ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A, 497, 1996-10-21

ALLSTATE LIFE OF NEW YORK SEPARATE ACCOUNT A
497, 1996-10-21

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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 PlusSM 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 1, 1996 with the U.S. Securities and Exchange Commission. If you
wish to receive the Statement of Additional Information, you may obtain a free
copy by calling or writing the Company at the address 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.

PROSPECTUS
October 1, 1996
<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
Mortality and Expense Risk Charge......................................... 16
Taxes..................................................................... 16
Transfer Charges.......................................................... 16
Fund Expenses............................................................. 16
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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
Delayed Maturity Dates.................................................. 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
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS............................................................... 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1996........................... 25
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
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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 11 and "Income Plans,"
page 13. 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 9.

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 11.

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 10. 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 11.

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 9.

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 11. You may want to enroll in a Dollar Cost
Averaging Program or an Automatic Fund Rebalancing Program. See "Dollar Cost
Averaging," page 12, and "Automatic Fund Rebalancing," page 12.

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 15,
"Mortality and Expense Risk Charge," page 16, "Administrative Expense Charge,"
page 16, "Transfer Charges," page 16, and "Taxes," page 16.

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 12, "Withdrawals or Transfers," page 10, and "Taxation of
Annuities in General," page 17.

4
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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 14.

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 13.

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 10, 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 17.

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
17.

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
<PAGE>

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

13
<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.

14
<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 17.

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.

15
<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.

16
<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.

17
<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

18
<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

19
<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 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 and
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>

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 1, 1996, has been filed with the United States
Securities and Exchange Commission.

Dated October 1, 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

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

TAXATION OF ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

The Company is taxed as a life insurance company under Part I of Subchapter
L of the Internal Revenue Code. 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.