UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

                                   Form 10-K

             Annual Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

The registrant meets the conditions set forth in General Instruction I(1)(a) and
(b) of Form 10-K and is therefore  filing this Form with the reduced  disclosure
format.

For fiscal year ended December 31, 1999 Commission file numbers:  033-50884
                                                                  033-84480
                                                                  033-90272
                                                                  333-25057
                                                                  033-35412
                                                                  002-82511

                       Northbrook Life Insurance Company
                       ---------------------------------
            (Exact name of registrant as specified in its charter)

            ARIZONA                                       36-3001527
            ---------                                     -----------
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                        Identification No.)

                               3100 Sanders Road
                          Northbrook, Illinois 60062
              (Address of Principal executive offices)(Zip Code)

                                 847/402-5000
             (Registrant's telephone number, including area code)

      Securities registered pursuant to Section 12(b) of the Act: None
      Securities registered pursuant to Section 12(g) of the Act: None

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

               Yes       x                  No
                      ---------                     ---------

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     As of December 31, 1999,  there were 25,000 shares of common  capital stock
outstanding,  par value $100 per share, all of which shares are held by Allstate
Life Insurance Company.

<PAGE>

                       NORTHBROOK LIFE INSURANCE COMPANY
             (A wholly owned subsidiary of Allstate Life Insurance Company)

                      Annual Report for 1999 On Form 10-K

                               TABLE OF CONTENTS

                                                                    PAGE
                                                                    ----

PART I

ITEM 1.       Business**............................................ 3
ITEM 2.       Properties**.......................................... 4
ITEM 3.       Legal Proceedings..................................... 4
ITEM 4.       Submission of Matters to a Vote of Security Holders*..N/A

PART II

ITEM 5.       Market for Registrant's Common Equity and
              Related Stockholder Matters........................... 5
ITEM 6.       Selected Financial Data*..............................N/A
ITEM 7.       Management's Discussion and Analysis of Financial
              Condition and Results of Operations................... 6
ITEM 7A.      Quantitative and Qualitative Disclosures About
              Market Risk...........................................13
ITEM 8.       Financial Statements and Supplementary Data...........13
ITEM 9.       Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure...................13

PART III

ITEM 10.      Directors and Executive Officers of the Registrant*...N/A
ITEM 11.      Executive Compensation*...............................N/A
ITEM 12.      Security Ownership of Certain Beneficial Owners and
              Management*...........................................N/A
ITEM 13.      Certain Relationships and Related Transactions*.......N/A

PART IV

ITEM 14.      Exhibits, Financial Statement Schedules, and
              Reports on Form 8-K...................................13

Index to Financial Statement Schedules..............................14
Signatures..........................................................15
Exhibit Index.......................................................E-1

*  Omitted pursuant to General Instruction I(2) of Form 10-K.
** Item prepared in accordance with General Instruction I(2) of Form 10-K.


<PAGE>

                                     PART I

ITEM 1.  BUSINESS

     Northbrook Life Insurance  Company  (hereinafter  "Northbrook  Life" or the
"Company"),  incorporated  in 1978 as a stock life  insurance  company under the
laws of the State of Illinois and  redomesticated to Arizona in December,  1998.
The  Company  has  done  business   continuously   since  its  incorporation  as
"Northbrook Life Insurance Company."

     Northbrook  Life is a wholly owned  subsidiary of Allstate  Life  Insurance
Company ("ALIC"),  a stock life insurance company incorporated under the laws of
Illinois.  ALIC is a wholly  owned  subsidiary  of  Allstate  Insurance  Company
("AIC"),  a stock  property-liability  insurance company  incorporated under the
laws of Illinois.  All of the  outstanding  capital stock of AIC is owned by The
Allstate Corporation ("Corporation").

     Northbrook Life's  operations  consist of one business segment which is the
sale of life insurance and savings products.

Northbrook Life and ALIC entered into reinsurance agreements, effective December
31,  1987,  under  which  Northbrook  Life  reinsures  substantially  all of its
business with ALIC. Under the agreements,  purchase payments under substantially
all general  account  contracts are transferred to ALIC and become invested with
the assets of ALIC, and ALIC is bound to stand behind the Company's  contractual
obligations to its  policyholders.  However,  the  obligations of ALIC under the
reinsurance  agreements are to the Company.  In addition,  assets of the Company
that  relate  to  insurance  in-force  excluding  Separate  Account  assets  are
transferred to ALIC. Therefore, the funds necessary to support the operations of
the  Company  are  provided  by ALIC and the  Company is not  required to obtain
additional capital to support in-force or future business.

     Under the Company's reinsurance agreements with ALIC, the Company reinsures
substantially all reserve  liabilities with ALIC except for variable  contracts.
The Company's  variable  contract  assets and  liabilities  are held in legally-
segregated, unitized Separate Accounts and are retained by the Company. However,
the transactions  related to such variable contracts such as premiums,  expenses
and benefits are transferred to ALIC.




                                       3
<PAGE>



     Northbrook  Life's and ALIC's  general  account  assets must be invested in
accordance with applicable  state laws. These laws govern the nature and quality
of investments  that may be made by life insurance  companies and the percentage
of their assets that may be committed to any particular  type of investment.

     Northbrook Life 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 1,700 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+(Superior) to ALIC which automatically reinsures all
net business of Northbrook Life. A.M. Best Company also assigns  Northbrook Life
the rating of A+(r) because Northbrook Life automatically reinsures all business
with Allstate Life.  Standard & Poor's  Insurance  Rating  Services  assigns AA+
(Excellent) to the Company's claims-paying ability and Moody's Investors Service
assigns an Aa2 (excellent) financial strength rating to the Company.  Northbrook
Life shares the same ratings of its parent, ALIC.

     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  measures  which may  significantly
affect the  Company's  insurance  business  relate to the  taxation of insurance
companies,  the tax treatment of insurance  products and the removal of barriers
preventing banks from engaging in the insurance business.

     Northbrook Life is registered  with the Securities and Exchange  Commission
("SEC") as an issuer of  registered  products.  The SEC also  regulates  certain
Northbrook  Life  Separate  Accounts  which issue  variable  life  contracts or,
together with the Company, issue variable annuity contracts.

ITEM 2.  PROPERTIES

     Northbrook  Life  occupies  office  space  provided  by AIC in  Northbrook,
Illinois.  Expenses  associated  with these  offices are allocated to Northbrook
Life.

ITEM 3.  LEGAL PROCEEDINGS

     The  Company  and  its  Board  of  Directors  know  of  no  material  legal
proceedings  pending to which the Company is a party or which  would  materially
affect the Company. 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 position or results of operations of the Company.




                                       4
<PAGE>



                                 PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     All of the Company's  outstanding shares are owned by its parent, ALIC. All
of ALIC's  outstanding shares are owned by AIC. All of the outstanding shares of
AIC are owned by The Corporation.






                                       5
<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


                        NORTHBROOK LIFE INSURANCE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         The following discussion highlights significant factors influencing
results of operations and changes in financial position of Northbrook Life
Insurance Company (the "Company"). It should be read in conjunction with the
financial statements and related notes. To conform with the 1999 presentation,
certain prior year amounts have been reclassified.

         The Company, a wholly owned subsidiary of Allstate Life Insurance
Company ("ALIC"), which is a wholly owned subsidiary of Allstate Insurance
Company ("AIC"), a wholly owned subsidiary of The Allstate Corporation (the
"Corporation"), markets savings and life insurance products through Dean Witter
Reynolds Inc., a wholly owned subsidiary of Morgan Stanley Dean Witter & Co.
Savings products include deferred annuities and immediate annuities without life
contingencies. Deferred annuities include fixed rate, market value adjusted, and
variable annuities. Life insurance consists of interest-sensitive life,
immediate annuities with life contingencies, and variable life insurance.

         The Company has identified itself as a single segment entity.

         The assets and liabilities related to variable annuity and variable
life contracts are legally segregated and reflected as Separate Accounts. The
assets of the Separate Accounts are carried at fair value. Separate Accounts
liabilities represent the contractholders' claim to the related assets and are
carried at the fair value of the assets. In the event that the asset value of
certain contractholder accounts are projected to be below the value guaranteed
by the Company, a liability is established through a charge to earnings.
Investment income and realized capital gains and losses of the Separate Accounts
accrue directly to the contractholders and therefore, are not included in the
Company's statements of operations and comprehensive income.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>


($ in thousands)

                                                 1999       1998       1997
                                               --------   --------   --------
<S>                                            <C>        <C>        <C>
Net investment income                          $  6,010   $  5,691   $  5,146
                                               --------   --------   --------
                                               --------   --------   --------
Realized capital gains and losses, after-tax   $    332   $      1   $    (44)
                                               --------   --------   --------
                                               --------   --------   --------

Net income                                     $  4,256   $  3,698   $  3,322
                                               --------   --------   --------
                                               --------   --------   --------

Total investments                              $ 90,168   $ 91,419   $ 79,433
                                               --------   --------   --------
                                               --------   --------   --------

</TABLE>


         The Company has reinsurance agreements under which substantially all
contract and policy related transactions are transferred to ALIC. The Company's
results of operations include only net investment income and realized capital
gains and losses earned on the assets of the Company that are not transferred
under reinsurance agreements.

         Net income for 1999 increased $558 thousand to $4.3 million from $3.7
million in 1998. The increase was driven by realized capital gains from the sale
of mortgage-backed securities and higher net investment income. In 1998, net
income increased $376 thousand primarily as a result of increased net investment
income.

         Pretax net investment income increased 5.6% to $6.0 million in 1999 as
higher investment balances, before the impact of unrealized gains and losses on
fixed income securities, were partially offset by increased investment expenses
and lower investment yields. In 1998, pretax


                                       6

<PAGE>


                        NORTHBROOK LIFE INSURANCE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


investment income increased 10.6% to $5.7 million due to higher investment
balances and lower investment expenses. For both years, the higher investment
balances arose from positive cash flows from operating activities. In addition,
in 1998, positive cash flows from operating activities were favorably impacted
by changes in inter-company settlement procedures. Investments, excluding
Separate Accounts and unrealized gains and losses on fixed income securities,
grew 7.1% and 14.2% in 1999 and 1998, respectively. Despite recent increases in
interest rates, current investment yields are still lower than average portfolio
yields, therefore funds from maturing investments were generally reinvested at
lower yields resulting in reduced investment income. If interest rates continue
to rise, this trend may reverse over time.

         Realized capital gains, after-tax, were $332 thousand in 1999 compared
to $1 thousand in 1998. In 1999, realized capital gains resulted from the sale
of mortgage-backed securities. Year-to-year fluctuations in realized capital
gains are largely the result of the timing of sales decisions reflecting
management's view of individual securities and overall market conditions.

FINANCIAL POSITION

($ in thousands)

<TABLE>
<CAPTION>

                                              1999         1998
                                           ----------   ----------
<S>                                        <C>          <C>
Fixed income securities (1)                $   86,998   $   86,336
Short-term investments                          3,170        5,083
                                           ----------   ----------
         Total investments                 $   90,168   $   91,419
                                           ----------   ----------
                                           ----------   ----------

Reinsurance recoverable from ALIC          $2,022,502   $2,148,091
                                           ----------   ----------
                                           ----------   ----------

Separate Accounts assets and liabilities   $8,211,996   $7,031,083
                                           ----------   ----------
                                           ----------   ----------

Contractholder funds                       $1,871,933   $2,003,122
                                           ----------   ----------
                                           ----------   ----------

</TABLE>

(1)  Fixed income securities are carried at fair value. Amortized cost for these
     securities was $89,205 and $81,156 at December 31, 1999 and 1998,
     respectively.

         Total investments were $90.2 million at December 31, 1999 compared to
$91.4 million at December 31, 1998. In 1999, positive cash flows generated from
operations were more than offset by unrealized losses on fixed income
securities.

FIXED INCOME SECURITIES The Company's fixed income securities portfolio consists
of publicly traded corporate bonds, mortgage-backed securities, U.S. government
bonds and tax-exempt municipal bonds. The Company generally holds its fixed
income securities to maturity, but has classified all of these securities as
available for sale to allow maximum flexibility in portfolio management. At
December 31, 1999, unrealized net capital losses on the fixed income securities
portfolio totaled $2.2 million compared to unrealized net capital gains of $5.2
million at December 31, 1998. The change in the unrealized position is primarily
attributable to an increase in interest rates.

         At December 31, 1999, all of the Company's fixed income securities
portfolio was rated investment grade, which is defined by the Company as a
security having a National Association of Insurance Commissioners ("NAIC")
rating of 1 or 2, a Moody's rating of Aaa, Aa, A or Baa, or a comparable Company
internal rating. The quality mix of the Company's fixed income securities
portfolio at December 31, 1999 is presented in the following table.


                                       7

<PAGE>


                        NORTHBROOK LIFE INSURANCE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
($ in thousands)
 NAIC
RATINGS    MOODY'S EQUIVALENT DESCRIPTION      FAIR VALUE     PERCENT TO TOTAL
-------    ------------------------------      ----------     ----------------
<S>        <C>                                  <C>               <C>
   1       Aaa/Aa/A                             $76,684            88.1%
   2       Baa                                   10,314            11.9
                                                -------           -----
                                                $86,998           100.0%
                                                -------           -----
                                                -------           -----

</TABLE>


         At December 31, 1999 and 1998, $18.7 million and $40.0 million,
respectively, of the fixed income securities portfolio was invested in
mortgage-backed securities ("MBS"). The MBS portfolio consists primarily of
securities which were issued by or have underlying collateral that is guaranteed
by U.S. government agencies or sponsored entities, thus minimizing credit risk.

         The MBS portfolio is subject to interest rate risk since the price
volatility and ultimate realized yield are affected by the rate of repayment of
the underlying mortgages. The Company attempts to limit interest rate risk on
these securities by investing a portion of the portfolio in securities that
provide prepayment protection. At December 31, 1999, over 24% of the MBS
portfolio was invested in planned amortization class bonds.

         The Company closely monitors its fixed income securities 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.

SHORT-TERM INVESTMENTS The Company's short-term investment portfolio was $3.2
million and $5.1 million at December 31, 1999 and 1998, respectively. The
Company invests available cash balances primarily in taxable short-term
securities having a final maturity date or redemption date of one year or less.

CONTRACTHOLDER FUNDS AND REINSURANCE RECOVERABLE FROM ALIC During 1999,
contractholder funds decreased by $131.2 million and reinsurance recoverable
from ALIC under reinsurance agreements decreased by $125.6 million. Deposits and
higher levels of interest credited to contractholders were more than offset by
fixed annuity surrenders and withdrawals and transfers to the Separate Accounts.
Reinsurance recoverable from ALIC relates to contract benefit obligations ceded
to ALIC.

SEPARATE ACCOUNTS Separate Accounts assets and liabilities increased 16.8% to
$8.21 billion in 1999. The increases were primarily attributable to increased
sales of variable annuity contracts and favorable investment performance of the
Separate Accounts investment portfolios, partially offset by variable annuity
surrenders and withdrawals.

MARKET RISK

         Market risk is the risk that the Company will incur losses due to
adverse changes in equity prices or interest rates. The Company's primary market
risk exposure is to changes in interest rates, although the Company also has
certain exposures to changes in equity prices.

CORPORATE OVERSIGHT In formulating and implementing policies for investing new
and existing funds, the Corporation, an indirect parent of the Company,
administers and oversees investment risk management processes primarily through
the Boards of Directors and Investment Committees of its operating subsidiaries,
and the Credit and Risk Management Committee ("CRMC"). The Boards of Directors
and Investment Committees provide executive oversight of


                                       8

<PAGE>


                        NORTHBROOK LIFE INSURANCE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


investment activities. The CRMC is a senior management committee consisting of
the Chief Investment Officer, the Investment Risk Manager, and other investment
officers who are responsible for the day-to-day management of market risk. The
CRMC meets at least monthly to provide detailed oversight of investment risk,
including market risk.

         The Corporation has investment guidelines that define the overall
framework for managing market and other investment risks, including the
accountabilities and controls over these activities. In addition, AIC has
specific investment policies for each of its affiliates, including the Company,
that delineate the investment limits and strategies that are appropriate for the
Company's liquidity, surplus, product and regulatory requirements.

INTEREST RATE RISK Interest rate risk is the risk that the Company will incur
economic losses due to adverse changes in interest rates, as the Company invests
substantial funds in interest-sensitive assets.

         One of the measures used to quantify this exposure is duration.
Duration measures the sensitivity of the fair value of assets to changes in
interest rates. For example, if interest rates increase 1%, the fair value of an
asset with a duration of 5 years is expected to decrease in value by
approximately 5%. At December 31, 1999, the Company's asset duration was
approximately 4.9 years, versus 4.1 years at December 31, 1998.

         To calculate duration, the Company projects asset cash flows, and
discounts them to a net present value basis using a risk-free market rate
adjusted for credit quality, sector attributes, liquidity and other specific
risks. Duration is calculated by revaluing these cash flows at an alternative
level of interest rates, and determining the percentage change in fair value
from the base case. The projections include assumptions (based upon historical
market and Company specific experience) reflecting the impact of changing
interest rates on the prepayment and/or option features of instruments, where
applicable. Such assumptions relate primarily to mortgage-backed securities,
collateralized mortgage obligations, and municipal and corporate obligations.

         Based upon the information and assumptions the Company uses in its
duration calculation and interest rates in effect at December 31, 1999,
management estimates that a 100 basis point immediate, parallel increase in
interest rates ("rate shock") would decrease the net fair value of its assets
identified above by approximately $4.3 million, an increase over the $3.5
million at December 31, 1998. The selection of a 100 basis point immediate
parallel increase in interest rates should not be construed as a prediction by
the Company's management of future market events, but rather, is intended to
illustrate the potential impact of such an event.

         To the extent that actual results differ from the assumptions utilized,
the Company's duration and rate shock measures could be significantly impacted.
Additionally, the Company's calculation assumes that the current relationship
between short-term and long-term interest rates (the term structure of interest
rates) will remain constant over time. As a result, these calculations may not
fully capture the impact of non-parallel changes in the term structure of
interest rates and/or large changes in interest rates.

EQUITY PRICE RISK Equity price risk is the risk that the Company will incur
economic losses due to adverse changes in a particular stock, stock fund or
stock index. At December 31, 1999, the Company had variable annuity and variable
life funds with balances totaling $8.21 billion. This is an increase over the
$7.0 billion of variable funds at December 31, 1998. The Company earns mortality
and expense fees as a percentage of fund balance. In the event of an immediate
decline of 10% in the fund balances due to equity market declines, the Company
would earn approximately $11.1 million less in annualized fee income, which
would be ceded to ALIC. This is a slight increase over the $9.5 million amount
determined at December 31, 1998. The


                                       9

<PAGE>


                        NORTHBROOK LIFE INSURANCE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


contractholder of a variable annuity product may elect to purchase a minimum
death benefit guarantee or a minimum income benefit guarantee, generally at the
time of purchase. Both guarantees may subject the Company to additional equity
price risk, as the beneficiary or contractholder may receive their benefit for
an amount greater than the fund balance under contractually defined
circumstances and terms. The Company recorded actuarially determined reserves as
of December 31, 1999 for these exposures and has ceded them to either ALIC or a
third party. The Company expects growth in its variable annuity products in the
future, stemming from both new sales as well as market value appreciation, which
will increase its exposure to equity price risk.

LIQUIDITY AND CAPITAL RESOURCES

         Under the terms of reinsurance agreements, substantially all premiums
and deposits, excluding those relating to Separate Accounts, are transferred to
ALIC, which maintains the investment portfolios supporting the Company's
products. Substantially all payments of policyholder claims, benefits, contract
maturities, contract surrenders and withdrawals and certain operating costs are
also reimbursed by ALIC, under the terms of the reinsurance agreements. The
Company continues to have primary liability as a direct insurer for risks
reinsured. The Company's ability to meet liquidity demands is dependent on
ALIC's ability to meet those demands. ALIC's claims-paying ability was rated
Aa2, AA+ and A+ by Moody's, Standard and Poor's and A.M. Best, respectively, at
December 31, 1999.

         The primary sources for the remainder of the Company's funds are
collection of principal and interest from the investment portfolio and capital
contributions from ALIC. The primary uses for the remainder of the Company's
funds are to purchase investments and pay costs associated with the maintenance
of the Company's investment portfolio.

         At December 31, 1999, the Moody's and Standard and Poor's claims-paying
rating for the Company were Aa2 and AA+, respectively.

         The 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, business, asset and interest rate risks. At December 31,
1999, RBC for the Company was significantly above a level that would require
regulatory action.

YEAR 2000

         The Company is dependent upon certain service provided for it by the
Corporation including computer-related systems, and systems and equipment that
are not typically thought of as computer-related (referred to as "non-IT"). For
this reason, the Company is reliant upon the Corporation for the establishment
and maintenance of its computer-related systems and non-IT.

         In 1995, the Corporation commenced a four phase plan which included
reprogramming, remediating or replacing computer systems and equipment which may
have failed to operate properly in or after the year 1999, due to the inability
of the systems and equipment to only recognize the last two digits of the year
in any date ("Year 2000"). Because of the comprehensiveness of the Corporation's
plan, and its timely completion, the Corporation has experienced no material
impacts on its results of operations, liquidity or financial position due to the
Year 2000 issue. The Corporation expects to incur total costs related to this
plan of $109


                                      10

<PAGE>


                        NORTHBROOK LIFE INSURANCE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


million between the years of 1995 and 2000. These costs are expensed as
incurred. A portion of these costs were incurred by the Company on a pro rata
basis of usage of computer-related systems and non-IT, as compared to the usage
of all the entities which shares these services with the Corporation. These
amounts were not material to the results of operations of the Company.

OTHER DEVELOPMENTS

         The NAIC's codification initiative has produced a comprehensive guide
of statutory accounting principles, which the Company will implement in January
2001. The Company's state of domicile, Arizona, has passed legislation revising
various statutory accounting requirements to conform to codification. These
requirements are not expected to have a material impact on the statutory surplus
of the Company.

FORWARD-LOOKING STATEMENTS

         The statements contained in this Management's Discussion and Analysis
that are not historical information are forward-looking statements that are
based on management's estimates, assumptions and projections. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor under The
Securities Act of 1933 and The Securities Exchange Act of 1934 for
forward-looking statements.


                                       11



<PAGE>



ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The pertinent  provisions of  Management's  Discussion and Analysis of Financial
Condition and Results of Operations are herein incorporated by reference.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Statements filed with this Report.

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

No disclosure required by this Item.



                                       12

<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         (a) DOCUMENTS FILED AS PART OF THIS REPORT

     1. FINANCIAL STATEMENTS.  The Registrant's  financial  statements,  for the
year  ended  December  31,  1998,   together  with  the  Report  of  Independent
Accountants are set forth on pages F-1 - F-20 of this report.

     2. FINANCIAL STATEMENT SCHEDULES.  The following are included in Part IV of
this report:

     Schedule IV - Reinsurance page F-20

     All other  schedules  have been omitted  because they are not applicable or
not required or because the required  information  is included in the  financial
statements or notes thereto.

     3.  EXHIBITS.  The exhibits  required to be filed by Item 601 of Regulation
S-K are listed under the caption "Exhibits" in Item 14(c).

     (b) REPORTS ON FORM 8-K

No reports on Form 8-K were filed for the quarter ended December 31, 1998.

     (c) EXHIBITS

Exhibit No.    Description

3(i)           Amended and Restated Articles of Incorporation and Articles of
               Redomestication of Northbrook Life Insurance Company
               (previously filed in Form 10-K, dated March 30, 1999)

3(ii)          Amended and Restated By-laws of Northbrook Life Insurance
               Company (previously filed in Form 10-K, dated March 30, 1999)

27             Financial Data Schedule (filed herewith)

99             Power of Attorney (filed herewith)

                                       13
<PAGE>




                              Financial Statements

                                     Index
                                     -----

                                                                            Page
                                                                            ----

Independent Auditors' Report............................................... F-1

Financial Statements:


     Statements of Financial Position
      December 31, 1999 and 1998........................................... F-2

     Statements of Operations and Comprehensive Income for the Years Ended
      December 31, 1999, 1998 and 1997..................................... F-3

     Statements of Shareholder's Equity for the Years Ended
      December 31, 1999, 1998 and 1997..................................... F-4

     Statements of Cash Flows for the Years Ended
      December 31, 1999, 1998 and 1997..................................... F-5

     Notes to Financial Statements......................................... F-6

     Schedule IV - Reinsurance for the Years Ended
      December 31, 1999, 1998 and 1997..................................... F-20




                                      14
<PAGE>



INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND SHAREHOLDER OF
NORTHBROOK LIFE INSURANCE COMPANY:

We have audited the accompanying Statements of Financial Position of Northbrook
Life Insurance Company (the "Company", an affiliate of The Allstate Corporation)
as of December 31, 1999 and 1998, and the related Statements of Operations and
Comprehensive Income, Shareholder's Equity and Cash Flows for each of the three
years in the period ended December 31, 1999. Our audits also included Schedule
IV -Reinsurance. These financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedule based
on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1999 and
1998, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1999 in conformity with generally
accepted accounting principles. Also, in our opinion, Schedule IV - Reinsurance,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.




/s/ Deloitte & Touche LLP

Chicago, Illinois
February 25, 2000

                                      F-1
<PAGE>

<TABLE>
<CAPTION>

                        NORTHBROOK LIFE INSURANCE COMPANY
                        STATEMENTS OF FINANCIAL POSITION


                                                                       December 31,
                                                              -----------------------------
                                                                   1999             1998
                                                              -------------    ------------
($ in thousands, except par value data)
<S>                                                           <C>              <C>
ASSETS
Investments
   Fixed income securities, at fair value
      (amortized cost $89,205 and $81,156)                     $     86,998    $     86,336
   Short-term                                                         3,170           5,083
                                                               ------------    ------------
         Total investments                                           90,168          91,419

Cash                                                                     21            --
Reinsurance recoverable from
   Allstate Life Insurance Company                                2,022,502       2,148,091
Other assets                                                          5,997           6,705
Separate Accounts                                                 8,211,996       7,031,083
                                                               ------------    ------------
         TOTAL ASSETS                                          $ 10,330,684    $  9,277,298
                                                               ============    ============
LIABILITIES
Reserve for life-contingent contract benefits                   $   150,587    $    145,055
Contractholder funds                                              1,871,933       2,003,122
Current income taxes payable                                          2,171           1,830
Deferred income taxes                                                   746           3,316
Payable to affiliates, net                                            5,990           5,085
Separate Accounts                                                 8,211,996       7,031,083
                                                               ------------    ------------
         TOTAL LIABILITIES                                       10,243,423       9,189,491
                                                               ============    ============
Commitments and Contingent Liabilities (Note 12)

SHAREHOLDER'S EQUITY
Common stock, $100 par value, 25,000 shares
      authorized, issued and outstanding                              2,500           2,500
Additional capital paid-in                                           56,600          56,600
Retained income                                                      29,596          25,340

Accumulated other comprehensive (loss) income:
    Unrealized net capital (losses) gains                            (1,435)          3,367
                                                               ------------    ------------
         TOTAL ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME         (1,435)          3,367
                                                               ------------    ------------
         TOTAL SHAREHOLDER'S EQUITY                                  87,261          87,807
                                                               ------------    ------------
         TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY            $ 10,330,684    $  9,277,298
                                                               ============    ============
</TABLE>

See notes to financial statements.

                                        F-2


<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                            STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>

                                                       Year Ended December 31,
                                                    ----------------------------
($ in thousands)                                      1999      1998       1997
                                                    -------    -------   -------
<S>                                                  <C>      <C>        <C>
REVENUES
Net investment income                               $ 6,010    $ 5,691   $ 5,146
Realized capital gains and losses                       510          2       (68)
                                                    -------    -------   -------
Income from operations
  before income tax expense                           6,520      5,693     5,078
Income tax expense                                    2,264      1,995     1,756
                                                    -------    -------   -------
NET INCOME                                            4,256      3,698     3,322
                                                    -------    -------   -------
Other comprehensive (loss) income, after-tax
Change in unrealized net capital gains and losses    (4,802)       825     1,256
                                                    -------    -------   -------
COMPREHENSIVE (LOSS) INCOME                         $  (546)   $ 4,523   $ 4,578
                                                    =======    =======   =======
</TABLE>

See notes to financial statements.

                                       F-3

<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                       STATEMENTS OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>

                                                           December 31,
                                                --------------------------------
                                                   1999       1998       1997
                                                ---------  ---------  ----------
<S>                                             <C>        <C>        <C>
($ in thousands)

COMMON STOCK                                    $  2,500    $  2,500   $  2,500
                                                --------    --------   --------
ADDITIONAL CAPITAL PAID-IN                      $ 56,600    $ 56,600   $ 56,600
                                                --------    --------   --------
RETAINED INCOME
Balance, beginning of year                      $ 25,340    $ 21,642   $ 18,320
Net income                                         4,256       3,698      3,322
                                                --------    --------   --------
Balance, end of year                              29,596      25,340     21,642
                                                --------    --------   --------

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance, beginning of year                      $  3,367    $  2,542   $  1,286
Change in unrealized net capital gains
     and losses                                   (4,802)        825      1,256
                                                --------    --------   --------
Balance, end of year                              (1,435)      3,367      2,542
                                                --------    --------   --------
TOTAL SHAREHOLDER'S EQUITY                      $ 87,261    $ 87,807   $ 83,284
                                                ========    ========   ========
</TABLE>

See notes to financial statements.

                                       F-4


<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                                             --------------------------------
($ in thousands)                                               1999        1998        1997
                                                             --------    --------    --------
<S>                                                          <C>         <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                   $  4,256    $  3,698    $  3,322
Adjustments to reconcile net income to net cash
    provided by operating activities
         Amortization and other non-cash items                    559         518         516
         Realized capital gains and losses                       (510)         (2)         68
         Changes in:
             Life-contingent contract benefits and
               contractholder funds                               (68)        273         205
              Income taxes payable                                355       1,866        (480)
              Other operating assets and liabilities              924       4,126        (264)
                                                             --------    --------    --------
                 Net cash provided by operating activities      5,516      10,479       3,367
                                                             --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES
Fixed income securities
       Proceeds from sales                                     17,992       1,922       1,606
       Investment collections                                   6,555      10,253      10,036
       Investment purchases                                   (32,050)    (20,690)    (18,568)
Change in short-term investments, net                           2,008      (1,964)      3,559
                                                             --------    --------    --------
               Net cash used in investing activities           (5,495)    (10,479)     (3,367)
                                                             --------    --------    --------

NET INCREASE IN CASH                                               21        --          --
CASH AT THE BEGINNING OF YEAR                                    --          --          --
                                                             --------    --------    --------
CASH AT END OF YEAR                                          $     21    $   --      $   --
                                                             ========    ========    ========
</TABLE>

See notes to financial statements.

                                       F-5


<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

1.    GENERAL

BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Northbrook Life
Insurance Company (the "Company"), a wholly owned subsidiary of Allstate Life
Insurance Company ("ALIC"), which is wholly owned by Allstate Insurance Company
("AIC"), a wholly owned subsidiary of The Allstate Corporation (the
"Corporation"). These financial statements have been prepared in conformity with
generally accepted accounting principles.

To conform with the 1999 presentation, certain amounts in the prior years'
financial statements and notes have been reclassified.

NATURE OF OPERATIONS
The Company markets savings and life insurance products exclusively through Dean
Witter Reynolds, Inc. ("Dean Witter") (see Note 4), a wholly owned subsidiary of
Morgan Stanley Dean Witter & Co. Savings products include deferred annuities and
immediate annuities without life contingencies. Deferred annuities include fixed
rate, market value adjusted, and variable annuities. Life insurance consists of
interest-sensitive life, immediate annuities with life contingencies, and
variable life insurance. In 1999, substantially all of the Company's statutory
premiums and deposits were from annuities.

 Annuity contracts and life insurance policies issued by the Company are subject
to discretionary surrender or withdrawal by customers, subject to applicable
surrender charges. These policies and contracts are reinsured primarily with
ALIC (see Note 3), which invests premiums and deposits to provide cash flows
that will be used to fund future benefits and expenses.

The Company monitors economic and regulatory developments which have the
potential to impact its business. Recently enacted federal legislation will
allow for banks and other financial organizations to have greater participation
in the securities and insurance businesses. This legislation may present an
increased level of competition for sales of the Company's products. Furthermore,
the market for deferred annuities and interest-sensitive life insurance is
enhanced by the tax incentives available under current law. Any legislative
changes which lessen these incentives are likely to negatively impact the demand
for these products.

Additionally, traditional demutualizations of mutual insurance companies and
enacted and pending state legislation to permit mutual insurance companies to
convert to a hybrid structure known as a mutual holding company could have a
number of significant effects on the Company by (1) increasing industry
competition through consolidation caused by mergers and acquisitions related to
the new corporate form of business; and (2) increasing competition in the
capital markets.

The Company is authorized to sell life and savings products in all states except
New York, as well as in the District of Columbia and Puerto Rico. The top
geographic locations for statutory premiums and deposits for the Company were
California, Florida, and Texas for the year ended December 31, 1999. No other
jurisdiction accounted for more than 5% of statutory premiums and deposits.
Substantially all premiums and deposits are ceded to ALIC under reinsurance
agreements.



                                       F-6


<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVESTMENTS
Fixed income securities include bonds and mortgage-backed securities. All fixed
income securities are carried at fair value and may be sold prior to their
contractual maturity ("available for sale"). The difference between amortized
cost and fair value, net of deferred income taxes, is reflected as a component
of shareholder's equity. Provisions are recognized for declines in the value of
fixed income securities that are other than temporary. Such writedowns are
included in realized capital gains and losses. Short-term investments are
carried at cost or amortized cost, which approximates fair value.

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

REINSURANCE RECOVERABLE
The Company has reinsurance agreements whereby substantially all premiums,
contract charges, credited interest, policy benefits and certain expenses are
ceded to ALIC. Such amounts are reflected net of such reinsurance in the
statements of operations and comprehensive income. Investment income earned on
the assets which support contractholder funds and the reserve for
life-contingent contract benefits is not included in the Company's financial
statements as those assets are owned and managed under terms of reinsurance
agreements. Reinsurance recoverable and the related reserve for life-contingent
contract benefits and contractholder funds are reported separately in the
statements of financial position. The Company continues to have primary
liability as the direct insurer for risks reinsured.

RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS AND INTEREST CREDITED
Interest-sensitive life contracts are insurance contracts whose terms are not
fixed and guaranteed. The terms that may be changed include premiums paid by the
contractholder, interest credited to the contractholder account balance and one
or more amounts assessed against the contractholder. Premiums from these
contracts are reported as deposits to contractholder funds. Contract charge
revenue consists of fees assessed against the contractholder account balance for
cost of insurance (mortality risk), contract administration and surrender
charges. Contract benefits include interest credited to contracts and claims
incurred in excess of the related contractholder account balance.

Contracts that do not subject the Company to significant risk arising from
mortality or morbidity are referred to as investment contracts. Fixed rate
annuities, market value adjusted annuities and immediate annuities without life
contingencies are considered investment contracts. Deposits received for such
contracts are reported as deposits to contractholder funds. Contract charge
revenue for investment contracts consists of charges assessed against the
contractholder account balance for contract

                                       F-7

<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

administration and surrender charges. Contract benefits include interest
credited and claims incurred in excess of the related contractholder account
balance.

Crediting rates for fixed rate annuities and interest-sensitive life contracts
are adjusted periodically by the Company to reflect current market conditions.

Investment contracts also include variable annuity and variable life contracts
which are sold as Separate Accounts products. The assets supporting these
products are legally segregated and available only to settle Separate Accounts
contract obligations. Deposits received are reported as Separate Accounts
liabilities. The Company's contract charge revenue for these contracts consists
of charges assessed against the Separate Accounts fund balances for contract
maintenance, administration, mortality, expense and surrenders.

All premiums, contract charges, contract benefits and interest credited are
reinsured.

INCOME TAXES
The income tax provision is calculated under the liability method and presented
net of reinsurance. Deferred tax assets and liabilities are recorded based on
the difference between the financial statement and tax bases of assets and
liabilities at the enacted tax rates. Deferred income taxes arise primarily from
unrealized capital gains and losses on fixed income securities carried at fair
value and differences in the tax bases of investments.

SEPARATE ACCOUNTS
The Company issues deferred variable annuity and variable life contracts, the
assets and liabilities of which are legally segregated and recorded as assets
and liabilities of the Separate Accounts. Absent any contract provisions wherein
the Company contractually guarantees either a minimum return or account value to
the beneficiaries of the contractholders in the form of a death benefit, the
contractholders bear the investment risk that the Separate Accounts' funds may
not meet their stated investment objectives.

The assets of the Separate Accounts are carried at fair value. Separate Accounts
liabilities represent the contractholders' claims to the related assets and are
carried at the fair value of the assets. In the event that the asset value of
certain contractholder accounts are projected to be below the value guaranteed
by the Company, a liability is established through a charge to earnings.
Investment income and realized capital gains and losses of the Separate Accounts
accrue directly to the contractholders and therefore, are not included in the
Company's statements of operations and comprehensive income. Revenues to the
Company from Separate Accounts consist of contract maintenance and
administration fees, and mortality, surrender and expense charges.

RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS
The reserve for life-contingent contract benefits, which relates to immediate
annuities with life contingencies and certain variable annuity contract
guarantees, is computed on the basis of assumptions as to mortality, future
investment yields, terminations and expenses at the time the policy is issued.
These assumptions include provisions for adverse deviation and generally vary by
such characteristics as type of coverage, year



                                       F-8
<PAGE>



                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)


of issue and policy duration. Detailed reserve assumptions and reserve interest
rates are outlined in Note 7.

CONTRACTHOLDER FUNDS
Contractholder funds arise from the issuance of interest-sensitive life and
certain investment contracts. Deposits received are recorded as interest-bearing
liabilities. Contractholder funds are equal to deposits received, net of
commissions, and interest credited to the benefit of the contractholder less
withdrawals, mortality charges and administrative expenses. Detailed information
on crediting rates and surrender and withdrawal protection on contractholder
funds are outlined in Note 7.

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

NEW ACCOUNTING STANDARDS
In 1999, the Company adopted Statement of Position ("SOP") 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments." The SOP
provides guidance concerning when to recognize a liability for insurance-related
assessments and how those liabilities should be measured. Specifically,
insurance-related assessments should be recognized as liabilities when all of
the following criteria have been met: 1) an assessment has been imposed or it is
probable that an assessment will be imposed, 2) the event obligating an entity
to pay an assessment has occurred and 3) the amount of the assessment can be
reasonably estimated. Adoption of this statement was not material to the
Company's results of operations or financial position.

3.    RELATED PARTY TRANSACTIONS

REINSURANCE
The Company has reinsurance agreements whereby substantially all premiums,
contract charges, credited interest, policy benefits and certain expenses are
ceded to ALIC and reflected net of such reinsurance in the statements of
operations and comprehensive income. Reinsurance recoverable and the related
reserve for life-contingent contract benefits and contracholder funds are
reported separately in the statements of financial position. The Company
continues to have primary liability as the direct insurer for risks reinsured.

Investment income earned on the assets which support contractholder funds and
the reserve for life-contingent contract benefits is not included in the
Company's financial statements as those assets are owned and managed under the
terms of the reinsurance agreements. The following amounts were ceded to ALIC
under reinsurance agreements.



                                       F-9


<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

<TABLE>
<CAPTION>

                                                      YEAR ENDED DECEMBER 31,
                                                      -----------------------
                                                    1999       1998        1997
                                                    ----       ----        ----
<S>                                               <C>        <C>        <C>
Premiums                                          $  2,966   $  2,528   $  1,979
Contract charges                                   118,290    102,218     83,559
Credited interest, policy benefits, and certain
     expenses                                      222,513    217,428    201,526

</TABLE>


BUSINESS OPERATIONS
The Company utilizes services provided by AIC and ALIC and business facilities
owned or leased, and operated by AIC in conducting its business activities. The
Company reimburses AIC and ALIC for the operating expenses incurred on behalf of
the Company. The Company is charged for the cost of these operating expenses
based on the level of services provided. Operating expenses, including
compensation and retirement and other benefit programs, allocated to the Company
were $33,892, $26,230 and $23,978 in 1999, 1998 and 1997, respectively. Of these
costs, the Company retains investment related expenses. All other costs are
ceded to ALIC under reinsurance agreements.

4.    EXCLUSIVE DISTRIBUTION AGREEMENT

The Company has a strategic alliance with Dean Witter to develop, market and
distribute proprietary savings and life insurance products through Morgan
Stanley Dean Witter Financial Advisors. Affiliates of Dean Witter are the
investment managers for the Morgan Stanley Dean Witter Variable Investment
Series, Morgan Stanley Universal Funds, Inc. and the Van Kampen American Capital
Life Investment Trust, the funds in which certain assets of the Separate
Accounts products are invested. Under the terms of the alliance, the Company has
agreed to use Dean Witter as an exclusive distribution channel for the Company's
products. In addition to the Company's products, Dean Witter markets other
products which compete with those of the Company.

Pursuant to the alliance agreement, Dean Witter provides approximately half of
the statutory capital necessary to maintain these products on the Company's
books through loans to a subsidiary of AIC. AIC unconditionally guarantees the
repayment of these loans. The Company shares approximately half the net profits
with Dean Witter on contracts written under the alliance.

The strategic alliance is cancelable for new business by either party by giving
30 days written notice, however, the Company believes the benefits derived by
Dean Witter will preserve the alliance.



                                       F-10


<PAGE>


                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

5.    INVESTMENTS

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

<TABLE>
<CAPTION>


                                                                      GROSS UNREALIZED
                                               AMORTIZED        ---------------------------        FAIR
                                                 COST                GAINS           LOSSES        VALUE
                                            ---------------     -----------    -------------    -------------
<S>                                             <C>                 <C>            <C>             <C>
AT DECEMBER 31, 1999
U.S. government and agencies                    $ 8,660             $   131        $   (57)        $ 8,734
Municipal                                         1,155                   6           (108)          1,053
Corporate                                        61,049                  26         (2,541)         58,534
Mortgage-backed securities                       18,341                 822           (486)         18,677
                                                -------             -------        -------         -------
     Total fixed income securities              $89,205             $   985        $(3,192)        $86,998
                                                =======             =======        =======         =======

AT DECEMBER 31, 1998

U.S. government and agencies                    $ 8,648             $ 1,469        $  --           $10,117
Municipal                                           590                  11           --               601
Corporate                                        33,958               1,634            (16)         35,576
Mortgage-backed securities                       37,960               2,250           (168)         40,042
                                                -------             -------        -------         -------
     Total fixed income securities              $81,156             $ 5,364        $  (184)        $86,336
                                                =======             =======        =======         =======

</TABLE>

SCHEDULED MATURITIES
The scheduled maturities for fixed income securities are as follows at December
31, 1999:

<TABLE>
<CAPTION>

                                         AMORTIZED    FAIR
                                           COST      VALUE
                                           ----      -----
<S>                                      <C>       <C>
Due in one year or less                  $    50   $    50
Due after one year through five years     16,690    16,538
Due after five years through ten years    46,933    44,542
Due after ten years                        7,191     7,191
                                         -------    ------
                                          70,864    68,321
Mortgage-backed securities                18,341    18,677
                                         -------   -------
      Total                              $89,205   $86,998
                                         =======   =======

</TABLE>

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


                                       F-11


<PAGE>
                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

<TABLE>
<CAPTION>

NET INVESTMENT INCOME
YEAR ENDED DECEMBER 31,                             1999        1998       1997
                                                    ----        ----       ----
<S>                                                <C>        <C>        <C>
Fixed income securities                            $ 5,881    $ 5,616    $ 5,364
Short-term investments                                 261        190         84
                                                   -------    -------    -------
    Investment income, before expense                6,142      5,806      5,448
    Investment expense                                 132        115        302
                                                   -------    -------    -------
    Net investment income                          $ 6,010    $ 5,691    $ 5,146
                                                   =======    =======    =======

REALIZED CAPITAL GAINS AND LOSSES

YEAR ENDED DECEMBER 31,                               1999       1998       1997
                                                   -------    -------    -------

Fixed income securities                            $   510    $     2    $   (70)
Short-term investments                                  --         --          2
                                                   -------    -------    -------
    Realized capital gains and losses                  510          2        (68)
    Income taxes                                      (178)        (1)        24
                                                   -------    -------    -------
    Realized capital gains and losses, after tax   $   332    $     1    $   (44)
                                                   =======    =======    =======

</TABLE>

Excluding calls and prepayments, gross gains of $629 were realized on sales of
fixed income securities during 1999 and gross losses of $119, $9 and $70 were
realized on sales of fixed income securities during 1999, 1998 and 1997,
respectively. There were no gross gains realized on sales of fixed income
securities during 1998 and 1997.

UNREALIZED NET CAPITAL GAINS AND LOSSES
Unrealized net capital gains on fixed income securities included in
shareholder's equity at December 31, 1999 are as follows:

<TABLE>
<CAPTION>

                                          COST/        FAIR        GROSS UNREALIZED     UNREALIZED
                                      AMORTIZED COST   VALUE      GAINS       LOSSES    NET LOSSES
                                      --------------   -----      -----       ------    ----------
<S>                                      <C>         <C>         <C>         <C>         <C>
  Fixed income securities                $ 89,205    $ 86,998    $    985    $ (3,192)   $ (2,207)
                                         ========    ========    ========    ========
  Deferred income taxes                                                                       772
                                                                                         --------
  Unrealized net capital losses                                                          $ (1,435)
                                                                                         ========

CHANGE IN UNREALIZED NET CAPITAL GAINS
YEAR ENDED DECEMBER 31,                     1999        1998        1997
                                          --------    --------    --------

  Fixed income securities                $ (7,387)   $  1,269    $  1,932
  Deferred income taxes                     2,585        (444)       (676)
                                         --------    --------    --------
 (Decrease) increase in unrealized net
   capital gains                         $ (4,802)   $    825    $  1,256
                                         ========    ========    ========

</TABLE>

SECURITIES ON DEPOSIT
At December 31, 1999, fixed income securities with a carrying value of $7,856
were on deposit with regulatory authorities as required by law.



                                       F-12


<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

6.    FINANCIAL INSTRUMENTS

In the normal course of business, the Company invests in various financial
assets and incurs various financial liabilities. The fair value estimates of
financial instruments presented below are not necessarily indicative of the
amounts the Company might pay or receive in actual market transactions.
Potential taxes and other transaction costs have not been considered in
estimating fair value. The disclosures that follow do not reflect the fair value
of the Company as a whole since a number of the Company's significant assets
(including reinsurance recoverable) and liabilities (including
interest-sensitive life insurance reserves and deferred income taxes) are not
considered financial instruments and are not carried at fair value. Other assets
and liabilities considered financial instruments, such as accrued investment
income and cash are generally of a short-term nature. Their carrying values are
assumed to approximate fair value.

FINANCIAL ASSETS

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

<TABLE>
<CAPTION>

                                     1999                      1998
                                     ----                      ----
                            CARRYING       FAIR       CARRYING       FAIR
                             VALUE         VALUE        VALUE        VALUE
                             -----         -----        -----        -----
<S>                       <C>          <C>          <C>          <C>
Fixed income securities   $   86,998   $   86,998   $   86,336   $   86,336
Short-term investments         3,170        3,170        5,083        5,083
Separate Accounts          8,211,996    8,211,996    7,031,083    7,031,083

</TABLE>

Fair values for fixed income securities are based on quoted market prices where
available. Non-quoted securities are valued based on discounted cash flows using
current interest rates for similar securities. Short-term investments are highly
liquid investments with maturities of less than one year whose carrying value
are deemed to approximate fair value. Separate Accounts assets are carried in
the statements of financial position at fair value based on quoted market
prices.

FINANCIAL LIABILITIES
The carrying value and fair value of financial liabilities at December 31, are
as follows:

<TABLE>
<CAPTION>

                                      1999                      1998
                                      ----                      ----
                             CARRYING       FAIR      CARRYING        FAIR
                               VALUE        VALUE       VALUE         VALUE
                            ----------   ----------   ----------   ----------
<S>                         <C>          <C>          <C>          <C>
Contractholder funds on
     investment contracts   $1,735,843   $1,675,910   $1,839,114   $1,814,684
Separate Accounts            8,211,996    8,211,996    7,031,083    7,031,083
</TABLE>

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



                                       F-13


<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

7.   RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS AND CONTRACTHOLDER FUNDS

At December 31, the reserve for life-contingent contract benefits consists of
the following:

<TABLE>
<CAPTION>

                                                    1999        1998
                                                    ----        ----
<S>                                             <C>        <C>
Immediate annuities:
     Structured settlement annuities               $109,907   $108,215
     Other immediate annuities                       40,680     36,840
                                                   --------   --------
     Total life-contingent contract benefits       $150,587   $145,055
                                                   ========   ========

</TABLE>

The assumptions for mortality generally utilized in calculating reserves
include, the U.S. population with projected calendar year improvements and age
setbacks for impaired lives for structured settlement annuities; and the 1983
group annuity mortality table for other immediate annuities. Interest rate
assumptions vary from 3.5% to 10.0% for immediate annuities. Other estimation
methods used include the present value of contractually fixed future benefits
for structured settlement annuities and other immediate annuities.

Premium deficiency reserves are established, if necessary, for the structured
settlement annuity business, to the extent the unrealized gains on fixed income
securities would result in a premium deficiency had those gains actually been
realized. The Company did not have a premium deficiency reserve at December 31,
1999 and 1998.

At December 31, contractholder funds consists of the following:

<TABLE>
<CAPTION>

                                               1999         1998
                                               ----         ----
<S>                                        <C>          <C>
Interest-sensitive life                    $  173,867   $  178,589
Fixed annuities:
     Immediate annuities                       78,197       77,291
     Deferred annuities                     1,619,869    1,747,242
                                           ----------   ----------
     Total contractholder funds            $1,871,933   $2,003,122
                                           ==========   ==========

</TABLE>

Contractholder funds are equal to deposits received net of commissions and
interest credited to the benefit of the contractholder less withdrawals,
mortality charges and administrative expenses. Interest rates credited range
from 4.0% to 7.2% for interest-sensitive life contracts; 3.5% to 10.2% for
immediate annuities and 3.4% to 8.0% for deferred annuities. Withdrawal and
surrender charge protection includes: i) for interest- sensitive life, either a
percentage of account balance or dollar amount grading off generally over 20
years; and, ii) for deferred annuities not subject to a market value adjustment,
either a declining or a level percentage charge generally over nine years or
less. Approximately 25% of deferred annuities are subject to a market value
adjustment.



                                       F-14
<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

8.   CORPORATION RESTRUCTURING

On November 10, 1999, the Corporation announced a series of strategic
initiatives to aggressively expand its selling and service capabilities. The
Corporation also announced that it is implementing a program to reduce expenses
by approximately $600 million. The reduction will result in the elimination of
approximately 4,000 current non-agent positions, across all employment grades
and categories by the end of 2000, or approximately 10% of the Corporation's
non-agent work force. The impact of the reduction in employee positions is not
expected to materially impact the results of operations of the Company.

These cost reductions are part of a larger initiative to redeploy the cost
savings to finance new initiatives including investments in direct access and
internet channels for new sales and service capabilities, new competitive
pricing and underwriting techniques, new agent and claim technology and enhanced
marketing and advertising. As a result of the cost reduction program, the
Corporation recorded restructuring and related charges of $81 million pretax
during the fourth quarter of 1999. The Corporation anticipates that additional
pretax restructuring related charges of approximately $100 million will be
expensed as incurred throughout 2000. The Company's allocable share of these
expenses were immaterial in 1999 and are expected to be immaterial in 2000.

9.    INCOME TAXES

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

Prior to June 30, 1995, the Corporation was a subsidiary of Sears Roebuck & Co.
("Sears") and, with its eligible domestic subsidiaries, was included in the
Sears consolidated federal income tax return and federal income tax allocation
agreement. Effective June 30, 1995, the Corporation and Sears entered into a new
tax sharing agreement, which governs their respective rights and obligations
with respect to federal income taxes for all periods during which the
Corporation was a subsidiary of Sears, including the treatment of audits of tax
returns for such periods.

The Internal Revenue Service ("IRS") has completed its review of the Allstate
Group's federal income tax returns through the 1993 tax year. Any adjustments
that may result from IRS examinations of tax returns are not expected to have a
material impact on the financial position, liquidity or results of operations of
the Company.



                                       F-15


<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

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

<TABLE>
<CAPTION>

                                                      1999       1998
                                                      ----       ----
<S>                                                 <C>          <C>
DEFERRED ASSETS
Unrealized net capital losses                       $   772    $    --
                                                    -------    -------
     Total deferred assets                              772         --

DEFERRED LIABILITIES
Difference in tax bases of investments               (1,518)    (1,503)
Unrealized net capital gains                             --     (1,813)
                                                    -------    -------
     Total deferred liabilities                      (1,518)    (3,316)
                                                    -------    -------
         Net deferred liability                     $  (746)   $(3,316)
                                                    =======    =======

</TABLE>

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

<TABLE>
<CAPTION>

                                             1999      1998      1997
                                             ----      ----      ----
<S>                                        <C>       <C>       <C>
Current                                    $ 2,249   $ 1,797   $ 1,843
Deferred                                        15       198       (87)
                                           -------   -------   -------
    Total income tax expense               $ 2,264   $ 1,995   $ 1,756
                                           =======   =======   =======

</TABLE>

The Company paid income taxes of $1,908, $129 and $2,236 in 1999, 1998 and 1997,
respectively.

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

<TABLE>
<CAPTION>

                                            1999     1998      1997
                                            ----     ----      ----
<S>                                         <C>      <C>       <C>
Statutory federal income tax rate           35.0%    35.0%     35.0%
Tax-exempt income                           (0.1)    (0.2)     (0.4)
Other                                       (0.2)     0.2        --
                                           -----    -----     -----
Effective income tax rate                   34.7%    35.0%     34.6%
                                           =====    =====     =====

</TABLE>

Prior to January 1, 1984, the Company was entitled to exclude certain amounts
from taxable income and accumulate such amounts in a "policyholder surplus"
account. The balance in this account at December 31, 1999, approximately $16,
will result in federal income taxes payable of $6 if distributed by the Company.
No provision for taxes has been made as the Company has no plan to distribute
amounts from this account. No further additions to the account have been
permitted since the Tax Reform Act of 1984.

10.   STATUTORY FINANCIAL INFORMATION

The Company's statutory capital and surplus was $83,746 and $68,883 at December
31, 1999 and 1998, respectively. The Company's statutory net income was $4,840,
$3,518 and $2,908 for the years ended December 31, 1999, 1998 and 1997,
respectively.



                                       F-16


<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company prepares its statutory financial statements in accordance with
accounting practices prescribed or permitted by the Arizona Department of
Insurance. Prescribed statutory accounting practices include a variety of
publications of the National Association of Insurance Commissioners ("NAIC"), as
well as state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not so
prescribed. The Company does not follow any permitted statutory accounting
practices that have a significant impact on statutory surplus or statutory net
income.

The NAIC's codification initiative has produced a comprehensive guide of
statutory accounting principles, which the Company will implement in January
2001. The Company's state of domicile, Arizona, has passed legislation revising
various statutory accounting requirements to conform to codification. These
requirements are not expected to have a material impact on the statutory surplus
of the Company.

DIVIDENDS
The ability of the Company to pay dividends is dependent on business conditions,
income, cash requirements of the Company and other relevant factors. The payment
of shareholder dividends by the Company without the prior approval of the state
insurance regulator is limited to formula amounts based on net income and
capital and surplus, determined in accordance with statutory accounting
practices, as well as the timing and amount of dividends paid in the preceding
twelve months. The maximum amount of dividends that the Company can distribute
during 2000 without prior approval of the Arizona Department of Insurance is
$4,840.

RISKED-BASED CAPITAL
The 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,
business, asset and interest rate risks. At December 31, 1999, RBC for the
Company was significantly above levels that would require regulatory action.


                                       F-17


<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ in thousands)

11.   OTHER COMPREHENSIVE INCOME

The components of other comprehensive income on a pretax and after-tax basis for
the year ended December 31, are as follows:

<TABLE>
<CAPTION>

                                            1999                           1998                          1997
                                --------------------------      ----------------------------    -----------------------------
                                                     After-                           After-                          After-
                                PRETAX     TAX       TAX        PRETAX      TAX        TAX      PRETAX       TAX       TAX
                               -------   -------   -------      -------   -------    -------    -------    -------    -------
<S>                           <C>        <C>        <C>        <C>        <C>        <C>        <C>       <C>        <C>
UNREALIZED CAPITAL GAINS
 AND LOSSES:
--------------------------------
Unrealized holding (losses)
   gains arising during
   the period                 $(6,877)   $ 2,407    $(4,470)   $ 1,271    $  (445)   $   826    $ 1,862   $  (652)   $ 1,210
Less:  reclassification
   adjustments                    510       (178)       332          2         (1)         1        (70)       24        (46)
                              -------    -------    -------    -------    -------    -------    -------   -------    -------
Unrealized net capital
   (losses) gains              (7,387)     2,585     (4,802)     1,269       (444)       825      1,932      (676)     1,256
                              -------    -------    -------    -------    -------    -------    -------   -------    -------
Other comprehensive
   (loss) income              $(7,387)   $ 2,585    $(4,802)   $ 1,269    $  (444)   $   825    $ 1,932   $  (676)   $ 1,256
                              =======    =======    =======    =======    =======    =======    =======   =======    =======

</TABLE>


12.  COMMITMENTS AND CONTINGENT LIABILITIES

REGULATION AND LEGAL PROCEEDINGS
The Company's business is subject to the effects of a changing social, economic
and regulatory environment. Public and regulatory initiatives have varied and
have included employee benefit regulations, 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 rates and benefits. The ultimate changes and eventual
effects, if any, of these initiatives are uncertain.

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. In the opinion of management, the ultimate liability, if any, arising
from such pending or threatened litigation is not expected to have a material
effect on the results of operations, liquidity or financial position of the
Company.

GUARANTY FUNDS
Under state insurance guaranty fund laws, insurers doing business in a state can
be assessed, up to prescribed limits, for certain obligations of insolvent
insurance companies to policyholders and claimants. The Company's expenses
related to these funds have been immaterial. These expenses are ceded to ALIC
under reinsurance agreements.

MARKETING AND COMPLIANCE ISSUES
Companies operating in the insurance and financial services markets have come
under the scrutiny of regulators with respect to market conduct and compliance
issues. Under certain circumstances, companies have been held responsible for
providing incomplete or misleading sales materials and for replacing existing
policies with policies that were less advantageous to the policyholder. The
Company monitors its sales materials and



                                       F-18
<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)

enforces compliance procedures to mitigate any exposure to potential litigation.
The Company is a member of the Insurance Marketplace Standards Association, an
organization which advocates ethical market conduct.


                                       F-19
<PAGE>

                        NORTHBROOK LIFE INSURANCE COMPANY
                            SCHEDULE IV--REINSURANCE
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>

                                                   GROSS                              NET
YEAR ENDED DECEMBER 31, 1999                       AMOUNT            CEDED            AMOUNT
----------------------------                       ------            -----            ------
<S>                                              <C>              <C>                 <C>
Life insurance in force                          $ 474,824        $ 474,824           $     -
                                                 =========        =========           =======

Premiums and contract charges:
         Life and annuities                      $ 121,351        $ 121,351           $     -
                                                 =========        =========           =======

                                                   GROSS                                NET
YEAR ENDED DECEMBER 31, 1998                       AMOUNT            CEDED            AMOUNT
----------------------------                       ------            -----            ------


Life insurance in force                          $ 494,256         $494,256           $     -
                                                 ==========        ========           =======
Premiums and contract charges:
         Life and annuities                      $ 104,746        $ 104,746           $     -
                                                 =========        =========           =======

                                                  GROSS                                 NET
YEAR ENDED DECEMBER 31, 1997                      AMOUNT             CEDED            AMOUNT
----------------------------                      ------             -----            ------

Life insurance in force                          $ 515,890         $515,890           $     -
                                                 =========         ========           =======
Premiums and contract charges:
         Life and annuities                      $  85,538         $ 85,538           $     -
                                                 =========         ========           =======

</TABLE>


                                       F-20






<PAGE>

                                  SIGNATURES

        Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                        NORTHBROOK LIFE INSURANCE COMPANY


                        By      /s/ THOMAS J. WILSON, II
                                ------------------------
                                Thomas J. Wilson, II
                                President and Chief Operating Officer
                                (Principal Executive Officer)

                        Date    March 28, 2000
                                ------------------


        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.


By       */s/ KEVIN R. SLAWIN
         --------------------
         Kevin R. Slawin
         Director

Date     March 24, 2000
         -------------------


By       /s/ SAMUEL H. PILCH
         ------------------------
         Samuel H. Pilch
         Controller
         (Chief Accounting Officer)

Date     March 28, 2000
         -------------------

By       */s/ SARAH R. DONAHUE
         --------------------
         Sarah R. Donahue
         Director

Date     March 24, 2000
         --------------------


By       */s/ JOHN R. HUNTER
         ------------------
         John R. Hunter
         Director

Date     March 24, 2000
         --------------------

By       */s/ CASEY J. SYLLA
         --------------------
         Casey J. Sylla
         Director

Date     March 24, 2000
         --------------------

By       */s/ TIMOTHY N. VANDER PAS
         -------------------------
         Timothy N. Vander Pas
         Director

Date     March 24, 2000
         --------------------


*Power of Attorney filed herewith.

<PAGE>

                                  EXHIBIT INDEX

               The Northbrook Life Insurance Company Form 10-K for
                        the year ended December 31, 1999

Exhibit No.                Description



27           Financial Data Schedule (filed herewith)

99           Power of Attorney



                                      E-1