the Preferred Withdrawal Amount without any Withdrawal Charge
or Market Value Adjustment. Each Certificate Year begins on the anniversary of
the date the Certificate was established. Any Preferred Withdrawal Amount which
is not withdrawn in a year may not be carried over to increase the Preferred
Withdrawal Amount in a subsequent year.

WITHDRAWAL CHARGE. Withdrawals in excess of the Preferred Withdrawal Amount will
be subject to a Withdrawal Charge as follows:

Payment Year: 1 2 3 4 5 6 7 8 and Later

Percentage: 7% 6% 5% 4% 3% 2% 1% 0%

To determine the Withdrawal Charge, we assume that purchase payments are
withdrawn first, beginning with the oldest payment. When all purchase payments
have been withdrawn, additional withdrawals will not be assessed a Withdrawal
Charge.

For each purchase payment withdrawal, the "Payment Year" in the table is
measured from the date we received the purchase payment. The Withdrawal Charge
is determined by:

multiplying the percentage corresponding to the Payment Year, times

that part of each purchase payment withdrawal that is in excess of the
Preferred Withdrawal Amount, adjusted by a Market Value Adjustment.

MARKET VALUE ADJUSTMENT. Withdrawals in excess of the Preferred Withdrawal
Amount, transfers, and amounts applied to an income plan from a Sub-account of
the Fixed Account other than during the 30 day period after a Guarantee Period
expires are subject to a Market Value Adjustment. A Market Value Adjustment is
an increase or decrease in the amount reflecting changes in the level of
interest rates since the Sub-account was established. As used in this provision,
"Treasury Rate" means the U. S. Treasury Note Constant Maturity yield as
reported in Federal Reserve Bulletin Release H.15. The Market Value Adjustment
is based on the following:

I = the Treasury Rate for a maturity equal to the Sub-account's
Guarantee Period for the week preceding the establishment of the
Sub-account;

N = the number of whole and partial years from the date we receive the
withdrawal, transfer, or death benefit request, or from the Payout
Start Date, to the end of the Sub-account's Guarantee Period;

J = the Treasury Rate for a maturity of N years for the week preceding
the receipt of the withdrawal request, transfer request, death
benefit request, or Income Payment request. If a Note with a
maturity of N years is not available, a weighted average will be
used. If N is one year or less, J will be the 1-year Treasury Rate.

An adjustment factor is determined from the following formula:

.9 x (I - J) x N

The amount subject to a Market Value Adjustment that is deducted from a Sub-
account of the Fixed Account is multiplied by the adjustment factor to determine
the amount of the Market Value Adjustment. The amount deducted from the Sub-
account includes the transfer amount or the amount we pay you, income tax we
withhold for you, the Withdrawal Charge, any applicable premium tax charge, and
the Market Value Adjustment.

Any Market Value Adjustment will be waived on withdrawals taken to satisfy IRS
minimum distribution rules.

Page 8
<PAGE>

DEATH OF OWNER OR ANNUITANT. A benefit may be paid to the owner determined
immediately after the death if, prior to the Payout Start Date:

any owner dies; or

the annuitant dies and the owner is not a natural person.

If the owner eligible to receive a benefit is not a natural person, the owner
may elect to receive the benefit in one or more distributions. Otherwise, if the
owner is a natural person, the owner may elect to receive a benefit either in
one or more distributions or by periodic payments through an Income Plan.

A Death Benefit will be paid: 1) if the owner elects to receive the Death
Benefit distributed in a single payment within 180 days of the date of death,
and 2) if the Death Benefit is paid as of the day the value of the Death Benefit
is determined. Otherwise, the Settlement Value will be paid. In any event, the
entire value of the certificate must be distributed within five (5) years after
the date of death unless an Income Plan is elected or a surviving spouse
continues the certificate in accordance with the following provisions.

Payments from the Income Plan must begin within one year of the date of death
and must be payable throughout:

the life of the owner; or

a period not to exceed the life expectancy of the owner; or

the life of the owner with payments guaranteed for a period not to exceed the
life expectancy of the owner.

If the surviving spouse of the deceased owner is the new owner, then the spouse
may elect one of the options listed above or may continue the Certificate in the
Accumulation Phase as if the death had not occurred. If the Certificate is
continued in the Accumulation Phase, the surviving spouse may make a single
withdrawal of any amount within one year of the date of death without incurring
a Withdrawal Charge. However, any applicable Market Value Adjustment, determined
as of the date of the withdrawal, will apply.

DEATH BENEFIT. Prior to the Payout Start Date, the death benefit is equal to the
greatest of:

Certificate Value on the date we determine the death benefit; or

the amount that would have been payable in the event of a full withdrawal
of the Certificate Value on the date we determine the death benefit; or

the Certificate Value on the Death Benefit Anniversary immediately
preceding the date we determine the death benefit adjusted by any purchase
payments, withdrawals and charges made between such Death Benefit
Anniversary and the date we determine the death benefit.

The first Death Benefit Anniversary is the issue date. Subsequent Death
Benefit Anniversaries are those certificate anniversaries that are
multiples of 7 Certificate Years, beginning with the 7th certificate
anniversary. For example, the issue date, 7th, and 14th certificate
anniversaries are the first three Death Benefit Anniversaries; or

the greatest of the Anniversary Values as of the date we determine the
death benefit. The Anniversary Value is equal to the Certificate Value on a
Certificate Anniversary, increased by purchase payments made since that
anniversary and reduced by the amount of any partial withdrawals since that
anniversary. Anniversary values will be calculated for each Certificate
anniversary prior to the earlier of:

a. the date we determine the death benefit, or

b. the oldest owner's or the annuitant's, if the owner is not a natural
person, attained age 75 or 5 years after the date the Certificate was
established, if later.

Page 9
<PAGE>

We will determine the value of the death benefit as of the end of the Valuation
Period during which we receive a complete request for payment of the death
benefit. A complete request includes due proof of death.

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

SETTLEMENT VALUE. The Settlement Value is the same amount that would be paid in
the event of withdrawal of the Certificate Value. We will calculate the
Settlement Value at the end of the Valuation Period coinciding with the
requested distribution date for payment or on the mandatory distribution date of
5 years after the date of death.

Page 10
<PAGE>
- -------------------------------------------------------------------------------
PAYOUT PHASE
- -------------------------------------------------------------------------------

PAYOUT PHASE DEFINED. The "Payout Phase" is the second of the two phases during
your Certificate. During this phase the Certificate Value adjusted by any Market
Value Adjustment and less any applicable taxes is applied to the Income Plan you
choose and is paid out as provided in that plan.

The Payout Phase begins on the Payout Start Date. It continues until we make the
last payment as provided by the Income Plan chosen.

PAYOUT START DATE. The "Payout Start Date" is the date the Certificate Value
adjusted by any Market Value Adjustment and less any applicable taxes is applied
to an Income Plan. The anticipated Payout Start Date is shown on the Annuity
Data Page. You may change the Payout Start Date by writing to us at least 30
days prior to this date.

The Payout Start Date must be on or before the annuitant's 90th birthday.

INCOME PLANS. An "Income Plan" is a series of payments on a scheduled basis to
you or to another person designated by you. The Certificate Value on the Payout
Start Date adjusted by any Market Value Adjustment and less any applicable
taxes, will be applied to your Income Plan choice from the following list:

1. LIFE INCOME WITH GUARANTEED PAYMENTS. We will make payments for as long as
the annuitant lives. If the annuitant dies before the selected number of
guaranteed payments have been made, we will continue to pay the remainder
of the guaranteed payments.

2. JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS. We will make
payments for as long as either the annuitant or joint annuitant, named at
the time of Income Plan selection, lives. If both the annuitant and the
joint annuitant die before the selected number of guaranteed payments have
been made, we will continue to pay the remainder of the guaranteed
payments.

3. GUARANTEED NUMBER OF PAYMENTS. We will make payments for a specified number
of months beginning on the Payout Start Date. These payments do not depend
on the annuitant's life. The number of months guaranteed may be from 60 to
360.

We reserve the right to make available other Income Plans.

INCOME PAYMENTS. Income payment amounts may vary based on any Sub-account of the
Variable Account and/or may be fixed for the duration of the Income Plan. The
method of calculating the initial payment is different for the two accounts. The
Certificate Maintenance Charge will be deducted in equal payments from each
income payment. The Certificate Maintenance Charge will be waived if total
Purchase Payments are $50,000 or more.

VARIABLE AMOUNT INCOME PAYMENTS. The initial income payment based upon the
Variable Account is calculated by applying the portion of the Certificate Value
in the Variable Account on the Payout Start Date, less any applicable premium
tax, to the appropriate value from the Income Payment Table selected. Subsequent
income payments will vary depending upon the changes in the Annuity Unit Values
for the Sub-accounts upon which the income payments are based.

The portion of the initial income payment based upon a particular Variable Sub-
account is determined by applying the amount of the Certificate Value in that
Sub-account on the Payout Start Date, less any applicable premium tax, to the
appropriate value from the Income Payment Table. This portion of the initial
income payment is divided by the Annuity Unit Value on the Payout Start Date for
that Variable Sub-account to determine the number of Annuity Units from that
Sub-account which will be used to determine subsequent income payments. Unless
Annuity Transfers are made between Sub-accounts, each subsequent income payment
from that Sub-account will be that number of Annuity Units times the Annuity
Unit Value for the Sub-account for the Valuation Date on which the income
payment is made.

ANNUITY UNIT VALUE. The Annuity Unit Value for each Sub-account of the Variable
Account at the end of any Valuation Period is calculated by:

multiplying the Annuity Unit Value at the end of the immediately preceding
Valuation Period by the Sub-account's Net Investment Factor during the
period; and then

Page 11
<PAGE>

dividing the result by 1.000 plus the assumed investment rate for the
period. The assumed investment rate is an effective annual rate of 3%.

FIXED AMOUNT INCOME PAYMENTS. The income payment amount derived from any monies
allocated to Sub-accounts of the Fixed Account during the Accumulation Phase are
fixed for the duration of the Income Plan. The Fixed Amount Income Payment is
calculated by applying the portion of the Certificate Value in the Fixed Account
on the Payout Start Date, adjusted by any Market Value Adjustment and less any
applicable premium tax, to the greater of the appropriate value from the Income
Payment Table selected or such other value as we are offering at that time.

ANNUITY TRANSFERS. After the Payout Start Date, no transfers may be made from
the Fixed Amount Income Payment. Transfers between Sub-accounts of the Variable
Account, or from the Variable Amount Income Payment to the Fixed Amount Income
Payment may not be made for six months after the Payout Start Date. Annuity
Transfers may be made once every six months thereafter.

PAYOUT TERMS AND CONDITIONS. The income payments are subject to the following
terms and conditions:

If the Certificate Value is less than $2,000, or not enough to provide an
initial payment of at least $20, we reserve the right to:

change the payment frequency to make the payment at least $20; or

terminate the Certificate and pay you the Certificate Value adjusted
by any Market Value Adjustment and less any applicable taxes in a
lump sum.

If we do not receive a written choice of an Income Plan from you at least 30
days before the Payout Start Date, the Income Plan will be life income with
guaranteed payments for 120 months.

If you choose an Income Plan which depends on any person's life, we may
require:

proof of age and sex before income payments begin; and

proof that the annuitant or joint annuitant is still alive before we
make each payment.

After the Payout Start Date, the Income Plan cannot be changed and
withdrawals cannot be made unless income payments are being made from the
Variable Account under Income Plan 3. You may terminate the income payments
being made from the Variable Account under Income Plan 3 at any time and
withdraw their value, subject to Withdrawal Charges.

If any owner dies during the Payout Phase, the remaining income payments
will be paid to the successor owner as scheduled.

Page 12

<PAGE>

- -------------------------------------------------------------------------------
INCOME PAYMENT TABLES
- -------------------------------------------------------------------------------

The initial income payment will be at least the amount based on the adjusted age
of the annuitant(s) and the tables below, less any federal income taxes which
are withheld. The adjusted age is the actual age on the Payout Start Date
reduced by one year for each six full years between January 1, 1983 and the
Payout Start Date. Income payments for ages and guaranteed payment periods not
shown below will be determined on a basis consistent with that used to determine
those that are shown. The Income Payment Tables are based on 3.0% interest and
the 1983a Annuity Mortality Tables.
<TABLE>
<CAPTION>

Income Plan 1 - Life Income with Guaranteed Payments for 120 Months
=================================================================================================
Monthly Income Payment for each $1,000 Applied to this Income Plan
- -------------------------------------------------------------------------------------------------
Annuitant's Annuitant's Annuitant's
Age Male Female Age Male Female Age Male Female
- -------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
35 $3.43 $3.25 49 $4.15 $3.82 63 $5.52 $4.97
36 3.47 3.28 50 4.22 3.88 64 5.66 5.09
37 3.51 3.31 51 4.29 3.94 65 5.80 5.22
38 3.55 3.34 52 4.37 4.01 66 5.95 5.35
39 3.60 3.38 53 4.45 4.07 67 6.11 5.49
40 3.64 3.41 54 4.53 4.14 68 6.27 5.64
41 3.69 3.45 55 4.62 4.22 69 6.44 5.80
42 3.74 3.49 56 4.71 4.29 70 6.61 5.96
43 3.79 3.53 57 4.81 4.38 71 6.78 6.13
44 3.84 3.58 58 4.92 4.46 72 6.96 6.31
45 3.90 3.62 59 5.02 4.55 73 7.13 6.50
46 3.96 3.67 60 5.14 4.65 74 7.31 6.69
47 4.02 3.72 61 5.26 4.75 75 7.49 6.88
48 4.08 3.77 62 5.39 4.86
=================================================================================================

Income Plan 2 - Joint and Survivor Life Income with Guaranteed Payments for 120 Months
=================================================================================================
Monthly Income Payment for each $1,000 Applied to this Income Plan
- -------------------------------------------------------------------------------------------------
Female Annuitant's Age
Male ------------------------------------------------------------------------------
Annuitant's 35 40 45 50 55 60 65 70 75
Age
- -------------------------------------------------------------------------------------------------

35 $3.09 $3.16 $3.23 $3.28 $3.32 $3.36 $3.39 $3.40 $3.42
40 3.13 3.22 3.31 3.39 3.46 3.51 3.56 3.59 3.61
45 3.17 3.28 3.39 3.50 3.60 3.69 3.76 3.81 3.85
50 3.19 3.32 3.45 3.60 3.74 3.87 3.98 4.07 4.14
55 3.21 3.35 3.51 3.68 3.87 4.06 4.23 4.37 4.48
60 3.23 3.37 3.55 3.75 3.98 4.23 4.47 4.70 4.88
65 3.24 3.39 3.57 3.80 4.07 4.37 4.71 5.04 5.34
70 3.24 3.40 3.59 3.83 4.13 4.48 4.90 5.36 5.81
75 3.25 3.41 3.61 3.86 4.17 4.56 5.04 5.61 6.22
=================================================================================================
</TABLE>

Page 13
<PAGE>

INCOME PLAN 3 - GUARANTEED NUMBER OF PAYMENTS
- ------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
Monthly Income Payment for each
Specified Period $1,000 Applied to this Income Plan
- ------------------------------------------------------
<S> <C>
10 Years $9.61
11 Years 8.86
12 Years 8.24
13 Years 7.71
14 Years 7.26
15 Years 6.87
16 Years 6.53
17 Years 6.23
18 Years 5.96
19 Years 5.73
20 Years 5.51
======================================================
</TABLE>

- --------------------------------------------------------------------------------
GENERAL PROVISIONS
- --------------------------------------------------------------------------------

THE ENTIRE CONTRACT. The entire contract consists of the Master Policy,
the Master Policy application, and any written enrollments, any endorsements,
and any riders.

All statements made in written enrollments are representations and not
warranties. No statement will be used by us in defense of a claim or to void the
Certificate unless it is included in a written enrollment.

Only our officers may, in order to conform to any state or federal law, change
the Master Policy or Certificate or waive a right or requirement. No other
individual may do this.

MASTER POLICY. The Master Policy may be amended by us, terminated by us, or
terminated by the Master Policyholder without the consent of any other person.
No termination completed after the issue date of this Certificate will adversely
affect your rights under this Certificate. Nothing in the Master Policy will
invalidate or impair any rights of Certificateholders.

We may not modify this Certificate without your consent, except to make it
comply with any changes in the Internal Revenue Code or as required by any other
applicable law.

INCONTESTABILITY. We will not contest the validity of this Certificate after
the issue date.

MISSTATEMENT OF AGE OR SEX. If any age or sex has been misstated, we will pay
the amounts which would have been paid at the correct age and sex.

If we find the misstatement of age or sex after the income payments begin, we
will:

pay all amounts underpaid including interest; or

stop payments until the total payments are equal to the corrected amount.

For purposes of the Misstatement of Age or Sex provision, interest will be
calculated at an effective annual rate of 6%.

ANNUAL STATEMENT. At least once a year, prior to the Payout Start Date, we will
send you a statement containing Certificate Value information. We will provide
you with Certificate Value information at any time upon request. The
information presented will comply with any applicable law.

SETTLEMENTS. We may require that this Certificate be returned to us prior to
any settlement. We must receive due proof of death of the owner or annuitant
prior to settlement of a death claim.

Due proof of death is one of the following:

a certified copy of a death certificate; or

a certified copy of a decree of a court of competent jurisdiction as to a
finding of death; or

14
<PAGE>

any other proof acceptable to us.

Any full withdrawal or death benefit under this Certificate will not be less
than the minimum benefits required by any statute of the state in which the
Certificate is delivered.

DEFERMENT OF PAYMENTS. We will pay any amounts due from the Variable Account
under this Certificate within seven days, unless:

the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on such Exchange is restricted;

an emergency exists as defined by the Securities and Exchange Commission; or

the Securities and Exchange Commission permits delay for the protection of
Certificate holders.

We reserve the right to postpone payments or transfers from the Fixed Account
for up to six months. If we elect to postpone payments or transfers from the
Fixed Account for more than 10 working days, we will pay interest as required by
applicable law. Any interest would be payable from the date the withdrawal
request is received by us to the date the payment or transfer is made.

VARIABLE ACCOUNT MODIFICATIONS. We reserve the right, subject to applicable
law, to make additions to, deletions from, or substitutions for the mutual fund
shares underlying the Sub-accounts of the Variable Account. We will not
substitute any shares attributable to your interest in a Sub-account of the
Variable Account without notice to you and prior approval of the Securities and
Exchange Commission, to the extent required by the Investment Company Act of
1940.

We reserve the right to establish additional Sub-accounts of the Variable
Account, each of which would invest in shares of another mutual fund. You may
then instruct us to allocate purchase payments or transfers to such Sub-
accounts, subject to any terms set by us or the mutual fund.

In the event of any such substitution or change, we may, by endorsement, make
such changes as may be necessary or appropriate to reflect such substitution or
change.

If we deem it to be in the best interests of persons having voting rights under
the certificates, 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.

Page 15

<PAGE>

AIM LIFETIME PLUS/(SM)/ VARIABLE ANNUITY
Issued by: Allstate Life Insurance Company of New York . PO Box 9075 .
Farmingville, NY 11738-9075 . Telephone 800-692-4682 FAX 516-451-5405
Overnight mail to: Allstate Life Insurance Company of New York . 1 Allstate
Drive . Farmingville, NY 11738
................................................................................

1 Owner(s) Name _______________________ [_]M [_]F Birthdate __/__/__

Address ____________________________________________________
Street City State Zip

Soc. Sec. No. __________________ Phone No. ________________

Name _______________________ [_]M [_]F Birthdate __/__/__

Address ____________________________________________________
Street City State Zip

Soc. Sec. No. __________________ Phone No. ________________
................................................................................

2 Annuitant Name _______________________ [_]M [_]F Birthdate __/__/__

Leave blank if Address ____________________________________________________
Annuitant is Street City State Zip
same as sole
Owner Soc. Sec. No. ____________ Relationship to Owner __________
................................................................................

3 Beneficiary(ies) Name_____________ Relationship to Owner______ Percentage____
Name_____________ Relationship to Owner______ Percentage____
Leave blank if
Spouse of sole
Owner
................................................................................

4 Purchase Initial Purchase Payment $__________
Payment/ Peace of Mind Option* [_]Yes [_]No
Plan Options Investment Allocation (whole % only, no fractions)
(choose one) [_]3yr [_]5yr [_]7yr [_]10yr
AIM V.I. FUNDS
[_]Capital Appreciation Fund ______%
[_]Diversified Income Fund ______%
[_]Global Utilities Fund ______%
[_]Government Securities Fund ______%
[_]Growth Fund ______%
[_]Growth and Income Fund ______%
[_]International Equity Fund ______%
[_]Money Market Fund ______%
[_]Value Fund ______%

Allocate the remainder to any variable funds by %.
Fixed Account
[_]1 Year Guarantee Period ______%
[_]3 Year Guarantee Period ______%
[_]5 Year Guarantee Period ______%
[_]7 Year Guarantee Period ______%
[_]10 Year Guarantee Period ______%
TOTAL 100%

*The "Peace of Mind" strategy allows a portion of an
investment to be placed in a fixed account which grows
back to the principal, assuming no withdrawals are taken.
................................................................................

5 Replacement Will this annuity replace or change any existing annuity
Information or life insurance? [_]Yes [_]No
(If Yes, complete the following.)
Company __________________________ Policy No. ______________
Cost basis amount ________________ Policy Date _____________
................................................................................

6 Tax Qualified [_]Yes [_]No (If Yes, complete the following.)
Plan [_]Custodial IRA [_]IRA Rollover
[_]IRA/Year of Contribution [_]IRA Transfer
[_]Other _______________________
................................................................................

7 Signature(s) If Allstate Life Insurance Company of New York ("Allstate")
declines this application, Allstate will have no liability
except to return the purchase payments.
I understand that any distribution from a Fixed Account
prior to the end of a rate guarantee period may be subject
to a Market Value Adjustment. I understand that annuity
values and income payments based on the investment
experience of a variable account are variable and are not
guaranteed as to dollar amount. I have received the
current prospectus for this variable annuity.

Signed at ___________________________ Date __ / __ / __
City State

Owner(s) __________________________________________________
................................................................................

8 Agent Use Will the annuity applied for replace or change any
Only existing annuity or life insurance? [_]Yes [_]No
Agent Name (Please print)_______________ Phone No.__________
Agent Signature ____________________ Soc. Sec. No.__________
Agent GA No. (Joint Business) ______________________________
Client's B/D Acct. No. _____________ B/D Name_______________
Designation: [_]A [_]B

Note: Please be advised that a firm designation may
override an individual agent designation. If no designation
is given, "A" will be the designation.

<PAGE>

CERTIFICATE OF AMENDMENT

OF THE RESTATED CERTIFICATE OF INCORPORATION

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

UNDER SECTION 1206 OF THE BUSINESS INSURANCE LAW

AND SECTION 805 OF THE BUSINESS CORPORATION LAW

The undersigned, being the Chairman of the Board and President and Vice
President, Secretary and General Counsel of Allstate Life Insurance Company of
New York, do hereby certify and set forth:

(1) The name of the Corporation s Allstate Life Insurance Company of New York.
The Corporation was previously named PM Life Insurance Company. The name
under which the Corporation was originally incorporated was Financial Life
Insurance Company.

(2) The Certificate of Incorporation of the Corporation was filed with the
State of New York Insurance Department on January 25, 1967. The Certificate
of Incorporation was restated (pursuant to Section 1206 of the Insurance
Law and Section 807 of the Business Corporation Law) on May 16, 1978.

(3) The Restated Certificate of Incorporation of Allstate Life Insurance
Company of New York is hereby amended, pursuant to Section 801(b) (14) of
the Business Corporation Law, to provide for a change in gender and
Director requirements to read as follows:

"Article 'FIFTH', designating the number of Directors of the
Corporation, is amended to read as follows:

"FIFTH: The number of Directors of this Corporation shall not be less
than thirteen nor more than fifteen in number, and shall be
determined by or under the By-Laws. As used in this paragraph,
'number of Directors' means the total number of Directors which the
Corporation would have if there were no vacancies. Directors shall be
elected at each annual meeting of shareholders and each Director so
elected shall hold office until the next annual meeting of
shareholders and until his or her successor is elected and qualified
or until his or her earlier death, resignation or removal. In the
event that the number of Directors duly elected and serving shall be
less than thirteen, the Corporation shall not for that reason be
dissolved, but the vacancy or vacancies shall be filled as provided
in Article SEVENTH hereof. Each Director shall be at least twenty-one
years of age. At all

<PAGE>

times a majority of the Directors shall be citizens and residents of
the United States and not less than three of the Directors shall be
residents of New York. The Directors need not be shareholders of the
Corporation. Not less than one-third of the Directors of the
Corporation shall be persons who are not officers or employees of the
Corporation or of any entity controlling, controlled by, or under
common control with such Corporation and who are not beneficial
owners of a controlling interest in the voting stock of such
Corporation."

(4) The manner in which this change to the Restated Certificate of
Incorporation was authorized was, pursuant to the Business Corporation Law
Section 614, by the holder of all outstanding shares of the Corporation
entitled to vote thereon. This Special Shareholders meeting was held
September 7, 1995.

IN WITNESS WHEREOF the undersigned has executed and signed this Certificate
and affirmed it as true this 3rd day of November, 1995.

/s/LOUIS G. LOWER, II
-----------------------------
LOUIS G. LOWER, II
Chairman of the Board and President

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

Sworn to before me this 3rd day of November, 1995

/s/CHRISTA ROSE FRONCZAK
- -----------------------------
Notary Public

(SEAL)
<PAGE>

CERTIFICATION
-------------

I, PAUL N. KIERIG, Assistant Secretary of Allstate Life Insurance Company
of New York, a New York corporation, hereby certify that the following are true,
complete and correct copies of resolutions concerning the amendment of the
Restated Certificate of Incorporation, adopted at a meeting of the Board of
Directors of the corporation held on June 20, 1994, and a resolution adopted by
written consent of the Shareholders of the corporation, effective September 1,
1994, and that they are now in full force and effect:

RESTATED CERTIFICATE OF INCORPORATION - AMENDMENT (Board of Directors)
- -------------------------------------------------

BE IT RESOLVED, That the following amendment to the Restated Certificate of
Incorporation for Allstate Life Insurance Company of New York, which provides
for a change in the location of the principal office, be submitted to the
Shareholders for approval:

Article "SECOND", designating the principal office of the Corporation, is
amended to read as follows:

SECOND: The principal office of the Corporation shall be located in
Farmingville, County of Suffolk, State of New York

RESTATED CERTIFICATE OF INCORPORATION - AMENDMENT - (Shareholders)
- -------------------------------------------------

Upon motion duly made, seconded and unanimously carried, the recommendation
made by the Board of Directors at the Annual Board of Directors Meeting held on
June 20, 1994, concerning the change of address for Allstate Life Insurance
Company of New York, is hereby adopted.

IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of the
Corporation to be affixed this 27th day of September, 1994.

/s/PAUL N. KIERIG
-------------------------
Paul N. Kierig
Assistant Secretary

(Corporate Seal)

<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

[LETTERHEAD OF STATE OF NEW YORK INSURANCE DEPARTMENT]

AMENDED

BY-LAWS

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

Huntington Station, New York

IS HEREBY APPROVED January 18, 1995 pursuant to Section 1210 of the New York
Insurance Law.

EDWARD J. MUHL
Acting Superintendent of Insurance

By /s/ Robert A. Ginnelly
-------------------------------

Special Deputy Superintendent

<PAGE>

CERTIFICATION
-------------

I, PAUL N. KIERIG, Assistant Secretary of Allstate Life Insurance Company
of New York, a New York corporation, hereby certify that the following is a
true, complete and correct copy of a resolution concerning the amendment of
Article VI, Section 1 of the By-Laws of the corporation, adopted at a meeting of
the Board of Directors held on June 20, 1994, and that it is now in full force
and effect:

BY-LAWS AMENDMENT
- -----------------

BE IT RESOLVED, That Article VI, Section 1, of the By-Laws are amended to
read as follows:

ARTICLE VI
----------

MISCELLANEOUS
-------------

Section 1
- ---------

(a) As used in this Section:

(1) "acted properly" as to any person shall mean that such person

(A) acted in good faith;

(B) acted in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the corporation; and

(C) with respect to any criminal action or proceeding, had no
reasonable cause to believe that his or her conduct was
unlawful.

The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act properly.

(ii) "covered person" shall mean an Indemnitee (as defined below) or an
Employee Indemnitee (as defined below).

(iii) "Employee Indemnitee" shall mean any non-officer employee of the
corporation (but not a non-officer employee of a subsidiary of the
corporation).

<PAGE>

(iv) "expenses" shall include attorneys' fees and expenses and any
attorneys' fees and expenses of establishing a right to
indemnification under this Section.

(v) "Indemnitee" shall mean any person who is or was

(A) A director or officer of the corporation and/or any subsidiary;

(B) a trustee or a fiduciary under any employee pension, profit
sharing, welfare or similar plan or trust of the corporation
and/or any subsidiary; or

(C) serving at the request of the corporation as a director or
officer of or in a similar capacity in another corporation,
partnership, joint venture, trust or other enterprise (which
shall, for the purpose of this Section be deemed to include not-
for-profit or for-profit entities of any type), whether acting
in such capacity or in any other capacity including, without
limitation, as a trustee or fiduciary under any employee
pension, profit sharing, welfare or similar plan or trust.

(vi) "proceeding" shall mean any threatened, pending or completed
action or proceeding, whether civil or criminal, and whether
judicial, legislative or administrative and shall include
investigative action by any person or body.

(vii) "subsidiary" shall mean a corporation, 50% or more of the
shares of which at the time outstanding having voting power for
the election of directors are owned directly or indirectly by
the corporation or by one or more subsidiaries or by the
corporation and one or more subsidiaries.

(b) The corporation shall indemnify any Indemnitee to the fullest extent
permitted under law (as the same now or hereafter exists), who was or is a
party or is threatened to be made a party to any proceeding by reason of
the fact that such person is or was an Indemnitee, against liabilities,
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her.

(c) The corporation shall indemnify any Employee Indemnitee who was or is a
party or is threatened to be made a party to any proceeding (other than
an action by or in the right of the corporation) by reason of the fact
that such person is or was an employee, against liabilities, expenses,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such proceeding, if such person
acted properly.

<PAGE>

(d) The corporation shall indemnify any Employee Indemnitee who was or is a
party or is threatened to be made a party to any proceeding by or in the
right of the corporation to procure a judgment in its favor by reason of
the fact that such person is or was an employee, against amounts paid in
settlement and against expenses actually and reasonably incurred by him or
her in connection with the defense or settlement of such proceeding, if he
or she acted properly, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance
of his or her duty to the corporation, unless and only to the extent that
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.

(e) Expenses incurred in defending a proceeding shall be paid by the
corporation to or on behalf of a covered person in advance of the final
disposition of such proceeding if the corporation shall have received an
undertaking by or on behalf of such person to repay such amounts, unless
it shall ultimately be determined that he or she is entitled to be
indemnified by the corporation as authorized in this Section.

(f) Any indemnification or advance under this Section (unless ordered by a
court) shall be made by the corporation only as authorized in the specific
proceeding upon a determination that indemnification or advancement to a
covered person is proper in the circumstances. Such determination shall be
made:

(i) by the Board of Directors, by a majority vote of a quorum
consisting of directors who were not made parties to such
proceeding, or

(ii) if such a quorum is not obtainable, or, even if obtainable and a
quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, of

(iii) in the absence of a determination made under (i) or (ii), by the
shareholders.

(g) The corporation shall indemnify or advance funds to any indemnitee
described in (a)(v)(C), above, only after such person shall have sought
indemnification or any advance from the corporation, partnership, joint
venture, trust or other enterprise in which he or she was serving at the
corporation's request, shall have failed to receive such indemnification or
advance, and shall have assigned irrevocably to the corporation any right
to receive indemnification which he or she might be entitled to assert
against such other corporation, partnership, joint venture, trust or other
enterprise.
<PAGE>

(h) The indemnification provided to a covered person by this Section:

(i) shall not be deemed exclusive of any other rights to which such
person may be entitled by law or under any articles of
incorporation, by-law, agreement, vote of shareholders or
disinterested directors or otherwise;

(ii) shall inure to the benefit of the legal representatives of such
person or his or her estate, whether such representatives are court
appointed or otherwise designated, and to the benefit of the heirs
of such person; and

(iii) shall be a contract right between the corporation and each such
preson who serves in any such capacity at any time while this
Section 1 of Article VI is in effect, and any repeal or modification
of this Section shall not affect any rights or obligations then
existing with respect to any state of facts or any proceedings then
existing.

(i) The indemnification and advances provided to a covered person by this
Section shall extend to and include claims for such payments arising out of
any proceeding commenced or based on actions of such person taken prior to
the effective date of this Section; provided that payment of such claims
had not been agreed to or denied by the corporation at the effective date.

(j) The corporation shall have the power to purchase and maintain insurance on
behalf of any covered person against any liability asserted against him or
her and incurred by him or her as a covered person or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against such liability under the provisions of this
Section. The corporation shall also have power to purchase and maintain
insurance to indemnify the corporation for any obligation which it may
incur as a result of the indemnification of covered persons under the
provisions of this Section.

(k) No payment of indenmification or advance shall be made unless a notice has
been filed with the Superintendent of Insurance pursuant to Section 1216 of
the New York Insurance law at least 30 days prior to such payment.

(l) If any provision of this Section is contrary to the law of New York with
respect to indemnification of an agent of the corporation, such provision
is hereby amended to conform to the limitations of such law.

(m) The invalidity or unenforceability of any provision in this Section shall
not affect the validity or enforceability of the remaining provisions of
this Section.

<PAGE>

IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of the
Corporation to be affixed this 27th day of September, 1994.

/s/ Paul N. Klerig
--------------------------
Paul N. Klerig
Assistant Secretary

(Corporate Seal)
<PAGE>

CERTIFICATION
-------------

I, MICHAEL J. VELOTTA, Secretary of ALLSTATE LIFE INSURANCE COMPANY OF NEW
YORK, hereby certify that the following is a true, complete and correct copy of
a Resolution amending Article VI, Section 5, of the By-Laws of Allstate Life
Insurance Company of New York, as adopted at an Annual Meeting of the Board of
Directors held on June 6, 1989, and that this Resolution is in full force and
effect:

BY-LAW AMENDMENT
- ----------------

BE IT RESOLVED, That Article VI, Section 5, of the By-Laws of the
Corporation is hereby amended to read as follows:

The compensation of the principal officers of the Company shall be fixed
from time to time by the Board of Directors. In addition, the Company shall
make no agreement with any of its officers, agents or salaried employees
that will extend beyond a period of twenty-four months from the date of
such agreement. All pensions payable to a salaried officer or employee, or
to a former salaried officer or employee, at the time of his retirement by
reason of age or disability and all life insurance benefits payable at his
death shall be pursuant to the terms of an employee benefit and retirement
plan adopted by the Board of Directors.

IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of the
Corporation to be affixed this 19th day of July, 1993.

/s/Michael J. Velotta
-----------------------------
Michael J. Velotta
Secretary

(Corporate Seal)
<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
-------------------------------------------

BY-LAWS
-------

Amended June 6, 1989
--------------------
<PAGE>

AMENDED BY-LAWS OF
------------------

ALLSTATE LIFE INSURANCE COMPANY
-------------------------------

OF NEW YORK
-----------

ARTICLE I
---------

DIRECTORS
---------

Section 1 The property, business and affairs of the Company shall be
managed and controlled by a Board of Directors composed of fifteen members. The
number of Directors may be changed by amendment of these By-Laws, as provided by
Article VI, Section 4. However, the number of Directors shall not be less than
thirteen nor more than fifteen, and no decrease in the number of Directors shall
shorten the term of any incumbent Director. The Directors shall be elected,
pursuant to notice under Section 12 of this Article, at each annual meeting of
the shareholders of the Company for a term of one year. Each Director shall
hold office for the term for which he was elected and until the election and
qualification of his successor.

At all times, a majority of Directors shall be citizens and residents of
the United States and not less than three Directors shall be residents of New
York. Further, the Directors who are officers or salaried employees of the
company shall at all times be less than a majority of the Board of Directors.

Section 2 In the event of a vacancy occurring in the Board of Directors,
the shareholders of the Company shall, by a majority vote at a special meeting
called for that purpose or at the next annual meeting of shareholders, elect a
director to fill such vacancy, who shall hold office during the unexpired
portion of the term of the director whose place he was elected to fill. Any
Director elected pursuant to this section of the By-Laws shall not take office
nor exercise the duties thereof until ten days after written notice of election
is filed with the Superintendent of Insurance.

Section 3 The Board of Directors may declare dividends payable out of the
surplus funds of the Company when warranted by law, however, no dividend shall
be declared until after 30 days written notice to the Superintendent of
Insurance.

Section 4 The Board of Directors shall elect all the general officers of
the Company hereafter provided and may prescribe additional descriptive titles
for any such officers.

The Board of Directors may from time to time appoint Assistant Vice
Presidents, Assistant Secretaries, Assistant Treasurers and other officers of
the Company.

<PAGE>

The Board of Directors may prescribe the duties, and fix the compensation
as provided by Article VI, Section 5 of these By-Laws, of any elected or
appointed officer and may require from any officer security for his faithful
service and for his proper accounting for monies and property from time to time
in his possession.

All officers of the Company shall hold office at the will of the Board of
Directors.

Section 5 The Board of Directors shall designate in what bank or banks the
funds of the Company shall be deposited and the person or persons who may sign,
on behalf of the Company, checks or drafts against such deposits. Such
designations may also be made by such person or persons as shall be appointed
for that purpose by the Board of Directors.

Section 6 The Board of Directors shall have the power to make rules and
regulations not inconsistent with the laws of this State, the Articles of
Incorporation of the Company, or these By-Laws, for the conduct of its own
meetings and the management of the affairs of the Company.

Section 7 The Board of Directors may authorize payment of compensation to
directors for their services as directors, and fix the amount thereof.

Section 8 The Board of Directors shall have the power to appoint
committees and to grant them powers not inconsistent with the laws of this
State, the Articles of Incorporation of the Company, or these By-Laws.

Section 9 An annual meeting of the Board of Directors shall be held each
year immediately after the adjournment of the annual meeting of the
shareholders. Other meetings of the Board of Directors may be held at such time,
and such place (within or without the state of New York), as the Board of
Directors may determine or when called by the Chairman of the Board or by a
majority of the Board of Directors.

Notice of every meeting of the Directors other than the stated annual
meeting shall be given by letter or telegraph sent to each Director at his
business address, not less than three days previous to the meeting. Any Director
may, in writing, waive notice of any meeting, and the presence of a Director at
any meeting shall be considered a waiver by him of notice of such meeting,
except as otherwise provided by law.

Any one or more members of the Board, or any Committee thereof, may
participate in a meeting of the Board or such Committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.

2
<PAGE>

Section 10 A majority of the whole Board of Directors shall constitute a
quorum for the transaction of business, but if at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting, from time to time, until a quorum shall have been
obtained.

Section 11 Any action required or permitted to be taken at any meeting of
the Board of Directors, or of any Committee thereof, may be taken without a
meeting if all members of the Board or such Committee, as the case may be,
consent thereto in writing. Such writing or writings shall be filed with the
minutes of proceedings of the Board or such Committee.

Section 12 No election of Directors pursuant to Section 1 of this Article
shall be valid unless a notice of election shall have been filed with the
Superintendent of Insurance at least 10 days prior to such election.

Section 13 The minutes of any meeting held pursuant to Section 9 of these
By-Laws and a record of any action taken pursuant to Section 11 of these By-Laws
shall be filed with the Department of Insurance within 30 days of the date of
the meeting or action taken in lieu of a meeting. If the minutes as finally
approved at a subsequent meeting differ from the minutes filed with the
Department of Insurance, the corrected minutes shall be forwarded to the
Department and the difference shall be summarized in a covering letter.

Section 14 Any or all of the Directors may be removed at any time, either
for or without cause, by vote of the shareholders or, for cause, by vote of a
majority of the Directors then in office. Any vacancy in the Board caused by
the removal of a Director by vote of the shareholders may be filled by the
shareholders entitled to vote for the election of the Director so removed, in
the manner provided in Section 2 of this article. If the removal of a Director
is requested by the Superintendent of Insurance, the Chairman shall immediately
call a special meeting of Directors to respond to the request of the
Superintendent of Insurance.

ARTICLE II
----------

OFFICERS
--------

Section 1 The general officers of the Company shall consist of a Chairman
of the Board, President, two or more Vice Presidents, a Secretary and a
Treasurer, who shall be elected annually by the Board of Directors at the stated
annual meeting held upon adjournment of the annual shareholders' meeting, and if
not elected at such meeting, such officers may be elected at any meeting of the
Board of Directors held thereafter. Such officers shall be elected by a
majority of the Directors, and shall hold office for one year and until their
respective successors are elected and qualified, subject to removal

3
<PAGE>

at will by the Board of Directors. In case of a vacancy in any of the general
offices of the Company, such vacancy may be filled by the vote of a majority of
the Board of Directors. Any two of the aforesaid offices may be filled by the
same person, with the exception of the offices of President and Vice President,
or President and Secretary.

Section 2 The Chairman of the Board shall preside at all meetings of the
shareholders and of the Board of Directors. He shall be the Chief Executive
Officer of the Company, shall have general and active management of the business
of the Company subject to the supervision of the Board of Directors, and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. He shall also perform such other duties as shall be prescribed from
time to time by the Board of Directors.

Section 3 The President shall have general administrative control and
supervision over the operations of the Company subject to the supervision of the
Chairman of the Board. He shall, in the absence or inability of the Chairman of
the Board, perform the duties and exercise the powers of the Chairman of the
Board. He shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some other
officer or agent of the corporation. He shall also perform such other duties as
may properly belong to his office or as shall be prescribed from time to time by
the Chairman of the Board or by the Board of Directors.

Section 4 Each Vice President shall have such powers and shall perform
such duties as may be assigned to him by the Chairman of the Board, or by the
President, or by the Board of Directors. In the absence or in the case of the
inability of the Chairman of the Board and the President to act, the Board of
Directors may designate which one of the Vice Presidents shall be the acting
Chief Executive Officer of the Company during such absence or inability,
whereupon such acting Chief Executive Officer shall have all the powers and
perform all of the duties incident to the office of Chairman during the absence
or inability of the Chairman and President to act.

Section 5 The Secretary shall keep the minutes of all meetings of the
Board of Directors, and of all meetings of the shareholders, in books provided
by Company for such purpose. He shall attend to the giving of all notices of
meetings of the Board of Directors or shareholders. He may sign with the
Chairman of the Board, the President or a Vice President in the name of the
Company when authorized by the Board of Directors so to do, all contracts and
other instruments requiring the seal of the Company and may affix the seal
thereof. He shall, in general, perform all of the duties which are incident to
the office of Secretary and such other duties as the Board of Directors or
Chairman of the Board may from time to time prescribe.

4
<PAGE>

Section 6 The Treasurer shall deposit the monies of the Company in the
Company's name in depositories designated by the Board of Directors, or by
such person or persons as shall be appointed for that purpose by the Board of
Directors. He shall, in general, perform all of the duties which are incident
to the office of Treasurer and such other duties as the Board of Directors or
Chairman of the Board may from time to time prescribe. The Board of Directors
may, in its discretion, require him to give bond for the faithful discharge of
his duties.

ARTICLE III
-----------

SHAREHOLDERS' MEETINGS
----------------------

Section 1 The annual meeting of the shareholders shall be held at the
principal office of the Company in the State of New York, or at such other
location within or without the State of New York as may be set forth in the
notice of call, on the fourth Tuesday in February of each year, except when such
day shall be a legal holiday, in which case the meeting shall be held on the
next succeeding business day. The Chairman of the Board of Directors may at any
time call a special meeting of the shareholders, and the Chairman of the Board
shall call such special meeting when requested, in writing, so to do by the
owners of not less than one-fifth of the outstanding shares of the Company.

Section 2 Notice of every meeting of the shareholders shall be given by
mailing notice thereof at least 10 days, but no more than 50 days before such
meeting to all the shareholders at their respective post office addresses last
furnished by them, respectively, to the Company. Notice of a special meeting
shall also state the purpose for which the meeting is called. The shareholders
may waive notice of any such meeting, in writing, and the presence of a
shareholder, either in person or by proxy, shall be considered a waiver of
notice, except as otherwise provided by law.

Section 3 The presence at such meeting in person or by proxy of
shareholders of the Company representing at least fifty-one percent of the then
outstanding shares of the Company shall be necessary to constitute a quorum for
the purpose of transacting business, except as otherwise provided by law, but a
smaller number may adjourn the meeting from time to time until a quorum shall be
obtained. Each shareholder shall be entitled to cast one vote in person or by
proxy for each share of stock of the Company held and of record in his or her
name on the books of the Company.

Section 4 A shareholder may vote at any meeting of the shareholders
either in person or by proxy duly constituted in writing. No special form of
proxy shall be necessary, however, no proxy shall be valid after eleven months
from its date unless otherwise provided in the proxy.

5
<PAGE>

ARTICLE IV
----------

SHARES
------

Section 1 Share certificates shall be signed by the President or a Vice
President and countersigned by the Secretary, shall be sealed with the corporate
seal of the Company, and shall be registered upon the Share Register of the
Company. Each certificate shall express on its face the name of the Company,
the number of the certificate, the number of shares for which it is issued, the
name of the person to whom it is issued, the par value of each of the said
shares, and the amount actually received by the Company for each share
represented by said certificate.

Section 2 Transfers of shares of the Company shall be made only on the
books of the Company by the holder thereof in person or by his attorney duly
authorized, in writing, and upon the surrender of the certificates or
certificate for the share transfer, upon which surrender and transfer new
certificates will be issued. However, no transfer shall be made until ten days
after notice of such transfer shall have been given to the Superintendent of
Insurance. The Board of Directors may, by resolution, close the share transfer
books of the Company for a period not exceeding ten days before the holding of
any annual or special meeting of the shareholders. The Board of Directors may,
by resolution, also close the transfer books of the Company for a period not
exceeding ten days before the payment of any dividends which may be declared
upon the shares of the Company.

ARTICLE V
---------

Section 1 All policies of insurance issued by this Company shall be
signed, either manually or by facsimile, by the President and the Secretary or
by such other officer or officers as the President may designate, and shall be
countersigned by a duly licensed resident agent where so required by law or
regulation.

ARTICLE VI
----------

MISCELLANEOUS
-------------

Section 1
---------

(a) As used in this Article:

(i) "acted properly" as to any person shall mean that such person

(A) acted in good faith;

(B) acted in a manner not clearly opposed to any written policy of
the corporation or in a manner which he reasonably believed to be
in the best interests of the corporation; and

6
<PAGE>

(ii) "agent" shall mean any person who is or was

(A) a director, officer or employee of the corporation and/or any
subsidiary;

(B) a trustee or a fiduciary under any employee pension, profit
sharing, welfare or similar plan or trust of the corporation
and/or any subsidiary;

(C) serving at the request of the corporation as a director, officer
and/or employee of or in a similar capacity in another
corporation, partnership, joint venture, trust or other
enterprise, (which shall, for the purpose of this Article be
deemed to include not-for-profit or for-profit entities of any
type), whether acting in such capacity or in any other capacity
including, without limitation, as a trustee or fiduciary under
any employee pension, profit sharing, welfare or similar plan or
trust.

(iii) "expense" shall include attorneys' fees and any expenses of
establishing a right to indemnification under this Article.

(iv) "proceeding" shall mean any threatened, pending or completed action or
proceeding, whether civil or criminal, and whether judicial,
legislative or administrative and shall include investigative action
by any person or body.

(v) "subsidiary" shall mean a corporation, 50% or more of the shares of
which at the time outstanding having voting power for the election of
directors, is owned directly or indirectly by the corporation or by
one or more subsidiaries or by the corporation and one or more
subsidiaries.

(b) The corporation shall indemnify any person who was or is party or is
threatened to be made a part to any proceeding (other than an action by or
in the right of the corporation) by reason of the fact that such person is
or was an agent against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
proceeding if such person acted properly.

7
<PAGE>

(c) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any proceeding by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that
such person is or was an agent against amounts paid in settlement and
against expenses actually and reasonably incurred by him in connection with
the defense or settlement of such proceeding if he acted properly, except
that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation
(as further specified by Article 7 of the New York Business Corporation
Act) unless and only to the extent that the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.

(d) Expenses incurred in defending a proceeding shall be paid by the
corporation to or on behalf of an agent in advance of the final disposition
of such proceeding if

(i) there is a reasonable basis to believe that such agent may be
entitled to indemnification under this Article;

(ii) such advance payments would not result in undue financial
hardship to the corporation; and

(iii) the corporation shall have received an undertaking by or on
behalf of such agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified
by the corporation as authorized in this Article.

(e) Any indemnification or advance under paragraphs (b), (c) or (d) of this
Article (unless ordered by a court) shall be made by the corporation only
as authorized in the specific proceeding upon a determination that
indemnification or advancement to such person is proper in the
circumstances. Such determination shall be made

(i) by the Board of Directors, by a majority vote of a quorum
consisting of directors who were not made parties to such
proceeding, or

(ii) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or

(iii) if a quorum of disinterested directors is not obtainable or if a
majority of the disinterested directors so directs by the
shareholders.

8
<PAGE>

(f) The corporation shall indemnify or advance funds to any person described in
Section (a) (ii) (c) only after such person shall have sought
indemnification or an advance from the corporation, partnership, joint
venture, trust or other enterprise in which he was serving at the
corporation's request, shall have failed to receive such indemnification or
advance and shall have assigned irrevocably to the corporation any right to
receive indemnification which he might be entitled to assert against such
other corporation, partnership, joint venture, trust or other enterprise.

(g) The indemnification provided to an agent by this Article

(i) shall not be deemed exclusive of any other rights to which such agent
may be entitled by law or under any articles of incorporation, by-law,
agreement, vote of shareholders or disinterested directors or
otherwise; and

(ii) shall inure to the benefit of the legal representatives of such agent
or his estate, whether such representatives are court-appointed or
otherwise designated, and to the benefit of the heirs of such agent.

(h) The indemnification and advances provided to an agent by this Article shall
extend to and include claims for such payments arising out of any
proceeding commenced or based on actions of an agent taken prior to the
effective date of this Article; provided that payment of such claims had
not been agreed to or denied by the corporation at the effective date.

(i) The corporation shall have power to purchase and maintain insurance on
behalf of any agent against any liability asserted against him and incurred
by him as agent or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of this Article. The corporation shall also have power
to purchase and maintain insurance to indemnify the corporation for any
obligation which it may incur as a result of the indemnification of agents
under the provisions of this Article.

(j) No payment of indemnification or advances shall be made unless a notice has
been filed with the Superintendent of Insurance pursuant to Section 62-a of
the New York Insurance Law at least 30 days prior to such payment.

(k) The invalidity or unenforceability of any provision in this Article shall
not affect the validity or enforceability of the remaining provisions of
this Article.

9
<PAGE>

Section 2 The fiscal year of the Company shall begin in each year of the
first day of January and end on the thirty-first day of December following.

Section 3 The common seal of the Company shall be circular in form and
shall contain the name of the Company and the words: "CORPORATE SEAL" and "NEW
YORK." An impression of the Company's seal is affixed hereto.

Section 4 Except to the extent otherwise required by law, the books and
records of the Company shall be kept at such place or places within or without
the State of New York as may be determined from time to time by the Board of
Directors.

Section 5 The compensation of the principal officers of the Company shall
be fixed from time to time by the Board of Directors. In addition, the Company
shall make no agreement with any of its officers, agents or salaried employees
that will extend beyond a period of twenty four months from the date of such
agreement. All pensions payable to a salaried officer or employee, or to a
former salaried officer or employee, at the time of his retirement by reason of
age or disability and all life insurance benefits payable at his death shall be
pursuant to the terms of an employee benefit and retirement plan adopted by the
Board of Directors.

Section 6 These By-Laws may be amended or repealed by the vote of majority
of the Directors present at any meeting at which a quorum is present. If any
by-law regulating an impending election of Directors is adopted, amended or
repealed by the Board of Directors, there shall be set forth in the notice of
the next meeting of shareholders for the election of Directors the by-law so
adopted, amended or repealed, together with a concise statement of the changes
made.

<PAGE>

PARTICIPATION AGREEMENT

BY AND AMONG

AIM VARIABLE INSURANCE FUNDS, INC.,

A I M DISTRIBUTORS, INC.,

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS

AND

ALLSTATE LIFE FINANCIAL SERVICES, INC.
<PAGE>

TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>

DESCRIPTION
- -----------
<S> <C>

Section 1. Available Funds................................................... 2
1.1 Availability................................................... 2
1.2 Addition, Deletion or Modification of Funds.................... 3
1.3 No Sales to the General Public................................. 3

Section 2. Processing Transactions........................................... 3
2.1 Timely Pricing and Orders...................................... 3
2.2 Timely Payments................................................ 4
2.3 Applicable Price............................................... 4
2.4 Dividends and Distributions.................................... 4
2.5 Book Entry..................................................... 5

Section 3. Costs and Expenses................................................ 5
3.1 General......................................................... 5
3.2 Parties To Cooperate............................................ 5

Section 4. Legal Compliance.................................................. 5
4.1 Tax Laws....................................................... 5
4.2 Insurance and Certain Other Laws............................... 8
4.3 Securities Laws................................................ 8
4.4 Notice of Certain Proceedings and Other Circumstances.......... 9
4.5 ALNY or the Underwriter To Provide Documents; Information
About AVIF.....................................................10
4.6 AVIF or AIM To Provide Documents; Information About ALNY
and the Underwriter............................................11

Section 5. Mixed and Shared Funding..........................................12
5.1 General........................................................12
5.2 Disinterested Directors........................................12
5.3 Monitoring for Material Irreconcilable Conflicts...............13
5.4 Conflict Remedies..............................................14
5.5 Notice to ALNY.................................................15
5.6 Information Requested by Board of Directors....................15
5.7 Compliance with SEC Rules......................................15
5.8 Requirements for Other Insurance Companies.....................16

Section 6. Termination.......................................................16
</TABLE>
i
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
6.1 Events of Termination...............................................16
6.2 Notice Requirement for Termination..................................17
6.3 Funds To Remain Available...........................................18
6.4 Survival of Warranties and Indemnifications.........................18
6.5 Continuance of Agreement for Certain Purposes.......................18

Section 7. Parties To Cooperate Respecting Termination.......................18

Section 8. Assignment........................................................19

Section 9. Notices...........................................................19

Section 10. Voting Procedures.................................................20

Section 11. Foreign Tax Credits...............................................20

Section 12. Indemnification...................................................21
12.1 Of AVIF and AIM by ALNY and the Underwriter.....................21
12.2 Of ALNY and the Underwriter by AVIF and AIM.....................23
12.3 Effect of Notice................................................25
12.4 Successors......................................................26

Section 13. Applicable Law....................................................26

Section 14. Execution in Counterparts.........................................26

Section 15. Severability......................................................26

Section 16. Rights Cumulative.................................................26

Section 17. Headings..........................................................26

SCHEDULE A....................................................................28

SCHEDULE B....................................................................29

SCHEDULE C....................................................................30
</TABLE>
ii
<PAGE>

PARTICIPATION AGREEMENT

THIS AGREEMENT, made and entered into as of the ____ day of _________, 1995
("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM");
Allstate Life Insurance Company of New York, a New York life insurance company
("ALNY"), on behalf of itself and each of its segregated asset accounts listed
in Schedule A hereto, as the parties hereto may amend from time to time (each,
an "Account," and collectively, the "Accounts"); and Allstate Life Financial
Services, Inc., a Delaware corporation and the principal underwriter of the
Contracts and Policies referred to below ("Underwriter") (collectively, the
"Parties").

WITNESSETH THAT:

WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, AVIF currently consists of nine separate series, shares ("Shares")
of each of which are registered under the Securities Act of 1933, as amended
(the "1933 Act") and are currently sold to one or more separate accounts of life
insurance companies to fund benefits under variable annuity contracts; and

WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto
as the Parties hereto may amend from time to time (each a "Fund"; reference
herein to "AVIF" includes reference to each Fund, to the extent the context
requires) available for purchase by the Accounts; and

WHEREAS, AIM is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD"); and

WHEREAS, AIM currently serves as the distributor for the Shares; and

WHEREAS, ALNY will be the issuer of certain variable annuity contracts
("Contracts") and/or variable life insurance policies ("Policies") as set forth
on Schedule A hereto, as the Parties hereto may amend from time to time, which
Contracts and Policies (hereinafter collectively, the "Policies"), if required
by applicable law, will be registered under the 1933 Act; and

1
<PAGE>

WHEREAS, the Accounts may be divided into two or more subaccounts
("Subaccounts"; reference herein to an "Account" includes reference to each
Subaccount thereof to the extent the context requires); and

WHEREAS, ALNY will serve as the depositor of the Accounts, each of which is
registered as a unit investment trust investment company under the 1940 Act (or
exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Policies will be registered as securities under the 1933 Act
(or exempt therefrom); and

WHEREAS, to the extent permitted by applicable insurance laws and
regulations, ALNY intends to purchase Shares in one or more of the Funds on
behalf of the Accounts to fund the Policies provided, that AVIF implements Mixed
and Shared Funding, described below, pursuant to an exemptive order from the SEC
or otherwise; and

WHEREAS, the Underwriter is a broker-dealer registered with the SEC under
the 1934 Act and a member in good standing of the NASD; and

WHEREAS, the Underwriter intends to enter into Selling Group Agreements
with entities that may legally sell the Policies (the "Selling Group Members");
and

NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:

SECTION 1. AVAILABLE FUNDS
---------------------------

1.1 AVAILABILITY.
------------

AVIF will make Shares of each Fund available to ALNY for purchase and
redemption at net asset value and with no sales charges, subject to the terms
and conditions of this Agreement. The Board of Directors of AVIF may refuse to
sell Shares of any Fund to any person, or suspend or terminate the offering of
Shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Directors
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, such action is deemed in the best interests of the
shareholders of such Fund.

2
<PAGE>

1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
-------------------------------------------

The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Policies, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.

1.3 NO SALES TO THE GENERAL PUBLIC.
------------------------------

AVIF represents and warrants that no Shares of any Fund have been or will
be sold to the general public.

SECTION 2. PROCESSING TRANSACTIONS
-----------------------------------

2.1 TIMELY PRICING AND ORDERS.
-------------------------

(a) AVIF or its designated agent will use its best efforts to provide ALNY
with the net asset value per Share for each Fund by 6:00 p.m. Central time on
each Business Day. As used herein, "Business Day" shall mean any day on which
(i) the New York Stock Exchange is open for regular trading and (ii) AVIF
calculates the Fund's net asset value.

(b) ALNY will use the data provided by AVIF each Business Day pursuant to
paragraph (a) immediately above to calculate Account unit values and to process
transactions that receive that same Business Day's Account unit values. ALNY
will perform such Account processing the same Business Day, and will place
corresponding orders to purchase or redeem Shares with AVIF by 9 a.m. Central
time the following Business Day; provided, however, that AVIF shall provide
additional time to ALNY in the event that AVIF is unable to meet the 6:00 p.m.
time stated in paragraph (a) immediately above. Such additional time shall be
equal to the additional time that AVIF takes to make the net asset values
available to ALNY.

(c) Each order to purchase or redeem Shares will separately describe the
amount of Shares of each Fund to be purchased, redeemed or exchanged and will
not be netted; provided, however, with respect to payment of the purchase price
by ALNY and of redemption proceeds by AVIF, ALNY and AVIF shall net purchase and
redemption orders with respect to each Fund and shall transmit one net payment
per Fund in accordance with Section 2.2, below. Each order to purchase or
redeem Shares shall also specify whether the order results from purchase
payments, surrenders,

3
<PAGE>

partial withdrawals, routine withdrawals of charges, or requests for other
transactions under Policies (collectively, "Policy transactions").

(d) If AVIF provides materially incorrect Share net asset value
information, ALNY shall be entitled to an adjustment to the number of Shares
purchased or redeemed to reflect the correct net asset value per Share. Any
material error in the calculation or reporting of net asset value per Share,
dividend or capital gain information shall be reported promptly upon discovery
to ALNY. Materiality and reprocessing cost reimbursement shall be determined in
accordance with standards established by the parties as provided in Schedule B,
attached hereto and incorporated herein.

2.2 TIMELY PAYMENTS.

ALNY will wire payment for net purchases to a custodial account designated
by AVIF by 1:00 p.m. Central Time on the same day as the order for Shares is
placed, to the extent practicable. AVIF will wire payment for net redemptions to
an account designated by ALNY by 1:00 p.m. Central Time on the same day as the
Order is placed, to the extent practicable, but in any event within five
calendar days after the date the order is placed in order to enable ALNY to pay
redemption proceeds within the time specified in Section 22(e) of the 1940 Act
or such shorter period of time as may be required by law.

2.3 APPLICABLE PRICE.

(a) Share purchase and redemption orders that result from Policy
transactions and that ALNY receives prior to the close of regular trading on the
New York Stock Exchange on a Business Day will be executed at the net asset
values of the appropriate Funds next computed after receipt by AVIF or its
designated agent of the orders. For purposes of this Section 2.3(a), ALNY shall
be the designated agent of AVIF for receipt of orders relating to Policy
transactions on each Business Day and receipt by such designated agent shall
constitute receipt by AVIF; provided, that AVIF receives notice of such orders
by 9 a.m. Central time on the next following Business Day or such later time
computed in accordance with Section 2.1(b) hereof.

(b) All other Share purchases and redemptions by ALNY will be effected at
the net asset values of the appropriate Funds next computed after receipt by
AVIF or its designated agent of the order therefor, and such orders will be
irrevocable.

2.4 DIVIDENDS AND DISTRIBUTIONS.

AVIF will furnish notice promptly to ALNY of any income dividends or
capital gain distributions payable on the Shares of any Fund. ALNY hereby elects
to reinvest all dividends and

4
<PAGE>

capital gains distributions in additional Shares of the corresponding Fund at
the ex-dividend date net asset values until ALNY otherwise notifies AVIF in
writing, it being agreed by the Parties that the ex-dividend date and the
payment date with respect to any dividend or distribution will be the same
Business Day. ALNY reserves the right to revoke this election and to receive all
such income dividends and capital gain distributions in cash.

2.5 BOOK ENTRY.
----------

Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to ALNY. Shares ordered from AVIF will be
recorded in an appropriate title for ALNY, on behalf of its Account.

SECTION 3. COSTS AND EXPENSES
------------------------------

3.1 GENERAL.
-------

Except as otherwise specifically provided in Schedule C, attached hereto
and made a part hereof, each Party will bear all expenses incident to its
performance under this Agreement.

3.2 PARTIES TO COOPERATE.
--------------------

Each Party agrees to cooperate with the others, as applicable, in arranging
to print, mail and/or deliver, in a timely manner, combined or coordinated
prospectuses or other materials of AVIF and the Accounts.

SECTION 4. LEGAL COMPLIANCE
----------------------------

4.1 TAX LAWS.
--------

(a) AVIF represents and warrants that each Fund is currently qualified and
will continue to qualify as a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). AVIF
will notify ALNY immediately upon having a reasonable basis for believing that a
Fund has ceased to so qualify or that it might not so qualify in the future.

5
<PAGE>

(b) AVIF represents that it will comply and maintain each Fund's compliance
with the diversification requirements set forth in Section 817(h) of the Code
and Section 1.817-5(b) of the regulations under the Code. AVIF will notify ALNY
immediately upon having a reasonable basis for believing that a Fund has ceased
to so comply or that a Fund might not so comply in the future.

(c) ALNY agrees that if the Internal Revenue Service ("IRS") asserts in
writing in connection with any governmental audit or review of ALNY or, to
ALNY's knowledge, of any Policy owner, annuitant or participant under the
Policies (collectively, "Participants"), that any Fund has failed to comply with
the diversification requirements of section 817(h) of the Code or ALNY otherwise
becomes aware of any facts that could give rise to any claim against AVIF or its
affiliates as a result of such a failure or alleged failure to so comply with
section 817(h) (hereinafter respectively referred to in this paragraph (c) as
"failure" or "alleged failure"):

(i) ALNY shall promptly notify AVIF of such assertion or potential claim;

(ii) ALNY shall consult with AVIF as to how to minimize any liability that
may arise as a result of such failure or alleged failure;

(iii) ALNY shall use its best efforts to minimize any liability of AVIF or
its affiliates resulting from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations Section 1.817-5(a)(2), to
the Commissioner of the IRS that such failure was inadvertent, provided
that ALNY shall not be required to make any such demonstration of
inadvertence unless AVIF represents or provides an opinion of counsel,
which representation or opinion shall be reasonably satisfactory to ALNY,
to the effect that a reasonable basis exists for making such a
demonstration;

(iv) ALNY shall permit AVIF, its affiliates and their legal and accounting
advisors to attend, advise and otherwise assist ALNY (which assistance ALNY
shall consider and/or accept in good faith) with respect to any
conferences, settlement discussions or other administrative or judicial
proceeding or contests (including judicial appeals thereof) with the IRS,
any Participant or any other claimant regarding any claims that could give
rise to liability to AVIF or its affiliates as a result of such a failure
or alleged failure, provided that ALNY shall control, in good faith, the
conduct of such conferences, discussions, proceedings, or contests or
appeals thereof;

(v) any written materials to be submitted by ALNY to the IRS, any
Participant or any other claimant in connection with any of the foregoing
proceedings or contests (including, without limitation, any such materials
to be submitted to the IRS pursuant to Treasury Regulations Section 1.817-
5(a)(2)), (a) shall be provided by ALNY to AVIF (together with any
supporting information or analysis) at least ten (10) business days, or
such shorter period to which the Parties hereto may from time to time
agree, prior to the day on which such proposed materials are to be
submitted and (b) shall not be submitted by ALNY to any such

6
<PAGE>

person without the express written consent of AVIF which shall not be
unreasonably withheld;

(vi) ALNY shall provide AVIF or its affiliates and their accounting and
legal advisors with such cooperation as AVIF shall reasonably request
(including, without limitation, by providing AVIF and its accounting and
legal advisors with copies of any relevant books and records (or portions
thereof) of ALNY that may be reasonably requested by or on behalf of AVIF
and that ALNY is permitted to provide in accordance with applicable law) in
order to facilitate review by AVIF or its advisors of any written
submissions provided to it pursuant to the preceding clause or its
assessment of the validity or amount of any claim against its arising from
such a failure or alleged failure;

(vii) ALNY shall not with respect to any claim of the IRS or any
Participant that would give rise to a claim against AVIF or its affiliates
(a) compromise or settle any claim, (b) accept any adjustment on audit, or
(c) forego any allowable administrative or judicial appeals, without the
express written consent of AVIF or its affiliates, which shall not be
unreasonably withheld, provided that ALNY shall not be required, after
exhausting all administrative remedies, to appeal any adverse IRS or
judicial decision unless AVIF or its affiliates shall have provided an
opinion of counsel approved by ALNY, which approval shall not be
unreasonably withheld, to the effect that a reasonable basis exists for
taking such appeal (or, in the case of an appeal to the United States
Supreme Court, that ALNY should be more likely than not to prevail on such
appeal), and provided further that each Party shall bear one-half of the
expenses of any judicial appeal; and

(viii) AVIF and its affiliates shall have no liability as a result of such
failure or alleged failure if ALNY fails to comply with any of the
foregoing clauses (i) through (vii), and such failure could be shown to
have materially contributed to the liability.

Should AVIF or any of its affiliates refuse to give its written consent to
any compromise or settlement of any claim or liability hereunder, ALNY may, in
its discretion, authorize AVIF or its affiliates to act in the name of ALNY in,
and to control the conduct of, such conferences, discussions, proceedings,
contests or appeals and all administrative or judicial appeals thereof, and in
that event AVIF or its affiliates shall bear the fees and expenses associated
with the conduct of the proceedings that it is so authorized to control;
provided that in no event shall ALNY have liability resulting from AVIF's
refusal to accept the proposed settlement or compromise with respect to any
failure caused by AVIF. As used in this Agreement, the term "affiliates" shall
have the same meaning as "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.

(d) ALNY represents and warrants that the Policies currently are and at
all times will be treated as annuity, endowment, or life insurance contracts
under applicable provisions of the Code. ALNY will notify AVIF immediately upon
having a reasonable basis for believing that any of the Policies have ceased to
be so treated or that they might not be so treated in the future,

7
<PAGE>

provided that such notice shall be kept confidential during the period of ALNY's
investigation of any such circumstances to the extent permitted by applicable
law.

(e) ALNY represents and warrants that each Account is and at all times
will be a "segregated asset account" and that interests in each Account are
offered exclusively through the purchase of or transfer into a "variable
contract," within the meaning of such terms under Section 817 of the Code and
the regulations thereunder. ALNY will notify AVIF immediately upon having a
reasonable basis for believing that such requirements have ceased to be met or
that they might not be met in the future.

4.2 INSURANCE AND CERTAIN OTHER LAWS.
--------------------------------

(a) AVIF and AIM will use their best efforts to comply with any applicable
state insurance laws or regulations, to the extent specifically requested in
writing by ALNY.

(b) ALNY represents and warrants that (i) it is an insurance company duly
organized, validly existing and in good standing under the laws of the State of
Illinois and has full corporate power, authority and legal right to execute,
deliver and perform its duties and comply with its obligations under this
Agreement, (ii) it has legally and validly established and maintains each
Account as a segregated asset account under Section 245.21 of the Illinois
Insurance Code and the regulations thereunder, and (iii) the Policies comply in
all material respects with all other applicable federal and state laws and
regulations.

(c) AVIF represents and warrants that it is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Maryland
and has full power, authority, and legal right to execute, deliver, and perform
its duties and comply with its obligations under this Agreement.

(d) AIM represents and warrants that it is a Delaware corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has full power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this Agreement.

(e) The Underwriter represents and warrants that it is a Delaware
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has full power, authority, and legal right to
execute, deliver, and perform its duties and comply with its obligations under
this Agreement.

8
<PAGE>

4.3 SECURITIES LAWS.

(a) ALNY and the Underwriter represent and warrant that (i) interests in
each Account pursuant to the Policies will be registered under the 1933 Act to
the extent required by the 1933 Act, (ii) the Policies will be duly authorized
for issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and
Illinois law, (iii) each Account is and will remain registered under the 1940
Act, to the extent required by the 1940 Act, (iv) each Account does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, to the extent required, (v) each Account's 1933 Act
registration statement relating to the Policies, together with any amendments
thereto, will at all times comply in all material respects with the requirements
of the 1933 Act and the rules thereunder, (vi) ALNY will amend the registration
statement for its Policies under the 1933 Act and for its Accounts under the
1940 Act from time to time as required in order to effect the continuous
offering of its Policies or as may otherwise be required by applicable law, and
(vii) each Account Prospectus will at all times comply in all material respects
with the requirements of the 1933 Act and the rules thereunder.

(b) AVIF and AIM represent and warrant that (i) Shares sold pursuant to
this Agreement will be registered under the 1933 Act to the extent required by
the 1933 Act and duly authorized for issuance and sold in compliance with
Maryland law, (ii) AVIF is and will remain registered under the 1940 Act to the
extent required by the 1940 Act, (iii) AVIF will amend the registration
statement for its Shares under the 1933 Act and itself under the 1940 Act from
time to time as required in order to effect the continuous offering of its
Shares, (iv) AVIF does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, (v) AVIF's 1933 Act
registration statement, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933 Act and rules
thereunder, and (vi) AVIF Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder.

(c) AVIF will register and qualify its Shares for sale in accordance with
the laws of any state or other jurisdiction if and to the extent reasonably
deemed advisable by AVIF.

4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.

(a) AVIF and/or AIM will immediately notify ALNY of (i) the issuance by
any court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to AVIF's registration statement under the 1933 Act
or AVIF Prospectus, (ii) any request by the SEC for any amendment to such
registration statement or AVIF Prospectus, (iii) the initiation of any
proceedings for that purpose or for any other purpose relating to the
registration or offering of AVIF's Shares, or (iv) any other action or
circumstances that may prevent the lawful offer or sale of Shares of any Fund in
any state or jurisdiction, including, without limitation, any circumstances in
which (a) such Shares are not registered and, in all material respects, issued
and sold in

9
<PAGE>

accordance with applicable state and federal law or (b) such law precludes the
use of such Shares as an underlying investment medium of the Policies issued or
to be issued by ALNY. AVIF will make every reasonable effort to prevent the
issuance, with respect to any Fund, of any such stop order, cease and desist
order or similar order and, if any such order is issued, to obtain the lifting
thereof at the earliest possible time.

(b) ALNY and/or the Underwriter will immediately notify AVIF of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to each Account's registration
statement under the 1933 Act relating to the Policies or each Account
Prospectus, (ii) any request by the SEC for any amendment to such registration
statement or Account Prospectus, (iii) the initiation of any proceedings for
that purpose or for any other purpose relating to the registration or offering
of each Account's interests pursuant to the Policies, or (iv) any other action
or circumstances that may prevent the lawful offer or sale of said interests in
any state or jurisdiction, including, without limitation, any circumstances in
which said interests are not registered and, in all material respects, issued
and sold in accordance with applicable state and federal law. ALNY will make
every reasonable effort to prevent the issuance of any such stop order, cease
and desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.

4.5 ALNY OR THE UNDERWRITER TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.

(a) ALNY or the Underwriter will provide to AVIF or its designated agent
at least one complete copy of all SEC registration statements, Account
Prospectuses, reports, any preliminary and final voting instruction solicitation
material, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to each Account or the Policies,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.

(b) The Underwriter will provide to AVIF or its designated agent at least
one complete copy of each piece of sales literature or other promotional
material not prepared by AVIF or its affiliates, in which AVIF or any of its
affiliates is named, at least ten [10] Business Days prior to its use or such
shorter period as the Parties hereto may, from time to time, agree upon. No such
material shall be used if AVIF or its designated agent objects to such use
within ten [10] Business Days after receipt of such material or such shorter
period as the Parties hereto may, from time to time, agree upon. AVIF hereby
designates its investment adviser as the entity to receive such sales
literature, until such time as AVIF appoints another designated agent by giving
notice to ALNY in the manner required by Section 9 hereof.

(c) Neither ALNY, the Underwriter, nor any of their respective affiliates
will give any information or make any representations or statements on behalf of
or concerning AVIF or its affiliates in connection with the sale of the Policies
other than (i) the information or representations contained in the registration
statement, including the AVIF Prospectus contained therein, relating to Shares,
as such registration statement and AVIF Prospectus may be amended from time to
time;

10
<PAGE>

or (ii) in reports or proxy materials for AVIF; or (iii) in sales literature or
other promotional material approved by AVIF, except with the express written
permission of AVIF.

(d) ALNY and the Underwriter shall adopt and implement procedures
reasonably designed to ensure that information concerning AVIF and its
affiliates that is intended for use only by brokers or agents selling the
Policies (i.e., information that is not intended for distribution to
Participants or offerees) ("broker only materials") is so used, and neither AVIF
nor any of its affiliates shall be liable for any losses, damages or expense
relating to the improper use of such broker only materials.

4.6 AVIF OR AIM TO PROVIDE DOCUMENTS; INFORMATION ABOUT ALNY AND THE
UNDERWRITER.

(a) AVIF will provide to ALNY at least one complete copy of all SEC
registration statements, AVIF Prospectuses, reports, any preliminary and final
proxy material, applications for exemptions, requests for no-action letters, and
all amendments to any of the above, that relate to AVIF or the Shares of a Fund,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.

(b) AVIF will provide to ALNY or the Underwriter camera ready or computer
diskette copies of all AVIF Prospectuses, proxy materials, periodic reports to
shareholders and other materials required by law to be sent to Participants who
have allocated any Policy value to a Fund. AVIF will provide such copies to ALNY
or the Underwriter in a timely manner so as to enable ALNY or the Underwriter,
as the case may be, to print and distribute such materials within the time
required by law to be furnished to Participants.

(c) AIM will provide to ALNY or its designated agent at least one complete
copy of each piece of sales literature or other promotional material in which
ALNY, the Underwriter or any of their respective affiliates is named, or that
refers to the Policies, at least 10 Business Days prior to its use or such
shorter period as the Parties hereto may, from time to time, agree upon. No such
material shall be used if ALNY or its designated agent objects to such use
within 10 Business Days after receipt of such material or such shorter period as
the Parties hereto may, from time to time, agree upon. ALNY shall receive all
such sales literature until such time as it appoints a designated agent by
giving notice to AVIF in the manner required by Section 9 hereof.

(d) Neither AVIF nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning ALNY, the
Underwriter, each Account, or the Policies other than (i) the information or
representations contained in the registration statement, including each Account
Prospectus contained therein, relating to the Policies, as such registration
statement and Account Prospectus may be amended from time to time; or (ii) in
reports or voting instruction materials for each Account; or (iii) in sales
literature or other promotional material approved by ALNY or its affiliates,
except with the express written permission of ALNY.

11
<PAGE>

(e) AIM shall adopt and implement procedures reasonably designed to ensure
that information concerning ALNY, the Underwriter, and their respective
affiliates that is intended for use only by brokers or agents selling the
Policies (i.e., information that is not intended for distribution to
Participants or offerees) ("broker only materials") is so used, and neither
ALNY, the Underwriter, nor any of their respective affiliates shall be liable
for any losses, damages or expense relating to the improper use of such broker
only materials.

SECTION 5. MIXED AND SHARED FUNDING

5.1 GENERAL.

AVIF has applied for an order from the SEC exempting it from certain
provisions of the 1940 Act and rules thereunder so that AVIF may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable life insurance contracts, separate accounts
of insurance companies unaffiliated with ALNY, and trustees of qualified pension
and retirement plans (collectively, "Mixed and Shared Funding"). The Parties
recognize that the SEC has imposed terms and conditions for such orders that are
substantially identical to many of the provisions of this Section 5. Sections
5.2 through 5.8 below shall apply, if and only if AVIF implements Mixed and
Shared Funding, pursuant to such an exemptive order or otherwise. AVIF hereby
notifies ALNY that, in the event that AVIF implements Mixed and Shared Funding,
it may be appropriate to include in the prospectus pursuant to which a Policy is
offered disclosure regarding the potential risks of Mixed and Shared Funding.

5.2 DISINTERESTED DIRECTORS.

AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the
Rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of 45 days if the vacancy or vacancies may
be filled by the Board; (b) for a period of 60 days if a vote of shareholders is
required to fill the vacancy or vacancies; or (c) for such longer period as the
SEC may prescribe by order upon application.

12
<PAGE>

5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.

AVIF agrees that its Board of Directors will monitor for the existence of
any material irreconcilable conflict between the interests of the participants
in all separate accounts of life insurance companies utilizing AVIF
("Participating Insurance Companies"), including each Account and participants
on all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). ALNY agrees to inform the Board of Directors of AVIF of the existence
of or any potential for any such material irreconcilable conflict of which it is
aware. The concept of a "material irreconcilable conflict" is not defined by the
1940 Act or the rules thereunder, but the Parties recognize that such a conflict
may arise for a variety of reasons, including, without limitation:

(a) an action by any state insurance or other regulatory authority;

(b) 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;

(d) the manner in which the investments of any Fund are being managed;

(e) a difference in voting instructions given by variable annuity contract
and variable life insurance contract Participants or by Participants of
different Participating Insurance Companies;

(f) a decision by a Participating Insurance Company to disregard the
voting instructions of Participants; or

(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.

Consistent with the SEC's requirements in connection with exemptive orders
of the type referred to in Section 5.1 hereof, ALNY will assist the Board of
Directors in carrying out its responsibilities by providing the Board of
Directors with all information reasonably necessary for the Board of Directors
to consider any issue raised, including information as to a decision by ALNY to
disregard voting instructions of Participants.

5.4 CONFLICT REMEDIES.

(a) It is agreed that if it is determined by a majority of the members of
the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, ALNY will, if it is a Participating
Insurance Company for which a material irreconcilable conflict

13
<PAGE>

is relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict, which
steps may include, but are not limited to:

(i) withdrawing the assets allocable to some or all of the Accounts from
AVIF or any Fund and reinvesting such assets in a different investment medium,
including another Fund of AVIF, or submitting the question whether such
segregation should be implemented to a vote of all affected Participants and, as
appropriate, segregating the assets of any particular group (e.g., annuity
Participants, life insurance Participants) that votes in favor of such
segregation, or offering to the affected Participants the option of making such
a change; and

(ii) establishing a new registered investment company of the type defined
as a "management company" in Section 4(3) of the 1940 Act or a new separate
account that is operated as a management company.

(b) If the material irreconcilable conflict arises because of ALNY's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, ALNY may be
required, at AVIF's election, to withdraw each Account's investment in AVIF or
any Fund. No charge or penalty will be imposed as a result of such withdrawal.
Any such withdrawal must take place within six months after AVIF gives notice to
ALNY that this provision is being implemented, and until such withdrawal AVIF
shall continue to accept and implement orders by ALNY for the purchase and
redemption of Shares of AVIF.

(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to ALNY conflicts with the
majority of other state regulators, then ALNY will withdraw each Account's
investment in AVIF within six months after AVIF's Board of Directors informs
ALNY that it has determined that such decision has created a material
irreconcilable conflict (after consideration of the interests of all
Participants), and until such withdrawal AVIF shall continue to accept and
implement orders by ALNY for the purchase and redemption of Shares of AVIF.

(d) ALNY agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants.

(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Policies. ALNY
will not be required by the terms hereof to establish a new funding medium for
any Policies if an offer to do so has been declined by vote of a majority of
Participants materially adversely affected by the material irreconcilable
conflict.

14
<PAGE>

5.5 NOTICE TO ALNY.
--------------

AVIF will promptly make known in writing to ALNY the Board of Directors'
determination of the existence of a material irreconcilable conflict, a
description of the facts that give rise to such conflict and the implications of
such conflict.

5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
-------------------------------------------

ALNY and AVIF (or its investment adviser) will at least annually submit to
the Board of Directors of AVIF such reports, materials or data as the Board of
Directors may reasonably request so that the Board of Directors may fully carry
out the obligations imposed upon it by the provisions hereof or any exemptive
application filed with the SEC to permit Mixed and Shared Funding, and said
reports, materials and data will be submitted at any reasonable time deemed
appropriate by the Board of Directors. All reports received by the Board of
Directors of potential or existing conflicts, and all Board of Directors actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
Board of Directors or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.

5.7 COMPLIANCE WITH SEC RULES.
-------------------------

If, at any time during which AVIF is serving as an investment medium for
variable life insurance Policies, 1940 Act Rules 6e-3(T) or, if applicable, 6e-2
are amended or Rule 6e-3 is adopted to provide exemptive relief with respect to
Mixed and Shared Funding, AVIF agrees that it will comply with the terms and
conditions thereof and that the terms of this Section 5 shall be deemed modified
if and only to the extent required in order also to comply with the terms and
conditions of such exemptive relief that is afforded by any of said rules that
are applicable.

5.8 REQUIREMENTS FOR OTHER INSURANCE COMPANIES.
------------------------------------------

AVIF will require that each Participating Insurance Company enter into an
agreement with AVIF that contains in substance the same provisions as are set
forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b), 4.5(a), 5, and 10 of this
Agreement.

15
<PAGE>

SECTION 6. TERMINATION
----------------------

6.1 EVENTS OF TERMINATION.
---------------------

Subject to Section 6.4 below, this Agreement will terminate as to a Fund:

(a) at the option of AVIF or ALNY upon the approval by (i) a majority of
the Disinterested Directors or (ii) a majority vote of the Shares of the
affected Fund that are held in the corresponding Subaccount of an Account
(pursuant to the procedures set forth in Section 10 of this Agreement for voting
Shares in accordance with Participant instructions); or

(b) at the option of AVIF or AIM upon institution of formal proceedings
against ALNY or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding ALNY's obligations under this
Agreement or related to the sale of the Policies, the operation of each Account,
or the purchase of Shares, if, in each case, AVIF or AIM reasonably determines
that such proceedings, or the facts on which such proceedings would be based,
have a material likelihood of imposing material adverse consequences on the Fund
with respect to which the Agreement is to be terminated; or

(c) at the option of ALNY upon institution of formal proceedings against
AVIF, its principal underwriter, or its investment adviser by the NASD, the SEC,
or any state insurance regulator or any other regulatory body regarding AVIF's
obligations under this Agreement or related to the operation or management of
AVIF or the purchase of AVIF Shares, if, in each case, ALNY reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on ALNY, or the Subaccount corresponding to the Fund with respect to which the
Agreement is to be terminated; or

(d) at the option of any Party in the event that (i) the Fund's Shares are
not registered and, in all material respects, issued and sold in accordance with
any applicable federal or state law or (ii) such law precludes the use of such
Shares as an underlying investment medium of the Policies issued or to be issued
by ALNY; or

(e) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or

(f) at the option of ALNY if the Fund ceases to qualify as a RIC under
Subchapter M of the Code or under successor or similar provisions, or if ALNY
reasonably believes that the Fund may fail to so qualify;

(g) at the option of ALNY if the Fund fails to comply with Section 817(h)
of the Code or with successor or similar provisions (other than by reason of the
failure of the Policies issued by

16
<PAGE>

ALNY to qualify as annuity or life insurance contracts under the Code, or the
failure of any Account or Policy to meet the definition of "segregated asset
account" or "variable contract"; respectively, within the meaning of the Code),
or if ALNY reasonably believes that the Fund may fail to so comply; or

(h) at the option of AVIF or AIM if the Policies issued by ALNY cease to
qualify as annuity contracts or life insurance contracts under the Code (other
than by reason of the Fund's noncompliance with Section 817(h) or Subchapter M
of the Code) or if interests in an Account under the Policies are not
registered, where required, and, in all material respects, are not issued or
sold in accordance with any applicable federal or state law; or

(i) upon another Party's material breach of any provision of this
Agreement.

6.2 NOTICE REQUIREMENT FOR TERMINATION.
----------------------------------

No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:

(a) in the event that any termination is based upon the provisions of
Section 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at
least six (6) months in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;

(b) in the event that any termination is based upon the provisions of
Section 6.1(b) or Section 6.1(c) hereof, such prior written notice shall be
given at least ninety (90) days in advance of the effective date of termination
unless a shorter time is agreed to by the Parties hereto; and

(c) in the event that any termination is based upon the provisions of
Section 6.1(d), Section 6.1(f), Section 6.1(g), Section 6.1(h) or Section 6.1(i)
hereof, such prior written notice shall be given as soon as possible within
twenty-four (24) hours after the terminating Party learns of the event causing
termination to be required.

6.3 FUNDS TO REMAIN AVAILABLE.
-------------------------

Except (a) as necessary to implement Participant-initiated transactions,
(b) as required by state insurance laws or regulations, (c) as required pursuant
to Section 5 of this Agreement, or (d) with respect to any Fund as to which this
Agreement has terminated pursuant to Section 6.1 hereof, ALNY shall not (i)
redeem AVIF Shares attributable to the Policies (as opposed to AVIF Shares
attributable to ALNY's assets held in each Account), or (ii) prevent
Participants from allocating payments to or transferring amounts from a Fund
that was otherwise available under the Policies,

17
<PAGE>

until six (6) months after ALNY shall have notified AVIF of its intention to do
so and until 36 full calendar months shall have expired from the date on which
an Account first invested in any Fund.

6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
-------------------------------------------

All warranties and indemnifications will survive the termination of this
Agreement.

6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
---------------------------------------------

If any Party terminates this Agreement with respect to any Fund pursuant to
Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, this
Agreement shall nevertheless continue in effect as to any Shares of that Fund
that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date as
of which an Account owns no Shares of the affected Fund or a date (the "Final
Termination Date") six (6) months following the Initial Termination Date, except
that ALNY may, by written notice shorten said six (6) month period in the case
of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i).

SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
-------------------------------------------

The Parties hereto agree to cooperate and give reasonable assistance to one
another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Policies in such Fund.

SECTION 8. ASSIGNMENT
----------------------

This Agreement may not be assigned by any Party, except with the written
consent of each other Party.

18
<PAGE>

SECTION 9. NOTICES
-------------------

Notices and communications required or permitted by Section 2 hereof will
be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:

Allstate Life Insurance Company of New York
3100 Sanders Road, Suite J5D
Northbrook, Illinois 60062
Facsimile: (708) 402-3781
Attn: Michael Velotta, Esq.

Allstate Life Financial Services, Inc.
3100 Sanders Road, Suite J5B
Northbrook, Illinois 60062
Facsimile: (708) 402-3781
Attn: John Hedrick, Esq.

AIM Variable Insurance Funds, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.

A I M Distributors, Inc.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
Facsimile: (713) 993-9185

Attn.: Nancy L. Martin, Esq.

SECTION 10. VOTING PROCEDURES
------------------------------

Subject to the cost allocation procedures established pursuant to Section
3.1 hereof, ALNY will distribute all proxy material furnished by AVIF to
Participants to whom pass-through voting privileges are required to be extended
and will solicit voting instructions from Participants. ALNY will vote Shares in
accordance with timely instructions received from Participants. ALNY will vote

19
<PAGE>

Shares that are (a) not attributable to Participants to whom pass-through voting
privileges are extended, or (b) attributable to Participants, but for which no
timely instructions have been received, in the same proportion as Shares for
which said instructions have been received from Participants. Neither ALNY nor
any of its affiliates will in any way recommend action in connection with or
oppose or interfere with the solicitation of proxies for the Shares held for
such Participants, except with respect to matters as to which ALNY has the
right, under Rule 6e-2 or 6e-3(T) under the 1940 Act, to vote the Shares without
regard to voting instructions from Participants. ALNY reserves the right to vote
shares held in any Account in its own right, to the extent permitted by law.
ALNY shall be responsible for assuring that each of its Accounts holding Shares
calculates voting privileges in a manner consistent with that of other
Participating Insurance Companies or in the manner required by any Mixed and
Shared Funding exemptive order that AVIF may obtain in the future. AVIF will
notify ALNY (i) of any changes of interpretations or amendments to any Mixed and
Shared Funding exemptive order it obtains in the future and (ii) of any proposal
to be submitted to Participants for their approval (prior to any Board of
Directors meeting of AVIF at which such proposals are presented).

SECTION 11. FOREIGN TAX CREDITS
--------------------------------

AVIF agrees to consult in advance with ALNY concerning any decision to
elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to its shareholders.

SECTION 12. INDEMNIFICATION
----------------------------

12.1 OF AVIF AND AIM BY ALNY AND THE UNDERWRITER
-------------------------------------------

(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below,
ALNY and the Underwriter each agrees to indemnify and hold harmless AVIF, its
affiliates (including AIM) except Participants, and each of their respective
directors and officers, and each person, if any, who controls AVIF or its
affiliates (including AIM) within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 12.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of ALNY) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
actions are related to the sale or acquisition of AVIF's Shares and:

20
<PAGE>

(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Account's 1933 Act registration
statement, any Account Prospectus, the Policies, or sales literature or
advertising for the Policies (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 any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to ALNY or the Underwriter by
or on behalf of AVIF for use in any Account's 1933 Act registration statement,
any Account Prospectus, the Policies, or sales literature or advertising or
otherwise for use in connection with the sale of Policies or Shares (or any
amendment or supplement to any of the foregoing); or

(ii) arise out of or as a result of any other statements or
representations (other than statements or representations contained in AVIF's
1933 Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of ALNY or the Underwriter and on which
such persons have reasonably relied) or the negligent, illegal or fraudulent
conduct of ALNY, the Underwriter or their respective affiliates or persons under
their control (including, without limitation, their employees and "Associated
Persons," as that term is defined in paragraph (m) of Article I of the NASD's
By-Laws), in connection with the sale or distribution of the Policies or Shares;
or

(iii) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in AVIF's 1933 Act registration
statement, AVIF Prospectus, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with information furnished
to AVIF or AIM by or on behalf of ALNY, the Underwriter or their respective
affiliates for use in AVIF's 1933 Act registration statement, AVIF Prospectus,
sales literature or advertising of AVIF, or any amendment or supplement to any
of the foregoing; or

(iv) arise as a result of any failure by ALNY or the Underwriter to
perform the obligations, provide the services and furnish the materials required
of them under the terms of this Agreement, or any material breach of any
representation and/or warranty made by ALNY or the Underwriter in this Agreement
or arise out of or result from any other material breach of this Agreement by
ALNY or the Underwriter; or

21
<PAGE>

(v) arise as a result of failure by the Policies issued by ALNY to
qualify as life insurance, endowment, or annuity contracts under the Code,
otherwise than by reason of any Fund's failure to comply with Subchapter M or
Section 817(h) of the Code.

(b) Neither ALNY nor the Underwriter shall be liable under this Section
12.1 with respect to any losses, claims, damages, liabilities or actions to
which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement or (ii) to
AVIF.

(c) Neither ALNY nor the Underwriter shall be liable under this Section
12.1 with respect to any action against an Indemnified Party unless AVIF or AIM
shall have notified ALNY or the Underwriter in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify ALNY or the Underwriter of any such action shall
not relieve ALNY or the Underwriter from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this Section 12.1. Except as otherwise provided herein, in case any such
action is brought against an Indemnified Party, ALNY or the Underwriter shall be
entitled to participate, at its own expense, in the defense of such action and
ALNY or the Underwriter also shall be entitled to assume the defense thereof,
with counsel approved by the Indemnified Party named in the action, which
approval shall not be unreasonably withheld. After notice from ALNY or the
Underwriter to such Indemnified Party of its election to assume the defense
thereof, the Indemnified Party will cooperate fully with ALNY and shall bear the
fees and expenses of any additional counsel retained by it, and ALNY will not be
liable to such Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.

12.2 OF ALNY AND THE UNDERWRITER BY AVIF AND AIM.

(a) Except to the extent provided in Sections 12.2(d), 12.2(e) and
12.2(f), below, to the extent permitted by law, AVIF and/or AIM each agrees to
indemnify and hold harmless ALNY, the Underwriter, their respective affiliates,
and each of their respective directors and officers, and each person, if any,
who controls ALNY, the Underwriter, or their respective affiliates within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 12.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
AVIF and/or AIM) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law, or otherwise,
insofar as such losses, claims, damages, liabilities or actions are related to
the sale or acquisition of AVIF's Shares and:

22
<PAGE>

(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in AVIF's 1933 Act registration
statement, AVIF Prospectus or sales literature or advertising of AVIF (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 any
Indemnified Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information furnished
to AVIF or its affiliates by or on behalf of ALNY or its affiliates for use in
AVIF's 1933 Act registration statement, AVIF Prospectus, or in sales literature
or advertising (or any amendment or supplement to any of the foregoing); or

(ii) arise out of or as a result of any other statements or
representations (other than statements or representations contained in any
Account's 1933 Act registration statement, any Account Prospectus, sales
literature or advertising for the Policies, or any amendment or supplement to
any of the foregoing, not supplied for use therein by or on behalf of AVIF or
its affiliates and on which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of AVIF, its affiliates or persons
under their control (including, without limitation, their employees and
"Associated Persons"), in connection with the sale or distribution of AVIF
Shares; or

(iii) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature or advertising covering the
Policies, or any amendment or supplement to any of the foregoing, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon and in conformity with
information furnished to ALNY, the Underwriter, or their respective affiliates
by AVIF or AIM for use in any Account's 1933 Act registration statement, any
Account Prospectus, sales literature or advertising covering the Policies, or
any amendment or supplement to any of the foregoing; or

(iv) arise as a result of any failure by AVIF or AIM to perform their
respective obligations, provide the services (including, but not limited to, the
provision of correct net asset value) and furnish the materials required of them
under the terms of this Agreement, or any material breach of any representation
and/or warranty made by AVIF or AIM in this Agreement or arise out of or result
from any other material breach of this Agreement by AVIF or AIM.

23
<PAGE>

(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, AVIF agrees to indemnify and hold harmless the Indemnified
Parties from and against any and all losses, claims, damages, liabilities
(including amounts paid in settlement thereof with, the written consent of AVIF)
or actions in respect thereof (including, to the extent reasonable, legal and
other expenses) to which the Indemnified Parties may become subject directly or
indirectly under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or actions directly or indirectly result
from or arise out of the failure of any Fund to operate as a regulated
investment company in compliance with (i) Subchapter M of the Code and
regulations thereunder or (ii) Section 817(h) of the Code and regulations
thereunder, including, without limitation, any income taxes and related
penalties, rescission charges, liability under state law to Participants
asserting liability against ALNY or the Underwriter pursuant to the Policies,
the costs of any ruling and closing agreement or other settlement with the IRS,
and the cost of any substitution by ALNY of Shares of another investment company
or portfolio for those of any adversely affected Fund as a funding medium for
each Account that ALNY reasonably deems necessary or appropriate as a result of
the noncompliance.

(c) AVIF shall not be liable under this Section 12.2 with respect to any
losses, claims, damages, liabilities or actions to which an Indemnified Party
would otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance by that Indemnified Party of its duties or by
reason of such Indemnified Party's reckless disregard of its obligations and
duties (i) under this Agreement or (ii) to ALNY, each Account, the Underwriter
or Participants.

(d) AVIF shall not be liable under this Section 12.2 with respect to any
action against an Indemnified Party unless the Indemnified Party shall have
notified AVIF in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the action shall have
been served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), but failure to
notify AVIF of any such action shall not relieve AVIF from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this Section 12.2. Except as otherwise provided
herein, in case any such action is brought against an Indemnified Party, AVIF
will be entitled to participate, at its own expense, in the defense of such
action and also shall be entitled to assume the defense thereof, with counsel
approved by the Indemnified Party named in the action, which approval shall not
be unreasonably withheld. After notice from AVIF to such Indemnified Party of
AVIF's election to assume the defense thereof, the Indemnified Party will
cooperate fully with AVIF and shall bear the fees and expenses of any additional
counsel retained by it, and AVIF will not be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.

(e) In no event shall AVIF be liable under the indemnification provisions
contained in this Agreement to any individual or entity, including without
limitation, ALNY, the Underwriter, or any other Participating Insurance Company
or any Participant, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any representation,

24
<PAGE>

warranty, and/or covenant made by ALNY or the Underwriter hereunder or by any
Participating Insurance Company under an agreement containing substantially
similar representations, warranties and covenants; (ii) the failure by ALNY or
any Participating Insurance Company to maintain its segregated asset account
(which invests in any Fund) as a legally and validly established segregated
asset account under applicable state law and as a duly registered unit
investment trust under the provisions of the 1940 Act (unless exempt therefrom);
or (iii) the failure by ALNY or any Participating Insurance Company to maintain
its variable annuity and/or variable life insurance contracts (with respect to
which any Fund serves as an underlying funding vehicle) as life insurance,
endowment or annuity contracts under applicable provisions of the Code;
provided, however, that the limitation of liability contained in this paragraph
(e) shall not apply if the breach or failures described in subparagraphs (i),
(ii) and (iii), above, by ALNY or any Participating Insurance Company resulted
from the failure of AVIF to comply with the requirements of Subchapter M or
Section 817(h) of the Code.

12.3 EFFECT OF NOTICE.

Any notice given by the indemnifying Party to an Indemnified Party referred
to in Section 12.1(c) or 12.2(d) above of participation in or control of any
action by the Indemnifying Party will in no event be deemed to be an admission
by the Indemnifying Party of liability, culpability or responsibility, and the
Indemnifying Party will remain free to contest liability with respect to the
claim among the Parties or otherwise.

12.4 SUCCESSORS.

A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.

SECTION 13. APPLICABLE LAW

This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland law, without regard for that state's
principles of conflict of laws.

25
<PAGE>

SECTION 14. EXECUTION IN COUNTERPARTS

This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.

SECTION 15. SEVERABILITY

If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.

SECTION 16. RIGHTS CUMULATIVE

The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.

SECTION 17. HEADINGS

The Table of Contents and headings used in this Agreement are for purposes
of reference only and shall not limit or define the meaning of the provisions of
this Agreement.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.

AIM VARIABLE INSURANCE FUNDS, INC.

By
--------------------------------

Title
-----------------------------

26
<PAGE>

A I M DISTRIBUTORS, INC.

By
--------------------------------------

Title
-----------------------------------

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK, on
behalf of itself and its Separate Accounts as
provided in Schedule A

By
--------------------------------------

Title
-----------------------------------

ALLSTATE LIFE FINANCIAL SERVICES, INC.

By
--------------------------------------

Title
-----------------------------------

27
<PAGE>

SCHEDULE A

FUNDS AVAILABLE UNDER THE POLICIES

AIM Variable Insurance Funds, Inc.
AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Money Market Fund
AIM V.I. Value Fund

SEPARATE ACCOUNTS UTILIZING THE FUNDS

Allstate Life Insurance Company of New York Separate Account A

POLICIES FUNDED BY THE SEPARATE ACCOUNTS

Individual and Group Flexible Premium Deferred Variable Annuity Contracts

<PAGE>

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
LAW AND REGULATION DEPARTMENT
3100 Sanders Road, J5D
Northbrook, Illinois 60062
Direct Dial Number 847.402.2400
Facsimile 847.402.4371

Michael J. Velotta
Vice President, Secretary
and General Counsel

September 13, 1996

TO: ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NORTHBROOK, ILLINOIS 60062

FROM: MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL

RE: FORM N-4 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940
FILE NO. 33-65381, 811-07467

With reference to the Registration Statement on Form N-4 filed by Allstate
Life Insurance Company of New York with the Securities and Exchange Commission
covering the Flexible Premium Deferred Variable Annuity Contracts ("Contracts"),
I have examined such documents and such law as I have considered necessary and
appropriate, and on the basis of such examination, it is my opinion that:

1. Allstate Life Insurance Company of New York is duly organized and
existing under the laws of the State of New York and has been duly
authorized to do business and to issue the Contracts by the Director of
Insurance of the State of New York.

2. The Contracts covered by the above Registration Statement have been or
will be approved and authorized by the Director of Insurance of the State
of New York and when issued will be valid, legal and binding obligations
of Allstate Life Insurance Company of New York.

I hereby consent to the filing of this opinion as an exhibit to the above
referenced Registration Statement and to the use of my name under the caption
"Legal Matters" in the Statement of Additional Information constituting a part
of the Registration Statement.

Sincerely,

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

<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Pre-Effective Amendment No. 1 to Registration
Statement No. 33-65381 of Allstate Life Insurance Company of New York on Form
N-4 of our report dated March 1, 1996 relating to the financial statements and
financial statement schedules of Allstate Life Insurance Company of New York,
appearing in the Prospectus, which is a part of such Registration Statement, and
to the reference to us under the heading "Experts" in such Prospectus.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois
September 20, 1996

<PAGE>

[LETTERHEAD OF SUTHERLAND, ASBILL & BRENNAN]

September 6, 1996

Allstate Life Insurance Company
of New York
3100 Sanders Road
Northbrook, IL 60062

Ladies and Gentlemen:

We hereby consent to the reference to our name under the caption "Legal
Matters" in the prospectus filed as part of Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-4 (File No. 33-65381) filed by Allstate Life of
New York Separate Account A for certain variable annuity contracts. In giving
this consent, we do not admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933.

Very truly yours,

SUTHERLAND, ASBILL & BRENNAN

By: /s/ Stephen E. Roth
--------------------------
Stephen E. Roth

<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
AIM V.I. CAPITAL APPRECIATION
6/30/95-6/30/96 NO. YEAR 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 30-Jun-95 1000.00 8.993014 111.19743
FEE 28-Jun-96 1.1666667 10.917601 0.10686

RESULTING VALUE 28-Jun-96 10.917601 111.09056 1212.8425

1.000
FORMULA: 1000*(1+T)= 1212.8425 -($1000)*(0.9)*(0.06)
= 1158.8425
T = 15.88%
R = 15.88%

<S> <C> <C> <C> <C> <C> <C>
AIM V.I. DIVERSIFIED INCOME
6/30/95-6/30/96 NO. YEAR 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 30-Jun-95 1000.00 9.470229 105.59407
FEE 28-Jun-96 1.1666667 10.205379 0.11432

RESULTING VALUE 28-Jun-96 10.205379 105.47975 1076.4608

1.000
FORMULA: 1000*(1+T)= 1076.4608 -($1000)*(0.9)*(0.06)
= 1022.4608
T = 2.25%
R = 2.25%

<S> <C> <C> <C> <C> <C> <C>
AIM V.I. GOVERNMENT SECURITIES
6/30/95-6/30/96 NO. YEAR 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 30-Jun-95 1000.00 9.639614 103.73859
FEE 28-Jun-96 1.1666667 9.832399 0.11866

RESULTING VALUE 28-Jun-96 9.832399 103.61994 1018.8326

1.000
FORMULA: 1000*(1+T)= 1018.8326 -($1000)*(0.9)*(0.06)
= 964.8326
T = -3.52%
R = -3.52%

<S> <C> <C> <C> <C> <C> <C>
AIM V.I. GROWTH
6/30/95-6/30/96 NO. YEAR 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 30-Jun-95 1000.00 9.012330 110.95910
FEE 28-Jun-96 1.1666667 10.587857 0.11019

RESULTING VALUE 28-Jun-96 10.587857 110.84891 1173.6524

1.000
FORMULA: 1000*(1+T)= 1173.6524 -($1000)*(0.9)*(0.06)
= 1119.6524
T = 11.97%
R = 11.97%

<S> <C> <C> <C> <C> <C> <C>
AIM V.I. GROWTH AND INCOME
6/30/95-6/30/96 NO. YEAR 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 30-Jun-95 1000.00 8.946001 111.78179
FEE 28-Jun-96 1.1666667 10.747666 0.10855

RESULTING VALUE 28-Jun-96 10.747666 111.67324 1200.2267

1.000
FORMULA: 1000*(1+T)= 1200.2267 -($1000)*(0.9)*(0.06)
= 1146.2267
T = 14.62%
R = 14.62%

<S> <C> <C> <C> <C> <C> <C>
AIM V.I. INTERNATIONAL EQUITY
6/30/95-6/30/96 NO. YEAR 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 30-Jun-95 1000.00 9.401360 106.36759
FEE 28-Jun-96 1.1666667 11.337146 0.10291

RESULTING VALUE 28-Jun-96 11.337146 106.26468 1204.7382

1.000
FORMULA: 1000*(1+T)= 1204.7382 -($1000)*(0.9)*(0.06)
= 1150.7382
T = 15.07%
R = 15.07%

<S> <C> <C> <C> <C> <C> <C>
AIM V.I. GLOBAL UTILITIES
6/30/95-6/30/96 NO. YEAR 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 30-Jun-95 1000.00 9.050919 110.48602
FEE 28-Jun-96 1.1666667 10.493152 0.11118

RESULTING VALUE 28-Jun-96 10.493152 110.37483 1158.1799

1.000
FORMULA: 1000*(1+T)= 1158.1799 -($1000)*(0.9)*(0.06)
= 1104.1799
T = 10.42%
R = 10.42%

<S> <C> <C> <C> <C> <C> <C>
AIM V.I. VALUE
6/30/95-6/30/96 NO. YEAR 1.000

TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE

INIT DEPOSIT 30-Jun-95 1000.00 8.962818 111.57205
FEE 28-Jun-96 1.1666667 10.261719 0.11369

RESULTING VALUE 28-Jun-96 10.261719 111.45836 1143.7544

1.000
FORMULA: 1000*(1+T)= 1143.7544 -($1000)*(0.9)*(0.06)
= 1089.7544
T = 8.98%
R = 8.98%
</TABLE>

<PAGE>

POWER OF ATTORNEY

WITH RESPECT TO THE ALLSTATE LIFE OF NEW YORK
SEPARATE ACCOUNT A

Know all men by these presents that Sharmaine M. Miller, whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, her attorneys-in-fact, with power of substitution,
and her in any and all capacities, to sign any Form N-4 registration statements
and amendments thereto for the Allstate Life of New York Separate Account A and
to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.

September 16, 1996
________________________
Date

/s/ SHARMAINE M. MILLER
------------------------
Sharmaine M. Miller
Chief Administrative Officer
and Director
Allstate Life Insurance Company
of New York
<PAGE>

POWER OF ATTORNEY

WITH RESPECT TO THE ALLSTATE LIFE OF NEW YORK
SEPARATE ACCOUNT A

Know all men by these presents that Kevin R. Slawin, whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, his attorneys-in-fact, with power of substitution,
and him in any and all capacities, to sign any Form N-4 registration statements
and amendments thereto for the Allstate Life of New York Separate Account A and
to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.

September 18, 1996
-------------------------------
Date

/s/ KEVIN R. SLAWIN
------------------------
Kevin R. Slawin
Vice President
and Director
Allstate Life Insurance Company
of New York

<PAGE>

POWER OF ATTORNEY

WITH RESPECT TO THE ALLSTATE LIFE OF NEW YORK
SEPARATE ACCOUNT A

Know all men by these presents that Karen C. Gardner, whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, her attorneys-in-fact, with power of substitution,
and her in any and all capacities, to sign any Form N-4 registration statements
and amendments thereto for the Allstate Life of New York Separate Account A and
to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.

September 18, 1996
-----------------------------------
Date

/s/ KAREN C. GARDNER
-----------------------------------
Karen C. Gardner
Vice President
Allstate Life Insurance Company
of New York
<PAGE>

POWER OF ATTORNEY

WITH RESPECT TO THE ALLSTATE LIFE OF NEW YORK
SEPARATE ACCOUNT A

Know all men by these presents that Thomas A. McAvity, Jr., whose signature
appears below, constitutes and appoints Louis G. Lower, II, and Michael J.
Velotta, and each of them, his attorneys-in-fact, with power of substitution,
and him in any and all capacities, to sign any Form N-4 registration statements
and amendments thereto for the Allstate Life of New York Separate Account A and
to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.

September 18, 1996
-------------------------------
Date

/s/ THOMAS A. McAVITY, Jr.
-------------------------------
Thomas A. McAvity, Jr.
Vice President
Allstate Life Insurance Company
of New York
<PAGE>

POWER OF ATTORNEY

WITH RESPECT TO THE ALLSTATE LIFE OF NEW YORK
SEPARATE ACCOUNT A

Know all men by these presents that Casey J. Sylla, whose signature appears
below, constitutes and appoints Louis G. Lower, II, and Michael J. Velotta, and
each of them, his attorneys-in-fact, with power of substitution, and him in any
and all capacities, to sign any Form N-4 registration statements and amendments
thereto for the Allstate Life of New York Separate Account A and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.

September 18, 1996
--------------------------------
Date

/s/ CASEY J. SYLLA
--------------------------------
Casey J. Sylla
Chief Investment Officer
Allstate Life Insurance Company
of New York

<PAGE>

<ARTICLE> 7
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> 6-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> JUN-30-1996 DEC-31-1995
<DEBT-HELD-FOR-SALE> 1,323,712 1,424,893
<DEBT-CARRYING-VALUE> 0 0
<DEBT-MARKET-VALUE> 0 0
<EQUITIES> 0 0
<MORTGAGE> 83,403 86,394
<REAL-ESTATE> 0 0
<TOTAL-INVEST> 1,462,487 1,541,329
<CASH> 1,957 1,472
<RECOVER-REINSURE> 3,009 3,331
<DEFERRED-ACQUISITION> 58,127 53,944
<TOTAL-ASSETS> 1,793,492 1,842,969
<POLICY-LOSSES> 824,929 838,739
<UNEARNED-PREMIUMS> 0 0
<POLICY-OTHER> 0 0
<POLICY-HOLDER-FUNDS> 509,737 499,548
<NOTES-PAYABLE> 0 0
<COMMON> 2,000 2,000
0 0
0 0
<OTHER-SE> 208,465 248,067
<TOTAL-LIABILITY-AND-EQUITY> 1,793,492 1,842,969
57,221 148,316
<INVESTMENT-INCOME> 55,424 104,384
<INVESTMENT-GAINS> 351 (1,846)
<OTHER-INCOME> 0 0
<BENEFITS> 85,389 198,055
<UNDERWRITING-AMORTIZATION> 2,965 5,502
<UNDERWRITING-OTHER> 0 0
<INCOME-PRETAX> 16,228 29,433
<INCOME-TAX> 5,990 9,911
<INCOME-CONTINUING> 10,238 19,522
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 10,238 19,522
<EPS-PRIMARY> 127.98 244.02
<EPS-DILUTED> 127.98 244.02
<RESERVE-OPEN> 5,009 3,527
<PROVISION-CURRENT> 7,738 10,806
<PROVISION-PRIOR> 62 134
<PAYMENTS-CURRENT> 6,614 9,398
<PAYMENTS-PRIOR> 215 60
<RESERVE-CLOSE> 5,980 5,009
<CUMULATIVE-DEFICIENCY> 0 0

</TABLE>