##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended
December 31, 2003

Commission File Nos. 33-34562; 33-60288; 333-48983

ML LIFE INSURANCE COMPANY OF NEW YORK
(Exact name of Registrant as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|New York                                                       |  | 16-1020455                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)

|                                                
|------------------------------------------------
|222 Broadway14th Floor
New York, New York 10038 
|                                                
|(Address of Principal Executive Offices)        
|1-800-333-6524                                  
|                                                
|(Registrants telephone no. including area code)

Securities registered pursuant to Section 12(b) or 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. [X] Yes  [  ]  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 ]

Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act). [  ] Yes [X] No

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average
bid and asked price of such common equity, as of the last business day of the registrants  most recently completed second
fiscal quarter: Not applicable.

Indicate the number of shares outstanding of each of the registrants
classes of common stock, as of the latest practicable date.

Common 220,000

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.





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PART I

Item 1.  Business.

The Registrant is engaged in the sale of life insurance and annuity
products. The Registrant is a stock life insurance company organized under the
laws of the State of New York on November 28, 1973. The Registrant is currently
subject to primary regulation by the New York State Insurance Department. The
Registrant is a direct wholly owned subsidiary of Merrill Lynch Insurance Group
(MLIG). MLIG is an indirect wholly owned subsidiary of Merrill Lynch & Co.,
Inc. (Merrill Lynch & Co.), a corporation whose common stock is traded on the
New York Stock Exchange.

Information pertaining to contract owner deposits, contract owner
account balances, and capital contributions can be found in the Registrants
financial statements which are contained herein.

The Registrant is currently licensed to conduct life insurance and
annuity business in nine states. It currently markets its annuity products and
variable life insurance products only in the state of New York.
During 2003, annuity and life insurance sales were made principally
in New York (97%, as measured by total contract
owner deposits).

The Registrants life insurance and annuity products are sold by
licensed agents affiliated with Merrill Lynch Life Agency, Inc. (MLLA), a
wholly owned subsidiary of Merrill Lynch, Pierce, Fenner & Smith Incorporated
(MLPF&S), pursuant to a general agency agreement by and between the Registrant
and MLLA. At December 31, 2003, approximately 1,139 agents of MLLA were
authorized to act for the Registrant.

The Registrant makes available, free of charge, annual reports on Form 10-K
and quarterly reports on Form 10-Q.  This information is available through
the "Financial Reports - Subsidiary Financials" section of the Merrill
Lynch & Co. Investor Relations website at www.ir.ml.com.  These reports are
available through the website as soon as reasonably practicable after the
Registrant electronically files such material with, or furnishes it to, the
Securities and Exchange Commission.

Item 2.  Properties.

The Registrants home office is located at
222 Broadway, 14th Floor, New York, New York. This office space is
leased from MLPF&S. In addition, personnel performing services for the Registrant pursuant to its Management
Services Agreement operate in MLIG office space. MLIG occupies certain
office space in Pennington, New Jersey through Merrill Lynch & Co. An allocable
share of the cost of each of these premises is paid by the Registrant through
the service agreement with MLIG. Merrill Lynch Insurance Group
Services, Inc. (MLIGS), an affiliate of MLIG owns office space in
Jacksonville, Florida. MLIGS also leases certain office space in Springfield,
Massachusetts from Picknelly Family Limited Partnership. During 2001, MLIGS
consolidated operations into the Jacksonville, Florida location. MLIGS continues
to lease the office space in Springfield, Massachusetts, although there are no
personnel at that location.

Item 3. Legal Proceedings.

There is no material pending litigation to which the Registrant is a
party or of which any of its property is the subject, and there are no legal
proceedings contemplated by any governmental authorities against the Registrant
of which it has any knowledge.

Item 4.  Submission of Matters to a Vote of Security Holders.

Information called for by this item is omitted pursuant to General
Instruction I. of Form 10-K.

PART II

Item 5.  Market for Registrants Common Equity and Related Stockholder Matters.

(a)  The Registrant is a wholly owned subsidiary of MLIG, which is an
indirect wholly owned subsidiary of Merrill Lynch & Co. MLIG is the sole record
holder of Registrants shares. Therefore, there is no public trading market for
Registrants common stock.

During 2003 and 2002, the Registrant did not pay any dividends. No other cash dividends have
been declared on Registrants common stock at any time during the two most
recent fiscal years. Under laws applicable to insurance companies domiciled in
the State of New York, notice of intention to declare a dividend must be filed
with the New York Superintendent of Insurance who may disallow the payment. See
Note 7 to the Registrants financial statements.

(b)  Not applicable.

(c)  Not applicable.

Item 6.  Selected Financial Data.

Information called for by this item is omitted pursuant to General
Instruction I. of Form 10-K.

-2-



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Item 7. Managements Narrative Analysis of Results of Operations This Managements Narrative Analysis of Results of Operations should be read in
conjunction with the Financial Statements and Notes to Financial Statements
included herein for the Registrant (referred to as ML of New York for
purposes of Items 7 and 7A). Certain statements contained in this Report may be considered forward-looking,
including statements about management expectations, strategic objectives,
business prospects, anticipated financial performance, and other similar
matters. These forward-looking statements are not statements of historical fact
and represent only managements beliefs regarding future events, which are
inherently uncertain. There are a variety of factors, many of which are beyond
ML of New Yorks control, which affect its operations, performance, business
strategy, and results and could cause its actual results and experience to
differ materially from the expectations and objectives expressed in any
forward-looking statements. These factors include, but are not limited to, the
factors listed in the Business Environmentand Economic Environmentsections
listed below, as well as actions and initiatives taken by both current and
potential competitors, general economic conditions, the effects of current,
pending, and future legislation, regulation and regulatory actions, and the
other risks and uncertainties detailed in ML of New Yorks Financial Statements
and Notes to Financial Statements. Accordingly, readers are cautioned not to
place undue reliance on forward-looking statements, which speak only as of the
dates on which they are made. ML of New York does not undertake to update
forward-looking statements to reflect the impact of circumstances or events
that arise after the dates the forward-looking statements are made. The reader
should, however, consult any further disclosures ML of New York may make in its
Quarterly Reports on Form 10-Q. Business Environment ML of New York conducts its business in the life insurance and annuity markets
of the financial services industry. These markets are highly regulated with
particular emphasis on company solvency and sales practice monitoring.
Demographically, the population is aging, which favors life insurance and
annuity products. The financial services industry continues to be affected by an intensifying
competitive environment, as demonstrated by consolidation through mergers,
competition from new and established competitors, and diminishing margins in
many mature products and services. The financial services industry is also impacted by the regulatory and
legislative environment. In 2003, additional aspects of the Sarbanes-Oxley Act
of 2002 were implemented as rules relating to corporate governance, auditor
independence and disclosure became effective and/or was adopted in their final
form. Various federal and state securities regulators and self-regulatory
organizations (including the Securities and Exchange Commission, New York Stock
Exchange, and the National Association of Securities Dealers), as well as industry
participants, continued to review and, in many cases, adopt changes to
their established rules and policies in areas such as corporate governance,
mutual fund trading, disclosure practices and auditor independence. Discontinuance of Variable Life Insurance During the first quarter 2003, ML of New York discontinued manufacturing its
single premium variable life insurance product. As a result, ML of New York
currently does not manufacture, market, or issue life insurance products. ML
of New York continues to service all life insurance contracts inforce. -3-




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Tax Legislation During May 2003, Congress passed the Jobs and Growth Tax Relief Reconciliation
Act of 2003 (the Act). A key provision in the Act is reduced federal income
tax rates on dividends and capital gains paid to investors on stocks and mutual
funds held individually. Pending future Congressional action, these federal
income tax rate reductions are set to expire after 2008. These recently
enacted tax rate reductions may impact the relative attractiveness of
non-qualified annuities. Economic Environment ML of New Yorks financial position and/or results of operations are primarily
impacted by the following economic factors: equity market performance,
fluctuations in medium term interest rates, and the corporate credit
environment via credit quality and fluctuations in credit spreads. The
following discusses the impact of each economic factor. Equity Market Performance Changes in the U.S. equity market directly affect the values of the underlying
U.S. equity-based mutual funds supporting separate accounts assets and,
accordingly, the values of variable contract owner account balances. Since
asset-based fees collected on inforce variable contracts represent a
significant source of revenue, ML of New Yorks financial condition will be
impacted by fluctuations in investment performance of separate accounts assets.
Fluctuations in the U.S. equity market also directly impact ML of New Yorks
exposure to guaranteed minimum death benefit (GMDB) provisions contained in
the variable annuities it manufactures. Negative investment performance
generally results in greater exposure to GMDB provisions, to the extent there
is an increase in the number of variable contracts (and amount per contract) in
which the GMDB exceeds the variable account balance. Prolonged periods of
negative investment performance may result in greater GMDB claim payments.
GMDB claim payments are recorded as a component of policy benefits. There are several standard indices published on a daily basis that measure
performance of selected components of the U.S. equity market. Examples include
the Dow Jones Industrial Average (Dow), NASDAQ Composite Index (NASDAQ) and
the Standard & Poors 500 Composite Stock Price Index (S&P). The following
table provides the increase (decrease) for each equity market index for the
years ended December 31: 2003
    
    2002Dow
    
    
    25.3
    %
    
    
    -16.8
    %NASDAQ
    
    
    50.0
    %
    
    
    -31.5
    %S&P
    
    
    26.4
    %
    
    
    -23.4
    %
 Despite positive equity market performance during 2003, average separate
accounts assets, and in turn, average variable contract owner account balances,
were lower as compared to 2002. The average monthly Dow and S&P indices were
slightly lower during 2003 as compared to 2002. The investment performance of the underlying U.S. equity-based mutual funds
supporting ML of New Yorks variable products do not replicate the returns on
any specific U.S. equity market index. However, investment performance will
generally increase or decrease with corresponding increases or decreases in the
overall U.S. equity market. Medium Term Interest Rates Changes in interest rates affect the value of investments, primarily fixed
maturity securities and preferred equity securities, as well as interest
sensitive liabilities. Changes in interest rates have an inverse relationship
to the value of investments and interest sensitive liabilities. See Note 3 to
the Financial Statements for the impact of changes in medium term interest
rates on the value of investments and liabilities. Also, since ML of New York
has certain fixed products that contain guaranteed minimum crediting rates,
decreases in interest rate can decrease the amount of interest spread earned by
ML of New York. -4-




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ML of New York defines medium term interest rates as the average interest rate
on U.S. Treasury securities with terms of 1 to 10 years. During 2003, average
medium term interest rates decreased approximately 77 basis points to yield, on
average, 2.42%. During 2002, average medium term interest rates decreased
approximately 68 basis points to yield, on average, 3.19%. Corporate Credit and Credit Spreads Changes in the corporate credit environment directly impact the value of ML of
New Yorks investments, primarily fixed maturity securities. ML of New York
primarily invests in investment-grade corporate debt to support its fixed rate
product liabilities. Credit spreads represent the credit risk premiums required by market
participants for a given credit quality, e.g. the additional yield that a debt
instrument issued by a AA-rated entity must produce over a risk-free
alternative (e.g., U.S. Treasury instruments). Changes in credit spreads have
an inverse relationship to the value of investments. See Note 3 to the
Financial Statements for the impact of changes in credit spreads on the value
of investments. ML of New York defines credit spreads according to the Merrill Lynch U.S.
Corporate Bond Index for BBB-A Rated bonds with three to five year maturities.
During 2003, credit spreads contracted approximately 113 basis points and ended
the year at 85 basis points. During 2002, credit spreads widened approximately
20 basis point and ended the year at 198 basis points. Critical Accounting Policies and Estimates The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the reported
amounts of revenues and expenses. Estimates, by their nature, are based on
judgement and available information. Therefore, actual results could differ
and could have a material impact on the Financial Statements, and it is
possible that such changes could occur in the near term. ML of New Yorks critical accounting policies and estimates are discussed
below. See Note 1 to the Financial Statements for additional information
regarding accounting policies. Deferred Policy Acquisition Costs for Variable Annuities and Variable Life
Insurance The costs of acquiring business, principally commissions, certain expenses
related to policy issuance, and certain variable sales expenses that relate to
and vary with the production of new and renewal business, are deferred and
amortized in accordance with Statement of Financial Accounting Standards No.
97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration
Contracts and for Realized Gains and Losses from the Sale of Investments.
Deferred policy acquisition costs (DAC) is subject to recoverability testing
at the time of policy issuance and loss recognition testing at the end of each
reporting period. At December 31, 2003, variable annuities and variable life
insurance account for $14.8 million (or 59%) and $10.2 million (or 41%),
respectively, of ML of New Yorks DAC asset. DAC for variable annuities is amortized with interest over the lives of the
policies in relation to the present values of estimated future gross profits
from asset-based fees, contract fees, and surrender charges, less a provision
for guaranteed minimum death benefit expenses, policy maintenance expenses, and
non-capitalized commissions. DAC for variable life insurance is amortized with interest over the lives of
the policies in relation to the present values of estimated future gross
profits from fees related to contract loans, asset-based fees, and cost of
insurance charges, less claims (net of reinsurance), cost of mortality
reinsurance, policy maintenance expenses, and non-capitalized commissions. -5-




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The most significant assumptions involved in the estimation of future gross
profits are future net separate accounts performance, surrender rates, and
mortality rates. ML of New York generally assumes a level long-term rate of net
separate accounts growth for all future years. The long-term rate may be
adjusted if ML of New Yorks long-term expectations change. Additionally, ML of
New York may modify the rate of net separate accounts growth over the short
term to reflect ML of New Yorks near-term expectations of the economy and
financial market performance in which separate accounts assets are invested. Future gross profit estimates are subject to periodic evaluation by ML of New
York, with necessary revisions applied against amortization to date. The impact
of revisions to estimates on cumulative amortization is recorded as a charge or
benefit to current operations (DAC unlocking). During 2003 and 2002, ML of
New York reduced earnings by $1.0 million and $1.5 million, respectively, via
an increase in amortization of deferred policy acquisition costs. Changes in
assumptions can have a significant impact on the amount of DAC reported for
variable annuities and variable life insurance products and their related
amortization patterns. In general, increases in the estimated separate accounts
return and decreases in surrender or mortality assumptions increase the
expected future profitability of the underlying business and may lower the rate
of DAC amortization. Conversely, decreases in the estimated separate accounts
return and increases in surrender or mortality assumptions reduce the expected
future profitability of the underlying business and may increase the rate of
DAC amortization. Other-Than-Temporary Impairment Losses on Investments ML of New York regularly reviews each investment in its fixed maturity and
equity securities portfolio to evaluate the necessity of recording impairment
losses for other-than-temporary (OTT) declines in the fair value of
investments. Management makes this determination through a series of
discussions with ML of New Yorks portfolio managers and credit analysts, as
well as information obtained from external sources (i.e. company announcements,
ratings agency announcements, or news wire services). The factors that give
rise to potential impairments include, but are not limited to, i) certain
credit-related events such as default of principal or interest payments, ii)
bankruptcy of issuer, and iii) certain security restructurings. In absence of a
readily ascertainable market value, the estimated fair value on these
securities represents managements estimate of the securitys ultimate recovery
value. OTT impairment losses result in a permanent reduction of the cost basis
of the underlying investment. OTT impairments on investments in fixed maturity
securities were $0.8 million and $3.5 million during 2003 and 2002,
respectively. Recent Developments New Accounting Pronouncements On July 7, 2003, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 03-1, Accounting and Reporting by Insurance
Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate
Accounts. The SOP provides guidance on accounting and reporting by insurance
companies for certain nontraditional long-duration contracts and for separate
accounts. The SOP is effective for financial statements for ML of New York
beginning in 2004. The SOP requires the establishment of a liability for
contracts that contain death or other insurance benefits using a specified
reserve methodology that is different from the methodology that ML of New York
currently employs. The adoption of SOP 03-1 will approximately result in a
$3.0 million increase in policyholder liabilities and a corresponding pre-tax
charge to earnings. The adoption of SOP 03-1 is considered a change in
accounting principle. New Business ML of New York sells variable and interest sensitive annuity products through
the retail network of Merrill Lynch, Pierce, Fenner & Smith, Incorporated, a
wholly owned broker-dealer subsidiary of Merrill Lynch & Co. ML of New York
competes for Merrill Lynch & Co.s clients annuity business with unaffiliated
insurers whose products are also sold through Merrill Lynch & Co.s retail
network, and with insurers who solicit this business -6-




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directly. The product lines that ML of New York offers are focused in the
highly competitive market segment of retirement planning. ML of New York
competes in this market segment by integrating its products into Merrill Lynch
& Co.s planning-based financial management program. ML of New Yorks financial management is based on conservative investment and
liability management and regular monitoring of its risk profile. ML of New York
also seeks to provide superior customer service and financial management to
promote the competitiveness of its products. ML of New Yorks customer service
center has established standards of performance that are monitored on a regular
basis. Managers and employees in the customer service center are periodically
evaluated based on their performance in meeting these standards. ML of New York has strategically placed its marketing emphasis on the sale of
variable annuity products. These products are designed to address the
retirement planning needs of Merrill Lynch & Co.s clients. ML of New York
issues three types of variable annuity products. These products are
differentiated by the degree of liquidity afforded to the contract owner. The
B-Share variable annuity contains a seven year surrender charge period, the
L-Share variable annuity contains a three year surrender charge period, and the
C-Share variable annuity has no surrender charge period. Each variable annuity
product provides tax-deferred retirement savings with the opportunity for
diversified investing in a wide selection of underlying mutual fund portfolios.
In addition, ML of New York issues a modified guaranteed annuity product. The
modified guaranteed annuity product also provides tax-deferred retirement
savings through a guaranteed fixed interest rate for a period selected by the
contract owner, but imposes a market value adjustment for withdrawals prior to
the expiration of the guarantee period. Total direct premiums by product type
for the three years ended December 31 were as follows: (In Millions)
    
    % Change2003
    
    2002
    
    2001
    
    2003 - 2002
    
    2002 - 2001Variable Annuities:B-Share
    
    $
    37.9
    
    
    $
    16.7
    
    
    $
    36.5
    
    
    
    127
    %
    
    
    -54
    %C-Share (a)
    
    
    10.4
    
    
    
    20.8
    
    
    
    71.5
    
    
    
    -50
    
    
    
    -71L-Share (b)
    
    
    9.9
    
    
    
    10.5
    
    
    
    1.2
    
    
    
    -6
    
    
    
    775Total Variable Annuities
    
    
    58.2
    
    
    
    48.0
    
    
    
    109.2
    
    
    
    21
    
    
    
    -56Variable Life Insurance
    
    
    0.7
    
    
    
    1.2
    
    
    
    4.3
    
    
    
    -42
    
    
    
    -72Modified Guaranteed
Annuities
    
    
    0.2
    
    
    
    15.2
    
    
    
    0.8
    
    
    
    -99
    
    
    
    n/mOther
    
    
    1.3
    
    
    
    0.1
    
    
    
    0.4
    
    
    
    n/m
    
    
    
    -75Total Direct Premiums
    
    $
    60.4
    
    
    $
    64.5
    
    
    $
    114.7
    
    
    
    -6
    %
    
    
    -44
    %
 (a)
    
    ML of New York offers two C-Share variable annuity products that were
introduced in the fourth quarter 2002 and the first quarter 2001,
respectively.(b)
    
    ML of New Yorks L-Share variable annuity product was introduced in the
fourth quarter 2001.
 During 2003, ML of New Yorks total direct premiums decreased $4.1 million (or
6%) to $60.4 million as compared to 2002. Variable annuity premiums increased
$10.2 million (or 21%) to $58.2 million during 2003 as compared to 2002.
Management attributes the increase in variable annuity premiums primarily to
the introduction of a new B-Share variable annuity product during the third
quarter of 2003. Sales of the new B-Share variable annuity product were $20.8
million during 2003. The new B-Share variable annuity product is designed for
the tax-qualified IRA market and includes a guaranteed living benefit
provision. Also, during the second quarter 2003 ML of New York added a
guaranteed living benefit provision to its existing B-Share variable annuity.
Living benefit provisions have increased in popularity due to consumers
increasing demand for guaranteed benefits. Management believes that the
generally decreasing equity markets over the past three -7-




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years has been the catalyst for this demand. C-Share and L-Share variable
annuity premiums decreased $10.4 million (or 50%) and $0.6 million (or 6%),
respectively, during 2003. C-Share and L-Share variable annuities do not
contain guaranteed living benefit provisions. Modified guaranteed annuity sales decreased $15.0 million (or 99%) to $0.2
million during 2003 as compared to 2002. During 2003, ML of New York stopped
offering certain guarantee periods because required spreads could not be
realized due to the combination of lower interest rates and regulatorily
mandated guaranteed minimum crediting rates. Financial Condition At December 31, 2003, ML of New Yorks assets were $1,251.8 million, or $122.6
million higher than the $1,129.2 million in assets at December 31, 2002
primarily due to a increase in separate accounts assets. Separate accounts
assets increased $132.8 million (or 16%) to $943.2 million. Changes in
separate accounts assets during each quarter of 2003 were as follows: 1Q03
    
    2Q03
    
    3Q03
    
    4Q03
    
    Total(In Millions)Investment performance  variable products
    
    $
    (14.8
    )
    
    $
    81.9
    
    
    $
    22.6
    
    
    $
    82.2
    
    
    $
    171.9Net cash outflow  variable products
    
    
    (9.0
    )
    
    
    (13.0
    )
    
    
    (4.3
    )
    
    
    (12.8
    )
    
    
    (39.1
    )Net increase (decrease)
    
    $
    (23.8
    )
    
    $
    68.9
    
    
    $
    18.3
    
    
    $
    69.4
    
    
    $
    132.8
 During 2003, ML of New York experienced contract owner withdrawals that
exceeded deposits by $42.5 million. The components of contract owner
transactions were as follows: 2003(In Millions)Premiums collected
    
    $
    60.4Internal tax-free exchanges
    
    
    (3.0
    )Net contract owner deposits
    
    
    57.4Contract owner withdrawals
    
    
    83.0Net transfers from separate accounts
    
    
    16.9Net contract owner withdrawals
    
    
    99.9Net contract owner activity
    
    $
    (42.5
    )
 ML of New York maintains a conservative general account investment portfolio.
ML of New York has no mortgage or real estate investments and its investment in
non-investment grade fixed maturity securities are below the industry average.
The following schedule identifies ML of New Yorks general account invested
assets by type: Investment Grade Fixed Maturity Securities (Rated A or higher)
    
    
    62
    %Policy Loans
    
    
    30
    %Investment Grade Fixed Maturity Securities (Rated BBB)
    
    
    7
    %Non-Investment Grade Fixed Maturity Securities
    
    
    1
    %100
    %
 At December 31, 2003 and 2002, approximately $1.3 million (or 1%) and $4.1
million (or 3%), respectively, of ML of New Yorks fixed maturity securities
were considered non-investment grade. ML of New York defines non-investment
grade as unsecured debt obligations that have a rating equivalent to Standard
and Poors BB+ or lower (or similar rating agency). Non-investment grade
securities are speculative and are subject to -8-




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significantly greater risks related to the creditworthiness of the issuers and
the liquidity of the market for such securities. Current non-investment grade
holdings are the result of ratings downgrades on ML of New Yorks portfolio as
ML of New York does not purchase non-investment grade securities. Also, as of
December 31, 2003, approximately $3.5 million (or 2%) of ML of New Yorks fixed
maturity securities were rated BBB-, which is the lowest investment grade
rating given by Standard and Poors, compared to $10.9 million (or 7%) of fixed
maturity securities as of December 31, 2002. ML of New York closely monitors
such investments. The reductions in non-investment grade and BBB- holdings are
attributable to management actions taken during 2003 to improve the overall
credit quality of the fixed maturity security portfolio. ML of New Yorks investment in collateralized mortgage obligations (CMO) and
mortgage backed securities (MBS) had a carrying value of $1.4 million and
$2.1 million at December 31, 2003 and 2002, respectively. At December 31,
2003, all of ML of New Yorks CMO and MBS holdings were fully collateralized by
the Government National Mortgage Association, the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation. CMO and MBS
securities are structured to allow the investor to determine, within certain
limits, the amount of interest rate risk, prepayment risk and default risk that
the investor is willing to accept. It is this level of risk that determines
the degree to which the yields on CMO and MBS securities will exceed the yields
that can be obtained from similarly rated corporate securities. At December 31, 2003, ML of New York had 2,005 life insurance and annuity
contracts inforce with interest rate guarantees. The estimated average rate of
interest credited on behalf of contract owners was 4.34% during 2003. Invested
assets supporting liabilities with interest rate guarantees had an estimated
average effective yield of 4.91% during 2003. The number of life insurance and
annuity contracts inforce with interest rate guarantees decreased 149 (or 7%)
as compared to 2002. Liquidity and Capital Resources ML of New Yorks liquidity requirements include the payment of sales
commissions and other underwriting expenses and the funding of its contractual
obligations for the life insurance and annuity contracts it has inforce. ML of
New York has developed and utilizes a cash flow projection system and regularly
performs asset / liability duration matching in the management of its asset and
liability portfolios. ML of New York anticipates funding all its cash
requirements utilizing cash from operations, normal investment maturities and
anticipated calls and repayments, consistent with prior years. As of December
31, 2003, ML of New Yorks assets included $190.4 million of cash, short-term
investments, and investment grade publicly traded available-for-sale securities
that could be liquidated if funds were required. In order to continue to issue annuity products, ML of New York must meet or
exceed the statutory capital and surplus requirements of the insurance
departments of the states in which it conducts business. Statutory accounting
practices differ from generally accepted accounting principles (GAAP) in two
major respects. First, under statutory accounting practices, the acquisition
costs of new business are charged to expense, while under GAAP they are
amortized over a period of time. Second, under statutory accounting practices,
the required additions to statutory reserves for new business in some cases may
initially exceed the statutory revenues attributable to such business. These
practices result in a reduction of statutory income and surplus at the time of
recording new business. The National Association of Insurance Commissioners utilizes the Risk Based
Capital (RBC) adequacy monitoring system. The RBC calculates the amount of
adjusted capital that a life insurance company should have based upon that
companys risk profile. As of December 31, 2003 and 2002, based on the RBC
formula, ML of New Yorks total adjusted capital level was well in excess of
the minimum amount of capital required to avoid regulatory action. ML of New York receives claims paying ability ratings from Standard and Poors
and A.M. Best. At December 31, 2003, ML of New York received ratings from
Standard and Poors and A.M. Best of A+ and A, respectively. -9-




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##### 



ML of New York has developed a comprehensive capital management plan that will
continue to provide appropriate levels of capital for the risks that ML of New
York assumes, but will allow ML of New York to reduce its absolute level of
surplus. No dividends were paid during 2003, 2002 or 2001. ML of New York believes that it will be able to fund the capital and surplus
requirements of projected new business from current statutory earnings and
existing statutory capital and surplus. If sales of new business significantly
exceed projections, ML of New York may have to look to its parent and other
affiliated companies to provide the capital or borrowings necessary to support
its current marketing efforts. ML of New Yorks future marketing efforts could
be hampered should its parent and/or affiliates be unwilling to commit
additional funding. During June 2003, ML of New York and Merrill Lynch & Co. executed a keepwell
agreement. The agreement obligates Merrill Lynch & Co. to maintain a level of
capital in ML of New York in excess of minimum regulatory capital requirements. Results of Operations ML of New Yorks gross earnings are principally derived from two sources:  
    
    the charges imposed on variable annuity and variable life insurance contracts, and
    
    the net earnings from investment of fixed rate life insurance and annuity contract owner deposits less interest credited to
contract owners, commonly known as interest spread The costs associated with acquiring contract owner deposits (deferred policy
acquisition costs) are amortized over the period in which ML of New York
anticipates holding those funds, as noted in the Critical Accounting Policies
section above. Insurance expenses and taxes reported in the statements of
earnings are net of amounts deferred. In addition, ML of New York incurs
expenses associated with the maintenance of inforce contracts. 2003 compared to 2002 ML of New York recorded net earnings of $4.4 million and $3.2 million for 2003
and 2002, respectively. Policy charge revenue decreased $1.6 million (or 9%) to $16.4 million during
2003 as compared to $18.0 million in 2002. The decrease in policy charge
revenue is primarily due to a decrease in non-asset based policy charge
revenue. Non-asset-based policy charge revenue decreased $1.1 million (or 15%)
due to decreases in cost of insurance charges on variable life insurance
contracts and deferred policy load amortization. In addition, asset-based
policy charge revenue decreased $0.5 million (or 4%) during 2003 as compared to
2002. The decrease in asset-based policy charge revenue is attributable to
lower average variable account balances. During the same comparative period,
average variable account balances decreased $41.7 million (or 5%). Net earnings derived from interest spread decreased $1.0 million (or 24%) to
$3.0 million during 2003 as compared to $4.0 million in 2002. The decrease in
interest spread is primarily a result of the reduction in yields on invested
assets resulting from (i) the lower interest rate environment during 2003 as
compared to 2002 and (ii) the increase in credit quality of the portfolio. ML of New York experienced net realized investment gains (losses) of $0.6
million and ($3.2) million during 2003 and 2002, respectively. The following
table provides net realized investment gains (losses) by type: Realized Gains (Losses)
        
        2003
        
        2002
        
        Difference(In Millions)Interest related
            gains
        
        $
        2.4
        
        
        $
        0.2
        
        
        $
        2.2
        
        
        
        (1
        )Credit related losses
        
        
        (1.8
        )
        
        
        (3.4
        )
        
        
        1.6
        
        
        
        (2
        )$
        0.6
        
        
        $
        (3.2
        )
        
        $
        3.8
 -10-




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##### 



(1)
    
    The increase in interest related gains is primarily
attributable to increases in invested asset market
valuations resulting from generally lower interest rates
and contracting credit spreads during 2003 as compared to
2002.(2)
    
    The decrease in credit related losses is primarily
due to a decrease in OTT declines in the carrying value of
fixed maturity securities. Policy benefits decreased $0.5 million (or 10%) to $4.0 million during 2003 as
compared to $4.5 million in 2002 primarily due to decreased variable annuity
death benefit payments incurred under GMDB provisions. Reinsurance premium ceded decreased $0.1 million (or 10%) to $1.6 million
during 2003 as compared to $1.7 million in 2002. The decrease is attributable
to the decrease in life insurance inforce. Amortization of deferred policy acquisition costs decreased $0.7 million (or
12%) to $4.8 million during 2003 as compared to $5.5 million in 2002 primarily
due to period-to-period differences in DAC unlocking as noted in the Critical
Accounting Policiessection above. Excluding DAC unlocking, amortization of
deferred policy acquisition costs remained relatively unchanged during 2003 as
compared to 2002. Insurance expenses and taxes increased $0.2 million (or 6%) to $3.5 million
during 2003 as compared to $3.3 million in 2002. The increase in insurance
expenses and taxes is primarily due to increased New York State Insurance
Department assessments. ML of New Yorks effective federal income tax rate increased to 28% for 2003
from 16% for 2002 primarily due to a reduction of certain permanent adjustments
recorded during 2003 as compared to 2002. Also, during 2003, deferred tax
components have been significantly impacted by fluctuations in GMDB tax
reserves. The reserve fluctuations have resulted in a decreased deferred tax
expense during 2003 as compared to 2002. 2002 compared to 2001 ML of New York recorded net earnings of $3.2 million and $4.3 million for 2002
and 2001, respectively. Policy charge revenue decreased $0.7 million (or 4%) to $18.0 million during
2002 as compared to $18.7 million in 2001. The decrease in policy charge
revenue is primarily attributable to reductions in asset-based policy charge
revenue collected on variable account balances. Variable annuity and variable
life asset-based policy charge revenue decreased $0.4 million (or 4%) and $0.3
million (or 12%), respectively, generally consistent with decreases in average
variable account balances for those products. Asset-based policy charge
revenue was favorably impacted by increases in rates charged to unaffiliated
fund investment managers for administrative services. Net earnings derived from interest spread decreased $1.0 million (or 20%) to
$4.0 million during 2002 as compared to $5.0 million in 2001. The decrease in
interest spread is primarily a result of the reduction in yields on invested
assets resulting from the lower interest rate environment as compared to 2001. ML of New York experienced net realized investment losses of $3.2 million and
$2.5 million during 2003 and 2002, respectively. The increase in net realized
investment losses is due to an increase in credit related losses primarily
losses on investments in fixed maturity securities issued by WorldCom Inc. Policy benefits increased $1.4 million (or 47%) to $4.5 million during 2002 as
compared to $3.1 million in 2001. During 2002, life insurance mortality expense
increased $0.8 million as compared to 2001 primarily due to an increase in the
number of death claims. In addition, variable annuity mortality expense
increased $0.5 million as compared to 2001 primarily due to increased death
benefit payments incurred under GMDB provisions. -11-




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##### 



Reinsurance premium ceded decreased $0.2 million (or 10%) to $1.7 million
during 2002 as compared to $1.9 million in 2001. The decrease is attributable
to the decrease in life insurance inforce. Amortization of deferred policy acquisition costs increased $2.0 million (or
56%) to $5.5 million during 2002 as compared to $3.5 million in 2001 primarily
due to period-to-period differences in DAC unlocking as noted in the Critical
Accounting Policiessection above. Insurance expenses and taxes decreased $1.5 million (or 31%) to $3.3 million
during 2002 as compared to $4.8 million in 2001. The decrease in insurance
expenses and taxes is primarily due to i) cost savings resulting from ML of New
Yorks consolidation of its life and annuity policy administration service
centers, which was completed during the third quarter 2001, and ii) reductions
in employee compensation expense. ML of New Yorks effective federal income tax rate decreased to 16% for 2002
from 45% for 2001. The changes in the effective federal income tax rate during
the respective periods are due to an increase in certain permanent adjustments
recorded during 2002 as compared to 2001. Also, during 2002, ML of New Yorks
current and deferred tax components have been significantly impacted by
fluctuations in GMDB tax reserves. The reserve fluctuations have resulted in
an increased current tax benefit and an increased deferred tax expense during
2002 as compared to 2001. Segment Information ML of New Yorks operating results are categorized into two business segments:
Life Insurance and Annuities. ML of New Yorks Life Insurance segment consists
of variable life insurance products and interest-sensitive life products. ML of
New Yorks Annuity segment consists of variable annuities and
interest-sensitive annuities. The Other earnings category represents
earnings on assets that do not support contract owner liabilities. Net
earnings by segment were as follows: Segment
    
    2003
    
    2002
    
    2001(In Millions)Life Insurance
    
    $
    1.3
    
    
    $
    1.4
    
    
    $
    1.9Annuities
    
    
    2.6
    
    
    
    1.3
    
    
    
    1.8Other
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.6
 The products that comprise the Life Insurance and Annuity segments generally
possess similar economic characteristics. As such, the financial condition and
results of operations of each business segment are generally consistent with ML
of New Yorks consolidated financial condition and results of operations
presented herein. OTT losses on investments by segment were as follows: Segment
    
    2003
    
    2002
    
    2001(In Millions)Life Insurance
    
    
    
    
    
    
    
    
    
    
    Annuities
    
    $
    0.8
    
    
    $
    3.5
    
    
    $
    0.4Other
    
    
    
    
    
    
    
    
    
    
    
 ML of New York is not dependent upon any single customer, and no single
customer accounted for more than 10% of its revenues during 2003. Inflation -12-




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##### 



ML of New Yorks operations have not been materially impacted by inflation and
changing prices during the preceding three years. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Market risk is the potential change in a financial instruments value caused by
fluctuations in certain underlying risk factors. ML of New York is primarily
subject to market risk resulting from fluctuations in interest rates, credit
spreads, credit risk, and equity prices. ML of New York utilizes an integrated
approach to manage financial market risks including a comprehensive asset /
liability management process, product design, and reinsurance programs. A number of assumptions must be made to obtain the expected fair value changes
illustrated below. ML of New York has no reason to believe that historically
simulated interest rate and credit spread movements have any predictive power
for future fair value changes. The volatility experienced during recent years
demonstrates the limitations of these models. Interest Rate Risk Interest rate risk arises from the possibility that changes in interest rates
will affect the value of investments, primarily fixed maturity securities and
preferred equity securities, as well as interest sensitive liabilities. Changes
in interest rates have an inverse relationship to the value of investments and
interest sensitive liabilities. ML of New York manages interest rate risk as
part of its asset / liability management strategy. For each portfolio,
management monitors the expected changes in assets and liabilities, as produced
by ML of New Yorks model, resulting from various interest rate scenarios.
Based on these results, management closely matches the duration and convexity
of insurance liabilities to the duration and convexity of assets supporting
those liabilities. The following table presents the estimated net impact on the fair value of
investments and interest sensitive liabilities resulting from various
hypothetical interest rate scenarios, based on assumptions contained in ML of
New Yorks model: Change in Fair ValueChange in Interest Rates
    
    2003
    
    2002(In Millions)+ 100 basis points
    
    
    ($3.5
    )
    
    
    ($2.0
    )+ 50 basis points
    
    
    ($1.7
    )
    
    
    ($1.0
    )+ 10 basis points
    
    
    ($0.3
    )
    
    
    ($0.2
    )- 10 basis points
    
    $
    0.3
    
    
    $
    0.2- 50 basis points
    
    $
    1.7
    
    
    $
    0.8- 100 basis points
    
    $
    3.4
    
    
    $
    1.6
 ML of New Yorks model is based on existing business inforce as of the year
ended 2003 without considering the impact of new annuity sales on assets or
liabilities. The model incorporates ML of New Yorks fixed maturity securities
and preferred equity investments excluding variable rate securities with rate
resetting in less than ninety days, securities with a maturity of less than
ninety days, and securities that are in or near default. The changes in
interest rate scenarios, noted above, assume parallel shifts in the yield curve
occurring uniformly throughout the year. Additionally, certain products have features that mitigate the impact of
interest rate risk. Examples include surrender charges, market value
adjustments, and resetting of interest credited rates (subject to certain
guaranteed minimum crediting rates). For interest sensitive life products the
guaranteed minimum rate is 4%. However, for some products, the minimum rate may
be reduced by a charge for mortality that varies by the -13-




---



##### 



attained age of the insured. For interest sensitive annuity products the
guaranteed minimum rates range from 3% to 5%, with the greatest concentration
in the 3% to 4% range. Credit Spread Risk Credit spread risk arises from the possibility that changes in credit spreads
will affect the value of investments. Credit spreads represent the credit risk
premiums required by market participants for a given credit quality, i.e., the
additional yield that a debt instrument issued by a AA-rated entity must
produce over a risk-free alternative (e.g., U.S. Treasury instruments). The following table presents the estimated net impact on the fair value of
investments resulting from various hypothetical fluctuations in credit spreads,
based on assumptions contained in ML of New Yorks model: Change in Fair ValueChange in Credit Spreads
    
    2003
    
    2002(In Millions)+ 50 basis points
    
    
    ($2.4
    )
    
    
    ($2.6
    )+ 10 basis points
    
    
    ($0.5
    )
    
    
    ($0.6
    )- 10 basis points
    
    $
    0.5
    
    
    $
    0.4- 50 basis points
    
    $
    2.4
    
    
    $
    2.3
 ML of New Yorks model is based on existing business inforce as of the year
ended 2003 without considering the impact of new annuity sales on assets. The
model incorporates ML of New Yorks fixed maturity securities and preferred
equity investments excluding securities with a maturity of less than ninety
days and securities that are in or near default. The changes in credit
spreads, noted above, assume a uniform occurrence throughout the year. Liability valuations for modified guaranteed annuities mitigate ML of New
Yorks exposure to credit spread risk on these products. Contract owner
surrender values reflect changes in spread between corporate bonds and U.S.
Treasury securities since the market value adjusted account value is based on
current crediting rates for new and renewal contracts. These crediting rates
are adjusted weekly and reflect current market conditions. Credit Risk Credit risk represents the loss that ML of New York would incur if an issuer
fails to perform its contractual obligations and the value of the security held
has been impaired or is deemed worthless. ML of New York manages its credit
risk by setting investment policy guidelines that assure diversification with
respect to investment, issuer, geographic location and credit quality.
Management regularly monitors compliance of each investment portfolios status
with the investment policy guidelines, including timely updates of
credit-related securities. In addition, ML of New York establishes tolerance
limits for exposure in any one issuer for prospective investments. Equity Price Risk Equity price risk arises from the possibility that general reductions in equity
prices will negatively affect the value of assets and liabilities, primarily
separate accounts assets and separate accounts liabilities. ML of New York
manages its exposure to equity risk via certain product design features (e.g.,
waiting periods, age caps, subsequent premium restrictions, and adjusted
withdrawals) and reinsurance programs to the extent reinsurance capacity is
available in the marketplace. General reductions in equity prices impact ML of
New York in the following ways:  
    
    Reductions in separate accounts assets. Asset-based fees collected on separate accounts assets are a primary source of
earnings for ML of New York, thus lower asset balances will result in lower fee income. 
    
    Increased exposure to guaranteed minimum death benefits. Decreasing variable contract owner account values increase the
number of contracts, as well as amounts per contract, in which guaranteed minimum death benefits exceed those variable
contract owner account balances. This may result in greater future mortality expense.
    
    Potential hindrance of sales and marketing efforts for variable products.
 -14-




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##### 



Item 8.  Financial Statements and Supplementary Data. The financial statements of Registrant are set forth in Part
IV hereof and are incorporated herein by reference. Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. Not applicable. Item 9A.  Controls and Procedures. In 2002, Registrant formed a Disclosure Committee to assist with the monitoring
and evaluation of our disclosure controls and procedures.  Registrants Chief Executive Officer, Chief Financial Officer and
Disclosure Committee have evaluated the effectiveness of
Registrants disclosure controls and procedures (as defined in
Rule 15d-15(e) under the Securities Exchange Act of 1934) as of
the end period covered by this Report. Based on that evaluation, Registrants Chief Executive Officer and Chief Financial
Officer have concluded that Registrants disclosure controls and
procedures are effective. In addition, no change in Registrants
internal control over financial reporting (as defined in
Rule 15d-15(f) under the Securities Exchange Act of 1934)
occurred during the fourth fiscal quarter of 2003 that has materially
affected, or is reasonably likely to materially affect,
Registrants internal control over financial reporting. PART III Information called
for by items 10 through 13 of this part is
omitted pursuant to General Instruction I. of Form 10-K.


-15-



---



##### 



PART IV

Item 14.  Principal Account Fees and Services

Pre-Approval of Services Provided by the Registrants Independent Auditor Consistent with SEC rules regarding auditor independence, the Audit Committee
has established a policy governing the provision of audit and
non-audit services to the Registrant. Pursuant to this policy, the
Audit Committee will consider annually and, if
appropriate approve the provision of all audit services to the Registrant by the
independent auditor. The Audit Committee will also consider and, if
appropriate,
pre-approve the provision by the independent auditor of services that fit
within the following categories of permitted non-audit services within a
specified dollar limit.  
    
    Audit service, include audit work performed in the review and preparation of the
financial statements, as well as services that generally only the independent
auditor can be expected to provide, such as comfort letters,
statutory audits, attest services, consents and assistance with the review of documents filed with the
SEC.
    
    Tax services include all services performed by the
independent auditor's tax
personnel.
    
All Other service, include all other miscellaneous services not captured in the
other two categories that are not prohibited services, as defined by
the SEC, and
that the Audit Committee believes will not impair the independence of
the independent auditor. Any proposed engagement of the independent auditor that does not fit within one
of the pre-approved categories of service or is not within the established fee
limits must be pre-approved by the Audit Committee. The Audit Committee has
delegated pre-approval authority to the Chair of the
Audit Committee in time sensitive cases. The exercise of such authority must be
reported to the Audit Committee at its next regularly scheduled meeting. The
Audit Committee regularly reviews summary reports detailing all services (and
related fees and expenses) being provided to the Registrant by the independent
auditor. Fees Paid to the Registrants Independent Auditor The following table presents fees for professional services rendered by
Deloitte & Touche LLP for the audit of the Registrants financial statements
for the years ended December 31, 2003 and 2002 and fees billed for other
services rendered by Deloitte & Touche LLP during those periods. 2003
    
    2002Audit (1)
    
    $
    196,354
    
    
    $
    172,354Tax (2)
    
    
    1,852
    
    
    
    1,626All Other (3)
    
    
    7,615
    
    
    
    6,685Total
    
    $
    205,821
    
    
    $
    180,665
  (1)
    
    Audit Fees included audit work performed in the review and
preparation of the financial statements, as well as, services that
generally only the independent auditor can be expected to provide, such
as comfort letters, statutory audits, attest services, consents and
assistance with and review of documents filed with the Securities and
Exchange Commission.(2)
    
    Tax Fees included all services performed by the independent
auditors tax personnel.(3)
    
    All Other Fees included miscellaneous out-of-pocket expenses. -16-      PART IV Item 15.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a)  Financial Statements and Exhibits. (1)
    
    The following financial statements of the
Registrant are filed as part of this report:a.
    
    Independent
Auditors Report dated March 1, 2004.b.
    
    Balance Sheets at
December 31, 2003 and 2002.c.
    
    Statements of Earnings for the Years Ended
December 31, 2003, 2002 and 2001.d.
    
    Statements of Comprehensive Income for the
Years Ended December 31, 2003, 2002 and
2001.e.
    
    Statements of Stockholders Equity for the
Years Ended December 31, 2003, 2002 and
2001.f.
    
    Statements of Cash Flows for the Years Ended
December 31, 2003, 2002 and 2001.g.
    
    Notes to Financial Statements for the Years
Ended December 31, 2003, 2002 and 2001.(2)
    
    Not applicable.(3)
    
    The following exhibits are filed as part of
this report as indicated below: -17-      3.1
    
    Certificate of Amendment of the Charter of ML Life
Insurance Company of New York. (Incorporated by reference
to Exhibit 6(a)(ii) to Post-Effective Amendment No. 10 to
ML of New York Variable Annuity Account As registration
statement on Form N-4, File No. 33-43654, filed December 9,
1996.)3.2
    
    By-Laws of ML Life Insurance Company of New York.
(Incorporated by reference to Exhibit 6(b) to
Post-Effective Amendment No. 10 to ML of New York Variable
Annuity Account As registration statement on Form N-4,
File No. 33-43654, filed December 9, 1996.)4.1
    
    Modified Guaranteed Annuity Contract. (Incorporated by
reference to Exhibit 4(a) to Pre-Effective Amendment No. 1
to the Registrants registration statement on Form S-1,
File No. 33-34562, filed October 16, 1990.)4.2
    
    Modified Guaranteed Annuity Contract Application.
(Incorporated by reference to Exhibit 4(b) to Pre-Effective
Amendment No. 1 to the Registrants registration statement
on Form S-1, File No. 33-34562, filed October 16, 1990.)4.3
    
    Qualified Retirement Plan Endorsement. (Incorporated by
reference to Exhibit 4(c) to Pre-Effective Amendment No. 1
to the Registrants registration statement on Form S-1,
File No. 33-34562, filed October 16, 1990.)4.4
    
    IRA Endorsement. (Incorporated by reference to Exhibit 4(d)
to Pre-Effective Amendment No. 1 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed October 16, 1990.)4.5
    
    Company Name Change Endorsement. (Incorporated by reference
to Exhibit 4(e) to Post-Effective Amendment No. 3 to the
Registrants registration statement on Form S-1, File No.
33-34562, filed March 30, 1992.)4.6
    
    IRA Endorsement, MLNY009 (Incorporated by reference to
Exhibit 4(d)(2) to Post-Effective Amendment No. 1 to the
Registrants registration statement on Form S-1, File No.
33-60288, filed March 31, 1994). -18-      4.7
    
    Modified Guaranteed Annuity Contract MLNY-AY-991/94.
(Incorporated by reference to Exhibit 4(a)(2) to
Post-Effective Amendment No. 3 to the Registrants
registration statement on Form S-1, File No. 33-60288,
filed December 7, 1994).4.8
    
    Qualified Retirement Plan Endorsement MLNY-AYQ-991/94.
(Incorporation by reference to Exhibit 4(c)(2) to
Post-Effective Amendment No. 3 to the Registrants
registration statement on Form S-1, File No. 33-60288,
filed December 7, 1994).10.1
    
    General Agency Agreement between Royal Tandem Life
Insurance Company and Merrill Lynch Life Agency Inc.
(Incorporated by reference to Exhibit 10(a) to
Pre-Effective Amendment No. 1 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed October 16, 1990.)10.2
    
    Investment Management Agreement by and between Royal Tandem
Life Insurance Company and Equitable Capital Management
Corporation. (Incorporated by reference to Exhibit 10(b) to
Pre-Effective Amendment No. 1 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed October 16, 1990.)10.3
    
    Shareholders Agreement by and among The Equitable Life
Assurance Society of the United States and Merrill Lynch & Co., Inc. and Tandem Financial Group, Inc. (Incorporated by
reference to Exhibit 10(c) to Pre-Effective Amendment No. 1
to the Registrants registration statement on Form S-1,
File No. 33-34562, filed October 16, 1990.)10.4
    
    Service Agreement by and between Royal Tandem Life
Insurance Company and Tandem Financial Group, Inc.
(Incorporated by reference to Exhibit 10(d) to
Pre-Effective Amendment No. 1 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed October 16, 1990.)10.5
    
    Service Agreement by and between Tandem Financial Group,
Inc. and Merrill Lynch & Co., Inc. (Incorporated by
reference to Exhibit 10(e) to Pre-Effective Amendment No. 1
to the Registrants registration statement on Form S-1,
File No. 33-34562, filed October 16, 1990.) -19-      10.6
    
    Form of Investment Management Agreement by and between
Royal Tandem Life Insurance Company and Merrill Lynch Asset
Management, Inc. (Incorporated by reference to Exhibit
10(f) to Post-Effective Amendment No. 1 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed March 7, 1991.)10.7
    
    Assumption Reinsurance Agreement between Merrill Lynch Life
Insurance Company, Tandem Insurance Group, Inc. and Royal
Tandem Life Insurance Company and Family Life Insurance
Company. (Incorporated by reference to Exhibit 10(g) to
Post-Effective Amendment No. 3 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed March 30, 1992.)10.8
    
    Indemnity Agreement between ML Life Insurance Company of
New York and Merrill Lynch Life Agency, Inc. (Incorporated
by reference to Exhibit 10(h) to Post-Effective Amendment
No. 3 to the Registrants registration statement on Form
S-1, File No. 33-34562, filed March 30, 1992.)10.9
    
    Amended General Agency Agreement between ML Life Insurance
Company of New York and Merrill Lynch Life Agency, Inc.
(Incorporated by reference to Exhibit 10(i) to
Post-Effective Amendment No. 3 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed March 30, 1992.)10.10
    
    Amended Management Agreement between ML Life Insurance
Company of New York and Merrill Lynch Asset Management,
Inc. (Incorporated by reference to Exhibit 10(j) to the
Registrants registration statement on Form S-1, File No.
33-60288, filed March 30, 1993.)10.11
    
    Mortgage Loan Servicing Agreement between ML Life Insurance
Company of New York and Merrill Lynch & Co., Inc.
(Incorporated by reference to Exhibit 10(k) to
Post-Effective Amendment No. 4 to the Registrants
registration statement on Form S-1, File No. 33-60288,
filed March 29, 1995.)23.1
    
    Written Consent of Deloitte & Touche, LLP, independent
auditors, is filed herewith.24.1
    
    Power of attorney of Frederick J. C. Butler. (Incorporated
by reference to Exhibit 24(a) to Post-Effective Amendment
No. 1 to the Registrants registration statement on Form
S-1, File No. 33-60288, filed March 31, 1994.) -20-      24.2
    
    Power of attorney of Robert L. Israeloff. (Incorporated by
reference to Exhibit 24(g) to Post-Effective Amendment No.
1 to the Registrants registration statement on Form S-1,
File No. 33-60288, filed March 31, 1994.)24.3
    
    Power of attorney of Cynthia L. Kahn. (Incorporated by
reference to Exhibit 24(i) to Post-Effective Amendment No.
1 to the Registrants registration statement on Form S-1,
File No. 33-60288, filed March 31, 1994.)24.4
    
    Power of attorney of Robert A. King. (Incorporated by
reference to Exhibit 24(j) to Post-Effective Amendment No.
1 to the Registrants registration statement on Form S-1,
File No. 33-60288, filed March 31, 1994.)24.5
    
    Power of attorney of Irving M. Pollack. (Incorporated by
reference to Exhibit 24(k) to Post-Effective Amendment No.
1 to the Registrants registration statement on Form S-1,
File No. 33-60288, filed March 31, 1994.)24.6
    
    Power of attorney of Barry G. Skolnick. (Incorporated by
reference to Exhibit 24(l) to Post-Effective Amendment No.
1 to the Registrants registration statement on Form S-1, File
No. 33-60288, filed March 31, 1994.) -21-      24.7
    
    Power of attorney of Richard M. Drew. (Incorporated by
reference to Exhibit 24.14 to Annual Report on Form 10-K,
File Nos. 33-34562, 33-60288, and 333-48983, filed
March 30, 2000.)24.8
    
    Power of attorney of Christopher J. Grady. (Incorporated by
reference to Exhibit 24.12 to Annual Report on Form 10-K,
File Nos. 33-34562, 33-60288, and 333-48983, filed April 2,
2001.)24.9
    
    Power of attorney of H. McIntyre Gardner. (Incorporated by
reference to ML of New York Variable Annuity Separate
Account As registration statement on Form N-4, File No.
333-69220, filed September 10, 2001.)24.10
    
    Power of attorney of Joseph Justice. (Incorporated by
reference to ML of New York Variable Annuity Separate
Account As registration statement on Form N-4, File No.
333-69220, filed September 10, 2001.)24.11
    
    Power of attorney of Nikos K. Kardassis. (Incorporated by
reference to ML of New York Variable Annuity Separate
Account As registration statement on Form N-4, File No.
333-69220, filed September 10, 2001.)24.12
    
    Power of attorney of Lori M. Salvo. (Incorporated by
reference to ML of New York Variable Annuity Separate
Account As registration statement on Form N-4, File No.
333-69220, filed September 10, 2001.)24.13
    
    Power of attorney of Deborah J. Adler is filed herewith.24.14
    
    Power of attorney of Loncetta M. Ruggiero is filed herewith.31.1
    
    Certification by the Chief Executive Officer of the Registrant
pursuant to Rule 15d-14(a), is filed herewith.31.2
    
    Certification by the Chief Financial Officer of the Registrant
pursuant to Rule 15d-14(a), is filed herewith.32.1
    
    Certification by the Chief Executive Officer of the
Registrant pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, is filed herewith.32.2
    
    Certification by the Chief Financial Officer of the
Registrant pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
is filed herewith. (b)  Reports on Form 8-K. No reports on Form 8-K have been filed during the last quarter of
the fiscal year ended December 31, 2003. -22-      INDEX TO FINANCIAL STATEMENTS Independent Auditors ReportBalance
Sheets at December 31, 2003 and 2002Statements
of Earnings for the Years Ended December 31, 2003, 2002 and 2001Statements
of Comprehensive Income for the Years Ended December 31, 2003, 2002 and 2001Statements
of Stockholders Equity for the Years Ended December 31,
2003, 2002 and 2001Statements
of Cash Flows for the Years Ended December 31, 2003, 2002 and
2001Notes
to Financial Statements for the Years Ended December 31, 2003,
2002 and 2001       INDEPENDENT AUDITORS REPORT The Board of Directors of
ML Life Insurance Company of New York: We have audited the accompanying balance sheets of ML Life Insurance Company of
New York (the Company), a wholly owned subsidiary of Merrill Lynch Insurance
Group, Inc., as of December 31, 2003 and 2002, and the related statements of
earnings, comprehensive income, stockholders equity, and cash flows for each
of the three years in the period ended December 31, 2003. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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, 2003 and
2002, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2003 in conformity with accounting
principles generally accepted in the United States of America. Deloitte & Touche, LLP
New York, New York March 1, 2004
      ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) BALANCE SHEETS
AS OF DECEMBER 31, 2003 AND 2002
(Dollars in thousands, except common stock par value and shares)  ASSETS
    
    2003
    
    2002INVESTMENTS:Fixed maturity securities, at estimated fair value
(amortized cost: 2003 - $177,770 ; 2002 - $161,708)
    
    $
    182,182
    
    
    $
    165,467Equity securities, at estimated fair value
(cost: 2003 - $0; 2002 - $5,896)
    
    
    
    
    
    
    5,625Policy loans on insurance contracts
    
    
    80,992
    
    
    
    86,603Total Investments
    
    
    263,174
    
    
    
    257,695CASH AND CASH EQUIVALENTS
    
    
    12,338
    
    
    
    23,092ACCRUED INVESTMENT INCOME
    
    
    4,332
    
    
    
    4,845DEFERRED POLICY ACQUISITION COSTS
    
    
    25,035
    
    
    
    27,522FEDERAL INCOME TAXES  CURRENT
    
    
    
    
    
    
    1,504OTHER ASSETS
    
    
    3,648
    
    
    
    4,143SEPARATE ACCOUNTS ASSETS
    
    
    943,233
    
    
    
    810,384TOTAL ASSETS
    
    $
    1,251,760
    
    
    $
    1,129,185
 See accompanying notes to financial statements.
    
    (Continued)
      ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) BALANCE SHEETS (Continued)
AS OF DECEMBER 31, 2003 AND 2002
(Dollars in thousands, except common stock par value and shares)  LIABILITIES AND STOCKHOLDER'S EQUITY
    
    2003
    
    2002LIABILITIES:POLICYHOLDER LIABILITIES AND ACCRUALS:Policyholders account balances
    
    $
    216,197
    
    
    $
    232,908Claims and claims settlement expenses
    
    
    4,071
    
    
    
    3,289Total policyholder liabilities and accruals
    
    
    220,268
    
    
    
    236,197OTHER POLICYHOLDER FUNDS
    
    
    2,114
    
    
    
    787FEDERAL INCOME TAXES  DEFERRED
    
    
    4,698
    
    
    
    6,890FEDERAL INCOME TAXES  CURRENT
    
    
    1,092
    
    
    
    AFFILIATED PAYABLES  NET
    
    
    2,460
    
    
    
    2,103OTHER LIABILITIES
    
    
    28
    
    
    
    498SEPARATE ACCOUNTS LIABILITIES
    
    
    943,233
    
    
    
    810,384Total Liabilities
    
    
    1,173,893
    
    
    
    1,056,859STOCKHOLDERS EQUITY:Common stock, $10 par value - 220,000 shares
authorized, issued and outstanding
    
    
    2,200
    
    
    
    2,200Additional paid-in capital
    
    
    52,310
    
    
    
    52,310Retained earnings
    
    
    22,006
    
    
    
    17,627Accumulated other comprehensive income
    
    
    1,351
    
    
    
    189Total Stockholders Equity
    
    
    77,867
    
    
    
    72,326TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,251,760
    
    
    $
    1,129,185
 See accompanying notes to financial statements.
      ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) STATEMENTS OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(Dollars in thousands)  2003
    
    2002
    
    2001REVENUES:Policy charge revenue
    
    $
    16,388
    
    
    $
    17,963
    
    
    $
    18,723Net investment income
    
    
    12,775
    
    
    
    14,583
    
    
    
    15,870Net realized investment gains (losses)
    
    
    633
    
    
    
    (3,158
    )
    
    
    (2,477
    )Total Revenues
    
    
    29,796
    
    
    
    29,388
    
    
    
    32,116BENEFITS AND EXPENSES:Interest credited to policyholders account balances
    
    
    9,756
    
    
    
    10,610
    
    
    
    10,925Policy benefits (net of reinsurance recoveries: 2003 - $705;
2002 - $959; 2001 - $648)
    
    
    4,027
    
    
    
    4,486
    
    
    
    3,050Reinsurance premium ceded
    
    
    1,577
    
    
    
    1,748
    
    
    
    1,947Amortization of deferred policy acquisition costs
    
    
    4,810
    
    
    
    5,467
    
    
    
    3,500Insurance expenses and taxes
    
    
    3,552
    
    
    
    3,336
    
    
    
    4,820Total Benefits and Expenses
    
    
    23,722
    
    
    
    25,647
    
    
    
    24,242Net Earnings Before Federal Income Tax Provision
    
    
    6,074
    
    
    
    3,741
    
    
    
    7,874FEDERAL INCOME TAX PROVISION (BENEFIT):Current
    
    
    4,513
    
    
    
    (2,833
    )
    
    
    1,243Deferred
    
    
    (2,818
    )
    
    
    3,423
    
    
    
    2,302Total Federal Income Tax Provision
    
    
    1,695
    
    
    
    590
    
    
    
    3,545NET EARNINGS
    
    $
    4,379
    
    
    $
    3,151
    
    
    $
    4,329
 See accompanying notes to financial statements.
      ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(Dollars in thousands)  2003
    
    2002
    
    2001NET EARNINGS
    
    $
    4,379
    
    
    $
    3,151
    
    
    $
    4,329OTHER COMPREHENSIVE INCOME:Net unrealized gains on available-for-sale securities:Net unrealized holding gains (losses) arising during the period
    
    
    1,245
    
    
    
    (237
    )
    
    
    936Reclassification adjustment for (gains) losses included in net
earnings
    
    
    (321
    )
    
    
    3,160
    
    
    
    2,238Net unrealized gains on investment securities
    
    
    924
    
    
    
    2,923
    
    
    
    3,174Adjustments for:Policyholder liabilities
    
    
    864
    
    
    
    (880
    )
    
    
    (228
    )Deferred federal income taxes
    
    
    (626
    )
    
    
    (715
    )
    
    
    (1,031
    )Total other comprehensive income, net of tax
    
    
    1,162
    
    
    
    1,328
    
    
    
    1,915COMPREHENSIVE INCOME
    
    $
    5,541
    
    
    $
    4,479
    
    
    $
    6,244
 See accompanying notes to financial statements.
      ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(Dollars in thousands)  AccumulatedAdditional
    
    
    
    
    
    other
    
    TotalCommon
    
    paid-in
    
    Retained
    
    comprehensive
    
    stockholder'sstock
    
    capital
    
    earnings
    
    income (loss)
    
    equityBALANCE, JANUARY 1, 2001
    
    $
    2,200
    
    
    $
    52,310
    
    
    $
    10,147
    
    
    $
    (3,054
    )
    
    $
    61,603Net earnings
    
    
    
    
    
    
    
    
    
    
    4,329
    
    
    
    
    
    
    
    4,329Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,915
    
    
    
    1,915BALANCE, DECEMBER 31, 2001
    
    
    2,200
    
    
    
    52,310
    
    
    
    14,476
    
    
    
    (1,139
    )
    
    
    67,847Net earnings
    
    
    
    
    
    
    
    
    
    
    3,151
    
    
    
    
    
    
    
    3,151Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,328
    
    
    
    1,328BALANCE, DECEMBER 31, 2002
    
    
    2,200
    
    
    
    52,310
    
    
    
    17,627
    
    
    
    189
    
    
    
    72,326Net earnings
    
    
    
    
    
    
    
    
    
    
    4,379
    
    
    
    
    
    
    
    4,379Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,162
    
    
    
    1,162BALANCE, DECEMBER 31, 2003
    
    $
    2,200
    
    
    $
    52,310
    
    
    $
    22,006
    
    
    $
    1,351
    
    
    $
    77,867
 See accompanying notes to financial statements.
      ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(Dollars in thousands)  2003
    
    2002
    
    2001Cash Flows From Operating Activities:Net earnings
    
    $
    4,379
    
    
    $
    3,151
    
    
    $
    4,329Noncash items included in earnings:Amortization of deferred policy acquisition costs
    
    
    4,810
    
    
    
    5,467
    
    
    
    3,500Capitalization of policy acquisition costs
    
    
    (2,323
    )
    
    
    (2,074
    )
    
    
    (4,220
    )Amortization of investments
    
    
    689
    
    
    
    837
    
    
    
    307Interest credited to policyholders account balances
    
    
    9,756
    
    
    
    10,610
    
    
    
    10,925Provision (benefit) for deferred Federal income tax
    
    
    (2,818
    )
    
    
    3,423
    
    
    
    2,302(Increase) decrease in operating assets:Accrued investment income
    
    
    513
    
    
    
    (197
    )
    
    
    (27
    )Federal income taxes  current
    
    
    1,504
    
    
    
    (1,504
    )
    
    
    62Other
    
    
    495
    
    
    
    6
    
    
    
    1,928Increase (decrease) in operating liabilities:Claims and claims settlement expenses
    
    
    782
    
    
    
    (820
    )
    
    
    (829
    )Other policyholder funds
    
    
    1,327
    
    
    
    (338
    )
    
    
    139Federal income taxes  current
    
    
    1,092
    
    
    
    (295
    )
    
    
    295Affiliated payables  net
    
    
    357
    
    
    
    1,644
    
    
    
    (467
    )Other
    
    
    (470
    )
    
    
    (483
    )
    
    
    (1,198
    )Other operating activities:Net realized investment (gains) losses (excluding gains on cash
and cash equivalents)
    
    
    (633
    )
    
    
    3,158
    
    
    
    2,478Net cash and cash equivalents provided by operating activities
    
    
    19,460
    
    
    
    22,585
    
    
    
    19,524Cash Flow From Investing Activities:Proceeds from (payments for):Sales of available-for-sale securities
    
    
    38,922
    
    
    
    32,338
    
    
    
    24,345Maturities of available-for-sale securities
    
    
    60,331
    
    
    
    24,996
    
    
    
    31,446Purchases of available-for-sale securities
    
    
    (109,475
    )
    
    
    (74,117
    )
    
    
    (52,428
    )Policy loans on insurance contracts
    
    
    5,611
    
    
    
    6,364
    
    
    
    (2,600
    )Net cash and cash equivalents provided by (used in) investing
activities
    
    
    (4,611
    )
    
    
    (10,419
    )
    
    
    763
  See accompanying notes to financial statements.
    (Continued)
      ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) STATEMENTS OF CASH FLOWS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(Dollars in thousands)  2003
    
    2002
    
    2001Cash Flows From Financing Activities:Proceeds from (payments for):Policyholder deposits (excludes internal policy replacement deposits)
    
    
    57,372
    
    
    
    62,927
    
    
    
    107,009Policyholder withdrawals (including transfers to/from separate accounts)
    
    
    (82,975
    )
    
    
    (72,525
    )
    
    
    (126,286
    )Net cash and cash equivalents used in financing activities
    
    
    (25,603
    )
    
    
    (9,598
    )
    
    
    (19,277
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (10,754
    )
    
    
    2,568
    
    
    
    1,010CASH AND CASH EQUIVALENTS:Beginning of year
    
    
    23,092
    
    
    
    20,524
    
    
    
    19,514End of year
    
    $
    12,338
    
    
    $
    23,092
    
    
    $
    20,524Supplementary Disclosure of Cash Flow Information:Cash paid to (received from) affiliates for:Federal income taxes
    
    $
    1,917
    
    
    $
    (1,034
    )
    
    $
    886Interest
    
    
    18
    
    
    
    11
    
    
    
    64
 See accompanying notes to financial statements.
      ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)  NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Description of Business: ML Life Insurance Company of New York (the
Company) is a wholly owned subsidiary of Merrill Lynch Insurance Group,
Inc. (MLIG). The Company is an indirect wholly owned subsidiary of Merrill
Lynch & Co., Inc. (Merrill Lynch & Co.). The Company is domiciled in the
State of New York.The Company sells non-participating annuity products, including variable
annuities, modified guaranteed annuities and immediate annuities. The
Company is licensed to sell insurance and annuities in nine states; however,
it currently limits its marketing activities to the State of New York. The
Company markets its products solely through the retail network of Merrill
Lynch, Pierce, Fenner & Smith, Incorporated (MLPF&S), a wholly owned
broker-dealer subsidiary of Merrill Lynch & Co.Basis of Reporting: The accompanying financial statements have been prepared
in conformity with accounting principles generally accepted in the United
States of America and prevailing industry practices, both of which require
management to make estimates that affect the reported amounts and disclosure
of contingencies in the financial statements. Actual results could differ
from those estimates.The significant accounting policies and related judgements underlying the
Companys financial statements are summarized below. In applying these
policies, management makes subjective and complex judgements that frequently
require estimates about matters that are inherently uncertain.For the purpose of reporting cashflows, cash and cash equivalents include
cash on hand and on deposit and short-term investments with original
maturities of three months or less.Certain reclassifications and format changes have been made to prior year
amounts to conform to the current year presentation.Revenue Recognition: Revenues for variable annuity contracts consist of
policy charges for i) mortality and expense risks, ii) certain benefit
guarantees selected by the contract owner, iii) administration fees, iv)
annual contract maintenance charges, and v) withdrawal charges assessed on
contracts surrendered during the withdrawal charge period.Revenues for variable life insurance contracts consist of policy charges for
i) mortality and expense risks, ii) cost of insurance fees, iii) amortization
of deferred sales charges, and iv) withdrawal charges assessed on contracts
surrendered during the withdrawal charge period. The Company does not
currently manufacture variable life insurance contracts.Revenues for interest-sensitive annuity contracts (market value adjusted
annuities and immediate annuities) and interest-sensitive life insurance
contracts (single premium whole life insurance, which is not currently
marketed) consist of i) investment income, ii) gains (losses) on the sale of
invested assets, and iii) withdrawal charges assessed on contracts
surrendered during the withdrawal charge period.Investments: The Companys investments in fixed maturity and equity
securities are classified as available-for-sale and are carried at estimated
fair value with unrealized gains and losses included in stockholders equity
as a component of accumulated other comprehensive income, net of tax. If
management determines that a decline in the value of an available-for-sale
security is other-than-temporary, the carrying value is adjusted to estimated
fair value and the decline in value is recorded as a net realized investment
loss. Management makes this determination through a series of discussions
with the Companys portfolio managers and credit analysts, as well
      as information obtained from external sources (i.e. company announcements,
ratings agency announcements, or news wire services). The factors that give
rise to potential impairments include, but are not limited to, i) certain
credit-related events such as default of principal or interest payments, ii)
bankruptcy of issuer, and iii) certain security restructurings. In the
absence of a readily ascertainable market value, the estimated fair value on
these securities represents managements estimate of the securitys ultimate
recovery value. Management bases this determination on the most recent
information available.For fixed maturity securities, premiums are amortized to the earlier of the
call or maturity date, discounts are accreted to the maturity date, and
interest income is accrued daily. For equity securities, dividends are
recognized on the ex-dividend date. Realized gains and losses on the sale or
maturity of investments are determined on the basis of specific
identification. Investment transactions are recorded on the trade date.Certain fixed maturity securities are considered non-investment grade. The
Company defines non-investment grade fixed maturity securities as unsecured
debt obligations that have a rating equivalent to Standard and Poors (or
similar rating agency) BB+ or lower.Policy loans on insurance contracts are stated at unpaid principal balances.Deferred Policy Acquisition Costs: Certain policy acquisition costs for life
and annuity contracts are deferred and amortized based on the estimated
future gross profits for each group of contracts. These future gross profit
estimates are subject to periodic evaluation by the Company, with necessary
revisions applied against amortization to date. The impact of these revisions
on cumulative amortization is recorded as a charge or credit to current
operations. It is reasonably possible that estimates of future gross profits
could be reduced in the future, resulting in a material reduction in the
carrying amount of deferred policy acquisition costs.Policy acquisition costs are principally commissions and a portion of certain
other expenses relating to policy acquisition, underwriting and issuance that
are primarily related to and vary with the production of new business.
Insurance expenses and taxes reported in the Statements of Earnings are net
of amounts deferred. Policy acquisition costs can also arise from the
acquisition or reinsurance of existing inforce policies from other insurers.
These costs include ceding commissions and professional fees related to the
reinsurance assumed. The deferred costs are amortized in proportion to the
estimated future gross profits over the anticipated life of the acquired
insurance contracts utilizing an interest methodology.During 1990, the Company entered into an assumption reinsurance agreement
with an unaffiliated insurer. The acquisition costs relating to this
agreement are being amortized over a twenty-five year period using an
effective interest rate of 7.5%. This reinsurance agreement provided for
payment of contingent ceding commissions, for a ten year period, based upon
the persistency and mortality experience of the insurance contracts assumed.
Payments made for contingent ceding commissions were capitalized and
amortized using an identical methodology as that used for the initial
acquisition costs. The following is a reconciliation of the acquisition costs
related to this reinsurance agreement for the years ended December 31: 2003
    
    2002
    
    2001Beginning balance
    
    $
    9,703
    
    
    $
    11,341
    
    
    $
    12,765Capitalized amounts
    
    
    
    
    
    
    
    
    
    
    17Interest accrued
    
    
    728
    
    
    
    851
    
    
    
    957Amortization
    
    
    (1,601
    )
    
    
    (2,489
    )
    
    
    (2,398
    )Ending balance
    
    $
    8,830
    
    
    $
    9,703
    
    
    $
    11,341
      The following table presents the expected amortization, net of interest
accrued, of these deferred acquisition costs over the next five years.
Amortization may be adjusted based on periodic evaluation of the expected
gross profits on the reinsured policies. 2004
    
    $
    6002005
    
    $
    6462006
    
    $
    7382007
    
    $
    7262008
    
    $
    718
  Separate Accounts: Assets and liabilities of Separate Accounts, representing
net deposits and accumulated net investment earnings less fees, held
primarily for the benefit of contract owners, are shown as separate captions
in the Balance Sheets. Separate Accounts are established in conformity with
New York State Insurance Law and are generally not chargeable with
liabilities that arise from any other business of the Company. Separate
Accounts assets may be subject to general claims of the Company only to the
extent the value of such assets exceeds Separate Accounts liabilities.Net investment income and net realized and unrealized gains (losses)
attributable to Separate Accounts assets accrue directly to the contract
owner and are not reported as revenue in the Companys Statements of
Earnings.Policyholders Account Balances: Liabilities for the Companys universal life
type contracts, including its life insurance and annuity products, are equal
to the full accumulation value of such contracts as of the valuation date
plus deficiency reserves for certain products. Interest-crediting rates for
the Companys fixed-rate products are as follows:  Interest-sensitive life products
    
    
    4.00%Interest-sensitive deferred annuities
    
    
    3.00%  7.40%Immediate annuities
    
    
    3.00%  8.80%
  These rates may be changed at the option of the Company after initial
guaranteed rates expire, unless contracts are subject to minimum interest
rate guarantees.Claims and Claims Settlement Expenses: Liabilities for claims and claims
settlement expenses equal the death benefit (plus accrued interest) for
claims that have been reported to the Company but have not settled and an
estimate, based upon prior experience, for unreported claims. Additionally,
the Company has established a mortality benefit accrual for its variable
annuity products.Income Taxes: The results of operations of the Company are included in the
consolidated Federal income tax return of Merrill Lynch & Co. The Company has
entered into a tax-sharing agreement with Merrill Lynch & Co. whereby the
Company will calculate its current tax provision based on its operations.
Under the agreement, the Company periodically remits to Merrill Lynch & Co.
its current Federal income tax liability.The Company uses the asset and liability method in providing income taxes on
all transactions that have been recognized in the financial statements. The
asset and liability method requires that deferred taxes be adjusted to
reflect the tax rates at which future taxable amounts will likely be settled
or realized. The effects of tax rate changes on future deferred tax
liabilities and deferred tax assets, as well as other changes in income tax
laws, are recognized in net earnings in the period during which such changes
are enacted. Valuation allowances are established when necessary to reduce
deferred tax assets to the amounts expected to be realized. See Note 4 to
the financial statements for further information.The Company is generally subject to taxes on premiums and, in substantially
all states, is exempt from state income taxes.
      Accounting Pronouncements: On April 30, 2003, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 149, Amendment of Statement 133 on Derivative Instruments and
Hedging Activities. SFAS No. 149 amends and clarifies accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities under SFAS No. 133. In addition,
it clarifies when a derivative contains a financing component that warrants
special reporting in the statements of cash flows. SFAS No. 149 is effective
for contracts entered into or modified after June 30, 2003 and for hedging
relationships designated after June 30, 2003. The adoption of SFAS No. 149
did not have a material impact on the Financial Statements.On July 7, 2003, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 03-1, Accounting and Reporting by
Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and
for Separate Accounts. The SOP provides guidance on accounting and reporting
by insurance companies for certain nontraditional long-duration contracts and
for separate accounts. The SOP is effective for financial statements for the
Company beginning in 2004. The SOP requires the establishment of a liability
for contracts that contain death or other insurance benefits using a
specified reserve methodology that is different from the methodology that the
Company currently employs. The adoption of SOP 03-1 will approximately
result in a $3.0 million increase in policyholder liabilities and a
corresponding pre-tax charge to earnings. The adoption of SOP 03-1 is
considered a change in accounting principle.In November of 2003, the Emerging Issues Task Force (EITF) reached a
consensus on Issue 03-01, The Meaning of Other-Than-Temporary Impairment and
Its Application to Certain Investments, as it relates to disclosures for SFAS
115 securities. In addition to the disclosures already required by SFAS 115,
EITF Issue 03-01 requires both quantitative and qualitative disclosures for
marketable equity and debt securities. The new disclosure requirements are
required to be applied to financial statements for fiscal years ending after
December 15, 2003. See Note 3 to the Financial Statements for these
disclosures.On December 31, 2002, the FASB issued SFAS No.148, Accounting for Stock-Based
Compensation  Transition and Disclosure, an amendment of FASB Statement No.
123, Accounting for Stock Based Compensation. SFAS No. 148 permits three
alternative methods for a voluntary transition to the fair value-based method
for those entities that adopt the standard prior to the end of fiscal
year-end 2003. Beginning in 2004, SFAS No. 148 eliminates prospective
application as a method of adoption for reporting stock-based compensation,
but continues to permit modified prospective application, which requires the
fair value of all unvested awards to be amortized over the remaining service
period, as well as restatement of prior years expense. The transition
guidance and disclosure provisions of SFAS No. 148 were effective for fiscal
years ending after December 15, 2002. Merrill Lynch & Co. intends to adopt
the fair value method of accounting for stock-based compensation under SFAS
No. 123 in 2004 using the retroactive restatement method permitted under SFAS
No. 148. This will result in additional allocated compensation expense to
the Company. The allocation of additional compensation expense is not
expected to have a material impact on the Companys Financial Statements. NOTE 2. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS  Financial instruments are carried at fair value or amounts that approximate
fair value. The carrying value of financial instruments as of December 31
were: 2003
    
    2002Assets:Fixed maturity securities (1)
    
    $
    182,182
    
    
    $
    165,467Equity securities (1)
    
    
    
    
    
    
    5,625Policy loans on insurance contracts (2)
    
    
    80,992
    
    
    
    86,603Cash and cash equivalents (3)
    
    
    12,338
    
    
    
    23,092Separate Accounts assets (4)
    
    
    943,233
    
    
    
    810,384Total financial instruments
    
    $
    1,218,745
    
    
    $
    1,091,171
      (1)
    
    For publicly traded securities, the estimated fair value is
determined using quoted market prices. For securities without a readily
ascertainable market value, the Company utilizes pricing services and
broker quotes. Such estimated fair values do not necessarily represent
the values for which these securities could have been sold at the dates
of the balance sheets. At December 31, 2003 and 2002, securities without
a readily ascertainable market value, having an amortized cost of
$21,702 and $20,353, had an estimated fair value of $22,580 and $18,844,
respectively.(2)
    
    The Company estimates the fair value of policy loans as equal to the
book value of the loans. Policy loans are fully collateralized by the
account value of the associated insurance contracts, and the spread
between the policy loan interest rate and the interest rate credited to
the account value held as collateral is fixed.(3)
    
    The estimated fair value of cash and cash equivalents approximates
the carrying value.(4)
    
    Assets held in Separate Accounts are carried at the net asset value
provided by the fund managers. NOTE 3. INVESTMENTS  The amortized cost and estimated fair value of investments in fixed maturity
securities and equity securities as of December 31 were: 2003Gross
    
    Gross
    
    EstimatedAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueFixed maturity securities:Corporate debt securities
    
    $
    158,415
    
    
    $
    4,420
    
    
    $
    1,082
    
    
    $
    161,753U.S. Government and agencies
    
    
    15,049
    
    
    
    748
    
    
    
    
    
    
    
    15,797Foreign governments
    
    
    3,005
    
    
    
    248
    
    
    
    2
    
    
    
    3,251Mortgage-backed securities
    
    
    1,301
    
    
    
    90
    
    
    
    10
    
    
    
    1,381Total fixed maturity securities
    
    $
    177,770
    
    
    $
    5,506
    
    
    $
    1,094
    
    
    $
    182,182
 2002Cost /
    
    Gross
    
    Gross
    
    EstimatedAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueFixed maturity securities:Corporate debt securities
    
    $
    137,726
    
    
    $
    4,582
    
    
    $
    2,542
    
    
    $
    139,766U.S. Government and agencies
    
    
    20,054
    
    
    
    1,329
    
    
    
    
    
    
    
    21,383Foreign governments
    
    
    2,008
    
    
    
    205
    
    
    
    
    
    
    
    2,213Mortgage-backed securities
    
    
    1,920
    
    
    
    185
    
    
    
    
    
    
    
    2,105Total fixed maturity securities
    
    $
    161,708
    
    
    $
    6,301
    
    
    $
    2,542
    
    
    $
    165,467Equity securities:Non-redeemable preferred stocks
    
    $
    5,896
    
    
    $
    35
    
    
    $
    306
    
    
    $
    5,625
      Estimated fair value and gross unrealized losses by length of time that
certain fixed maturity securities have been in a continuous unrealized loss
position at December 31, 2003 were: Less than 12 Months
    
    More than 12 Months
    
    TotalEstimated
    
    Unrealized
    
    Estimated
    
    Unrealized
    
    Estimated
    
    UnrealizedFair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    LossesFixed Maturity Securities:Corporate debt securities
    
    $
    37,273
    
    
    $
    856
    
    
    $
    1,227
    
    
    $
    226
    
    
    $
    38,500
    
    
    $
    1,082Foreign governments
    
    
    997
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    997
    
    
    
    2Mortgage-backed securities
    
    
    604
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    604
    
    
    
    10Total temporarily impaired securities
    
    $
    38,874
    
    
    $
    868
    
    
    $
    1,227
    
    
    $
    226
    
    
    $
    40,101
    
    
    $
    1,094
  Unrealized losses primarily relate to corporate debt securities rated BBB or
higher and are due to price fluctuations as a result of changes in interest
rates. These investments are not considered other-than-temporarily impaired
since based on the most recent available information the Company has the
ability and intent to hold the investments for a period of time sufficient for
a forecasted market price recovery up to or beyond the amortized cost of the
investment.Realized investment losses on securities deemed to have incurred
other-than-temporary declines in fair value were $786, $3,503, and $405 for
the years ended December 31, 2003, 2002, and 2001 respectively.The amortized cost and estimated fair value of fixed maturity securities at
December 31, 2003 by contractual maturity were: EstimatedAmortized
    
    FairCost
    
    ValueFixed maturity securities:Due in one year or less
    
    $
    20,935
    
    
    $
    21,123Due after one year through five years
    
    
    138,415
    
    
    
    141,602Due after five years through ten years
    
    
    8,437
    
    
    
    8,809Due after ten years
    
    
    8,682
    
    
    
    9,267176,469
    
    
    
    180,801Mortgage-backed securities
    
    
    1,301
    
    
    
    1,381Total fixed maturity securities
    
    $
    177,770
    
    
    $
    182,182
  Fixed maturity securities not due at a single maturity date have been
included in the preceding table in the year of final maturity. Expected
maturities may differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
      The amortized cost and estimated fair value of fixed maturity securities at
December 31, 2003 by rating agency equivalent were: EstimatedAmortized
    
    FairCost
    
    ValueAAA
    
    $
    52,686
    
    
    $
    54,211AA
    
    
    29,903
    
    
    
    30,067A
    
    
    75,576
    
    
    
    78,176BBB
    
    
    18,211
    
    
    
    18,395Non-investment grade
    
    
    1,394
    
    
    
    1,333Total fixed maturity securities
    
    $
    177,770
    
    
    $
    182,182
  The Company has recorded certain adjustments to policyholders account
balances in conjunction with unrealized holding gains or losses on
investments classified as available-for-sale. The Company adjusts those
liabilities as if the unrealized holding gains or losses had actually been
realized, with corresponding credits or charges reported in accumulated other
comprehensive income, net of taxes. The components of net unrealized gains
(losses) included in accumulated other comprehensive income as of December 31
were as follows: 2003
    
    2002Assets:Fixed maturity securities
    
    $
    4,412
    
    
    $
    3,759Equity securities
    
    
    
    
    
    
    (271
    )4,412
    
    
    
    3,488Liabilities:Policyholders account balances
    
    
    2,334
    
    
    
    3,198Federal income taxes  deferred
    
    
    727
    
    
    
    1013,061
    
    
    
    3,299Stockholders equity:Accumulated other comprehensive income
    
    $
    1,351
    
    
    $
    189
  Proceeds and gross realized investment gains and losses from the sale of
available-for-sale securities for the years ended December 31 were: 2003
    
    2002
    
    2001Proceeds
    
    $
    38,922
    
    
    $
    32,338
    
    
    $
    24,345Gross realized investment gains
    
    
    2,485
    
    
    
    1,259
    
    
    
    223Gross realized investment losses
    
    
    1,852
    
    
    
    4,417
    
    
    
    2,701
  The
Company considers fair value at the date of sale to be equal to
proceeds received. Proceeds for gross realized investment losses from the sale of
available-for-sale securities were $7,903, $12,335 and $8,739 for the years
ended December 31, 2003, 2002, and 2001, respectively.The Company had investment securities with a carrying value of $959 that were
deposited with insurance regulatory authorities at both December 31, 2003 and
2002.Excluding investments in U.S. Government and agencies, the Company is not
exposed to any significant concentration of credit risk in its fixed maturity
securities portfolio.
      Net investment income arose from the following sources for the years ended December 31: 2003
    
    2002
    
    2001Fixed maturity securities
    
    $
    8,589
    
    
    $
    9,131
    
    
    $
    9,929Equity securities
    
    
    206
    
    
    
    855
    
    
    
    1,104Policy loans on insurance contracts
    
    
    4,004
    
    
    
    4,400
    
    
    
    4,440Cash and cash equivalents
    
    
    221
    
    
    
    410
    
    
    
    760Other
    
    
    52
    
    
    
    72
    
    
    
    1Gross investment income
    
    
    13,072
    
    
    
    14,868
    
    
    
    16,234Less investment expenses
    
    
    (297
    )
    
    
    (285
    )
    
    
    (364
    )Net investment income
    
    $
    12,775
    
    
    $
    14,583
    
    
    $
    15,870
  Net realized investment gains (losses), for the years ended December 31 were as follows: 2003
    
    2002
    
    2001Fixed maturity securities
    
    $
    460
    
    
    $
    (3,642
    )
    
    $
    (2,458
    )Equity securities
    
    
    173
    
    
    
    484
    
    
    
    (20
    )Cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    1Net realized investment gains (losses)
    
    $
    633
    
    
    $
    (3,158
    )
    
    $
    (2,477
    )
 NOTE 4. FEDERAL INCOME TAXES  The following is a reconciliation of the provision for income taxes based on
earnings before Federal income taxes, computed using the Federal statutory
tax rate, versus the reported provision for income taxes for the years ended
December 31: 2003
    
    2002
    
    2001Provision for income taxes computed at Federal statutory rate
    
    $
    2,126
    
    
    $
    1,309
    
    
    $
    2,756Increase (decrease) in income taxes resulting from:Dividend received deduction
    
    
    (243
    )
    
    
    (707
    )
    
    
    (78
    )Foreign tax credit
    
    
    (188
    )
    
    
    (12
    )
    
    
    17Interest adjustments
    
    
    
    
    
    
    
    
    
    
    832Non-deductible fees
    
    
    
    
    
    
    
    
    
    
    18Federal income tax provision
    
    $
    1,695
    
    
    $
    590
    
    
    $
    3,545
  The Federal statutory rate for each of the three years ended December 31 was 35%.The Company provides for deferred income taxes resulting from temporary
differences that arise from recording certain transactions in different years
for income tax reporting purposes than for financial reporting purposes. The
sources of these differences and the tax effect of each are as follows:
      2003
    
    2002
    
    2001Policyholders account balances
    
    $
    (2,308
    )
    
    $
    4,335
    
    
    $
    1,859Deferred policy acquisition costs
    
    
    (508
    )
    
    
    (852
    )
    
    
    440Investment adjustments
    
    
    (2
    )
    
    
    (60
    )
    
    
    3Deferred Federal income tax provision (benefit)
    
    $
    (2,818
    )
    
    $
    3,423
    
    
    $
    2,302
  Deferred tax assets and liabilities as of December 31 are determined as follows: 2003
    
    2002Deferred tax assets:Investment adjustments
    
    $
    1,446
    
    
    $
    1,444Policyholders account balances
    
    
    924
    
    
    
    Total deferred tax assets
    
    
    2,370
    
    
    
    1,444Deferred tax liabilities:Deferred policy acquisition costs
    
    
    6,341
    
    
    
    6,849Net unrealized investment gain on
investment securities
    
    
    727
    
    
    
    101Policyholders account balances
    
    
    
    
    
    
    1,384Total deferred tax liabilities
    
    
    7,068
    
    
    
    8,334Net deferred tax liability
    
    $
    4,698
    
    
    $
    6,890
  The Company anticipates that all deferred tax assets will be realized,
therefore no valuation allowance has been provided. NOTE 5. REINSURANCE  In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured life and to recover a portion of benefits paid by
ceding reinsurance to other insurance enterprises or reinsurers under
indemnity reinsurance agreements, primarily excess coverage and coinsurance
agreements. The maximum amount of mortality risk retained by the Company is
approximately $500 on single life policies and joint life policies.  Indemnity reinsurance agreements do not relieve the Company from its
obligations to policyholders. Failure of reinsurers to honor their
obligations could result in losses to the Company. The Company regularly
evaluates the financial condition of its reinsurers so as to minimize its
exposure to significant losses from reinsurer insolvencies. The Company holds
collateral under reinsurance agreements in the form of letters of credit and
funds withheld totaling $124 that can be drawn upon for delinquent
reinsurance recoverables.  As of December 31, 2003, the Company had the following life insurance inforce: PercentageCeded to
    
    Assumed
    
    
    
    
    
    of amountGross
    
    other
    
    from other
    
    Net
    
    assumed toamount
    
    companies
    
    companies
    
    amount
    
    netLife insurance
inforce
    
    $
    692,752
    
    
    $
    101,108
    
    
    $
    1,976
    
    
    $
    593,620
    
    
    
    0.3
    %
  The Company was a party to a reinsurance agreement with an unaffiliated
insurer, whereby the Company assumed mortality risk, within certain limits,
on a block of yearly renewable term life insurance contracts. During 2002,
the unaffiliated insurer recaptured this block of business from the Company.
      In addition, the Company seeks to limit its exposure to guaranteed features
contained in certain variable annuity contracts. Specifically, the Company
reinsures certain guaranteed living and minimum death benefit provisions to
the extent reinsurance capacity is available in the marketplace. As of
December 31, 2003, 100% and 2% of the account value for variable annuity
contracts containing guaranteed living and minimum death benefit provisions,
respectively, were reinsured. NOTE 6. RELATED PARTY TRANSACTIONS  The Company and MLIG are parties to a service agreement whereby MLIG has
agreed to provide certain accounting, data processing, legal, actuarial,
management, advertising and other services to the Company. Expenses incurred
by MLIG, in relation to this service agreement, are reimbursed by the Company
on an allocated cost basis. Charges billed to the Company by MLIG pursuant to
the agreement were $3,431, $3,412 and $4,963 for 2003, 2002 and 2001
respectively. Charges attributable to this agreement are included in
insurance expenses and taxes, except for investment related expenses, which
are included in net investment income. The Company is allocated interest
expense on its accounts payable to MLIG that approximates the daily Federal
funds rate. Total intercompany interest incurred was $18, $11 and $64 for
2003, 2002 and 2001, respectively. Intercompany interest is included in net
investment income.The Company and Merrill Lynch Investment Managers, L.P. (MLIM) are parties
to a service agreement whereby MLIM has agreed to provide certain invested
asset management services to the Company. The Company pays a fee to MLIM for
these services through the MLIG service agreement. Charges attributable to
this agreement and allocated to the Company by MLIG were $171, $150 and $145
for 2003, 2002 and 2001, respectively.During 2002, MLIG entered into an agreement with Roszel Advisors, LLC
(Roszel), a subsidiary of MLIG, with respect to administrative services for
the MLIG Variable Insurance Trust (the Trust). Certain Separate Accounts
of the Company may invest in the various mutual fund portfolios of the Trust
in connection with variable annuity contracts the Company has inforce. Under
this agreement, Roszel pays MLIG an amount equal to a percentage of the assets invested
in the Trust through the Separate Accounts. Revenue attributable to this agreement is
included in policy charge
revenue. The Company received from MLIG its allocable share of such
compensation in the amount of $101 and $22 during 2003 and 2002,
respectively.The Company has a general agency agreement with Merrill Lynch Life Agency
Inc. (MLLA) whereby registered representatives of MLPF&S, who are the
Companys licensed insurance agents, solicit applications for contracts to be
issued by the Company. MLLA is paid commissions for the contracts sold by
such agents. Commissions paid to MLLA were $2,267, $1,902 and $3,910 for
2003, 2002 and 2001, respectively. Substantially all of these commissions
were capitalized as deferred policy acquisitions costs and are being
amortized in accordance with the policy discussed in Note 1 to the Financial
Statements.While management believes that the service agreements referenced above are
calculated on a reasonable basis, they may not necessarily be indicative of
the costs that would have been incurred with an unrelated third party.
Affiliated agreements generally contain reciprocal indemnity provisions
pertaining to each partys representations and contractual obligations
thereunder. NOTE 7. STOCKHOLDERS EQUITY AND STATUTORY REGULATIONS  Notice of intention to declare a dividend must be filed with the New York
Superintendent of Insurance who may disallow the payment. The Company filed
no dividend requests during 2003, 2002 or 2001.Statutory capital and surplus at December 31, 2003 and 2002, was $28,371, and
$21,411, respectively. At December 31, 2003 and 2002, approximately $2,617
and $1,921, respectively, of stockholders equity was available for
distribution to MLIG.Applicable insurance department regulations require that the Company report
its accounts in accordance with statutory accounting practices. Statutory
accounting practices differ from principles utilized in these financial
      statements as follows: policy acquisition costs are expensed as incurred,
future policy benefit reserves are established using different actuarial
assumptions, provisions for deferred income taxes are limited to temporary
differences that will be recognized within one year, and securities are
valued on a different basis. The Companys statutory net income (loss) for
2003, 2002 and 2001 was $6,567, ($13,824) and $348, respectively. The
statutory net loss incurred during 2002 was primarily due to establishing
additional policy benefit reserves required by state insurance regulation.The Companys statutory financial statements are presented on the basis of
accounting practices prescribed or permitted by the New York Insurance
Department. The State of New York has adopted the National Association of
Insurance Commissioners statutory accounting practices as a component of
prescribed or permitted practices by the State of New York.The National Association of Insurance Commissioners utilizes the Risk Based
Capital (RBC) adequacy monitoring system. The RBC calculates the amount of
adjusted capital that a life insurance company should have based upon that
companys risk profile. As of December 31, 2003, and 2002, based on the RBC
formula, the Companys total adjusted capital level was well in excess of the
minimum amount of capital required to avoid regulatory action. NOTE 8. COMMITMENTS AND CONTINGENCIES  State insurance laws generally require that all life insurers who are
licensed to transact business within a state become members of the states
life insurance guaranty association. These associations have been established
for the protection of policyholders from loss (within specified limits) as a
result of the insolvency of an insurer. At the time an insolvency occurs, the
guaranty association assesses the remaining members of the association an
amount sufficient to satisfy the insolvent insurers policyholder obligations
(within specified limits). Based upon the public information available at
this time, management believes the Company has no material financial
obligations to state guaranty associations.In the normal course of business, the Company is subject to various claims
and assessments. Management believes the settlement of these matters would
not have a material effect on the financial position or results of operations
of the Company. NOTE 9. SEGMENT INFORMATION  In reporting to management, the Companys operating results are categorized
into two business segments: Life Insurance and Annuities. The Companys Life
Insurance segment consists of variable life insurance products and
interest-sensitive life insurance products. The Companys Annuity segment
consists of variable annuities and interest-sensitive annuities. The
accounting policies of the business segments are the same as those described
in the summary of significant accounting policies. All revenue and expense
transactions are recorded at the product level and accumulated at the
business segment level for review by management. The Other category,
presented in the following segment financial information, represents net
revenues and earnings on assets that do not support life or annuity contract
owner liabilities.
      The following table summarizes each business segments contribution to the consolidated amounts: Life2003
    
    Insurance
    
    Annuities
    
    Other
    
    TotalNet interest spread (a)
    
    $
    485
    
    
    $
    1,697
    
    
    $
    837
    
    
    $
    3,019Other revenues
    
    
    7,605
    
    
    
    9,416
    
    
    
    
    
    
    
    17,021Net revenues
    
    
    8,090
    
    
    
    11,113
    
    
    
    837
    
    
    
    20,040Policy benefits
    
    
    2,114
    
    
    
    1,913
    
    
    
    
    
    
    
    4,027Reinsurance premium ceded
    
    
    1,562
    
    
    
    15
    
    
    
    
    
    
    
    1,577Amortization of deferred policy
acquisition costs
    
    
    1,632
    
    
    
    3,178
    
    
    
    
    
    
    
    4,810Other non-interest expenses
    
    
    1,217
    
    
    
    2,335
    
    
    
    
    
    
    
    3,552Total non-interest expenses
    
    
    6,525
    
    
    
    7,441
    
    
    
    
    
    
    
    13,966Net earnings before Federal income
tax provision
    
    
    1,565
    
    
    
    3,672
    
    
    
    837
    
    
    
    6,074Federal income tax provision
    
    
    307
    
    
    
    1,095
    
    
    
    293
    
    
    
    1,695Net earnings
    
    $
    1,258
    
    
    $
    2,577
    
    
    $
    544
    
    
    $
    4,379Balance Sheet Information:Total assets
    
    $
    397,569
    
    
    $
    831,328
    
    
    $
    22,863
    
    
    $
    1,251,760Deferred policy acquisition costs
    
    
    10,179
    
    
    
    14,856
    
    
    
    
    
    
    
    25,035Policyholder liabilities and accruals
    
    
    93,172
    
    
    
    127,096
    
    
    
    
    
    
    
    220,268Other policyholder funds
    
    
    677
    
    
    
    1,437
    
    
    
    
    
    
    
    2,114
      Life2002
    
    Insurance
    
    Annuities
    
    Other
    
    TotalNet interest spread (a)
    
    $
    662
    
    
    $
    2,503
    
    
    $
    808
    
    
    $
    3,973Other revenues
    
    
    8,440
    
    
    
    6,478
    
    
    
    (113
    )
    
    
    14,805Net revenues
    
    
    9,102
    
    
    
    8,981
    
    
    
    695
    
    
    
    18,778Policy benefits
    
    
    2,216
    
    
    
    2,270
    
    
    
    
    
    
    
    4,486Reinsurance premium ceded
    
    
    1,748
    
    
    
    
    
    
    
    
    
    
    
    1,748Amortization of deferred policy
acquisition costs
    
    
    2,163
    
    
    
    3,304
    
    
    
    
    
    
    
    5,467Other non-interest expenses
    
    
    1,225
    
    
    
    2,111
    
    
    
    
    
    
    
    3,336Total non-interest expenses
    
    
    7,352
    
    
    
    7,685
    
    
    
    
    
    
    
    15,037Net earnings before Federal income
tax provision
    
    
    1,750
    
    
    
    1,296
    
    
    
    695
    
    
    
    3,741Federal income tax provision (benefit)
    
    
    374
    
    
    
    (27
    )
    
    
    243
    
    
    
    590Net earnings
    
    $
    1,376
    
    
    $
    1,323
    
    
    $
    452
    
    
    $
    3,151Balance Sheet Information:Total assets
    
    $
    390,244
    
    
    $
    725,481
    
    
    $
    13,460
    
    
    $
    1,129,185Deferred policy acquisition costs
    
    
    11,760
    
    
    
    15,762
    
    
    
    
    
    
    
    27,522Policyholder liabilities and accruals
    
    
    99,271
    
    
    
    136,926
    
    
    
    
    
    
    
    236,197Other policyholder funds
    
    
    588
    
    
    
    199
    
    
    
    
    
    
    
    787
      Life2001
    
    Insurance
    
    Annuities
    
    Other
    
    TotalNet interest spread (a)
    
    $
    1,311
    
    
    $
    2,638
    
    
    $
    996
    
    
    $
    4,945Other revenues
    
    
    9,028
    
    
    
    7,210
    
    
    
    8
    
    
    
    16,246Net revenues
    
    
    10,339
    
    
    
    9,848
    
    
    
    1,004
    
    
    
    21,191Policy benefits
    
    
    1,322
    
    
    
    1,728
    
    
    
    
    
    
    
    3,050Reinsurance premium ceded
    
    
    1,947
    
    
    
    
    
    
    
    
    
    
    
    1,947Amortization of deferred policy
acquisition costs
    
    
    2,018
    
    
    
    1,482
    
    
    
    
    
    
    
    3,500Other non-interest expenses
    
    
    2,055
    
    
    
    2,765
    
    
    
    
    
    
    
    4,820Total non-interest expenses
    
    
    7,342
    
    
    
    5,975
    
    
    
    
    
    
    
    13,317Net earnings before Federal income
tax provision
    
    
    2,997
    
    
    
    3,873
    
    
    
    1,004
    
    
    
    7,874Federal income tax provision
    
    
    1,134
    
    
    
    2,060
    
    
    
    351
    
    
    
    3,545Net earnings
    
    $
    1,863
    
    
    $
    1,813
    
    
    $
    653
    
    
    $
    4,329Balance Sheet Information:Total assets
    
    $
    452,156
    
    
    $
    828,087
    
    
    $
    21,397
    
    
    $
    1,301,640Deferred policy acquisition costs
    
    
    13,847
    
    
    
    17,068
    
    
    
    
    
    
    
    30,915Policyholder liabilities and accruals
    
    
    107,660
    
    
    
    127,465
    
    
    
    
    
    
    
    235,125Other policyholder funds
    
    
    686
    
    
    
    439
    
    
    
    
    
    
    
    1,125
  (a)
    
    Management considers investment income net of interest credited to
policyholders account balances in evaluating results.  The table below summarizes the Companys net revenues by product for 2003, 2002 and 2001: 2003
    
    2002
    
    2001Life InsuranceVariable life
    
    $
    8,041
    
    
    $
    8,919
    
    
    $
    9,989Interest-sensitive whole life
    
    
    49
    
    
    
    183
    
    
    
    350Total Life Insurance
    
    
    8,090
    
    
    
    9,102
    
    
    
    10,339AnnuitiesVariable annuities
    
    
    9,587
    
    
    
    9,782
    
    
    
    9,853Interest-sensitive annuities
    
    
    1,526
    
    
    
    (801
    )
    
    
    (5
    )Total Annuities
    
    
    11,113
    
    
    
    8,981
    
    
    
    9,848Other
    
    
    837
    
    
    
    695
    
    
    
    1,004Total
    
    $
    20,040
    
    
    $
    18,778
    
    
    $
    21,191
 ******
      SIGNATURES Pursuant to the requirements of Section 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. ML Life Insurance Company of New York(Registrant)Date:
March 23, 2004
    
    By:
    /s/ Joseph E. JusticeJoseph E. Justice
Chief Financial Officer 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. Signature
    
    Title
    
    Date/s/ Barry G. SkolnickBarry G. Skolnick
    
    Director, Senior Vice President,
and General Counsel*
    
    March 24, 2004/s/ Joseph E. JusticeJoseph E. Justice
    
    Director, Senior Vice President,
Chief Financial Officer, and
Treasurer
    
    March 23, 2004*H. McIntyre Gardner
    
    Director and Chairman of the Board
    
    March 24, 2004*Nikos K. Kardassis
    
    Director, President, and Chief
Executive Officer
    
    March 24, 2004       *Deborah J. Adler
    
    Director, Senior Vice President and Chief Actuary
    
    March 24, 2004*Frederick J. C. Butler
    
    Director
    
    March 24, 2004*Richard M. Drew
    
    Director
    
    March 24, 2004*Christopher J. Grady
    
    Director and Senior Vice President
    
    March 24, 2004*Robert L. Israeloff
    
    Director
    
    March 24, 2004*Robert A. King
    
    Director
    
    March 24, 2004*Irving M. Pollack
    
    Director
    
    March 24, 2004*Concetta M. Ruggiero
    
    Director and Senior Vice President
    
    March 24, 2004*Lori M. Salvo
    
    Director, Vice President,
Senior Counsel,Director of Compliance, and Secretary
    
    March 24, 2004*Cynthia Kahn Sherman
    
    Director
    
    March 24, 2004/s/ Connie F. YostConnie F. Yost
    
    Vice President and Controller
    
    March 23, 2004 *Signing in his own capacity and as Attorney-in-Fact.       SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT. No annual report covering the Registrants last fiscal year or proxy
material has been or will be sent to Registrants security holder       EXHIBIT INDEX Exhibit No.
    
    Description
    
    Location3.1
    
    Certificate of Amendment of the Charter of
ML Life Insurance Company of New York
    
    Incorporated by reference to Exhibit
6(a)(ii) to Post-Effective Amendment No.
10 to ML of New York Variable Annuity
Account As registration statement on Form
N-4, File No. 33-43654, filed December 9,
1996.3.2
    
    By-Laws of ML Life Insurance Company of
New York
    
    Incorporated by reference to Exhibit 6(b)
to Post-Effective Amendment No. 10 to ML
of New York Variable Annuity Account As
registration statement on Form N-4, File
No. 33-43654, filed December 9, 1996.4.1
    
    Modified Guaranteed Annuity Contract
    
    Incorporated by reference to Exhibit 4(a)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed October
16, 1990.4.2
    
    Modified Guaranteed Annuity Contract
Application
    
    Incorporated by reference to Exhibit 4(b)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed October
16, 1990.4.3
    
    Qualified Retirement Plan Endorsement
    
    Incorporated by reference to Exhibit 4(c)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed
October 16, 1990.4.4
    
    IRA Endorsement
    
    Incorporated by reference to Exhibit 4(d)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed October
16, 1990. E-1      4.5
      
      Company Name Change Endorsement
      
      Incorporated by reference to
        Exhibit 4(e) to Post-Effective Amendment No. 3 to the Registrants
        registration statement on Form S-1, File No. 33-34562, filed
        March 30, 1992.4.6
      
      IRA Endorsement, MLNY009
      
      Incorporated by reference to
        Exhibit 4(d)(2) to Post-Effective Amendment No. 1 to the Registrants
        registration statement on Form S-1, File No. 33-60288, filed
        March 31, 1994.4.7
      
      Modified Guaranteed Annuity
        Contract
        MLNY-AY-991/94
      
      Incorporated by reference to
        Exhibit 4(a)(2) to Post-Effective Amendment No. 3 to the Registrants
        registration statement on Form S-1, File No. 33-60288, filed
        December 7, 1994.4.8
      
      Qualified Retirement Plan
        Endorsement 
        MLNY-AYQ-991/94
      
      Incorporated by reference to
        Exhibit 4(c)(2) to Post-Effective Amendment No. 3 to the Registrants
        registration statement on Form S-1, File No. 33-60288, filed
        December 7, 1994.10.1
      
      General Agency Agreement between
        Royal Tandem Life Insurance Company and Merrill Lynch Life Agency Inc.
      
      Incorporated by reference to
        Exhibit 10(a) to Pre-Effective Amendment No. 1 to the Registrants
        registration statement on Form S-1, File No. 33-34562, filed
        October 16, 1990.10.2
      
      Investment Management Agreement
        by and between Royal Tandem Life Insurance Company and Equitable Capital
        Management Corporation
      
      Incorporated by reference to
        Exhibit 10(b) to Pre-Effective Amendment No. 1 to the Registrants
        registration statement on Form S-1, File No. 33-34562, filed
        October 16, 1990.10.3
      
      Shareholders Agreement
        by and among The Equitable Life Assurance Society of the United States
        and Merrill Lynch & Co., Inc. and Tandem Financial Group, Inc.
      
      Incorporated by reference to
        Exhibit 10(c) to Pre- Effective Amendment No. 1 to the Registrants
        registration statement on Form S-1, File No. 33-34562, filed
        October 16, 1990. E-2      10.4
    
    Service Agreement by and between Royal
Tandem Life Insurance Company and Tandem
Financial Group, Inc.
    
    Incorporated by reference to Exhibit 10(d)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed October
16, 1990.10.5
    
    Service Agreement by and between Tandem
Financial Group, Inc. and Merrill Lynch &
Co., Inc.
    
    Incorporated by reference to Exhibit 10(e)
to Pre-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed October
16, 1990.10.6
    
    Form of Investment Management Agreement by
and between Royal Tandem Life Insurance
Company and Merrill Lynch Asset
Management, Inc.
    
    Incorporated by reference to Exhibit 10(f)
to Post-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed March
7, 1991.10.7
    
    Assumption Reinsurance Agreement between
Merrill Lynch Life Insurance Company,
Tandem Insurance Group, Inc. and Royal
Tandem Life Insurance Company and Family
Life Insurance Company
    
    Incorporated by reference to Exhibit 10(g)
to Post-Effective Amendment No. 3 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed March
30, 1992.10.8
    
    Indemnity Agreement between ML Life
Insurance Company of New York and Merrill
Lynch Life Agency, Inc.
    
    Incorporated by reference to Exhibit 10(h)
to Post-Effective Amendment No. 3 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed March
30, 1992.10.9
    
    Amended General Agency Agreement between
ML Life Insurance Company of New York and
Merrill Lynch Life Agency, Inc.
    
    Incorporated by reference to Exhibit 10(i)
to Post-Effective Amendment No. 3 to the
Registrants registration statement on
Form S-1, File No. 33-34562, filed March
30, 1992.10.10
    
    Amended Management Agreement between ML
Life Insurance Company of New York and
Merrill Lynch Asset Management, Inc.
    
    Incorporated by reference to Exhibit 10(j)
to the Registrants registration statement
on Form S-1, File No. 33-60288, filed March
30, 1993. E-3      10.11
    
    Mortgage Loan Servicing Agreement between
ML Life Insurance Company of New York and
Merrill Lynch & Co., Inc.
    
    Incorporated by reference to Exhibit 10(k)
to the Registrants registration statement
on Form S-1, File No. 33-60288, filed
March 29, 1995.23.1
    
    Written Consent of Deloitte & Touche LLP, independent auditors
    
    Exhibit 23.124.1
    
    Power of attorney of Frederick J. C.Butler
    
    Incorporated by reference to Exhibit 24(a)
to Post-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-60288, filed March
31, 1994.24.2
    
    Power of attorney of Robert L. Israeloff
    
    Incorporated by reference to Exhibit 24(g)
to Post-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-60288, filed March
31, 1994. E-4      24.3
    
    Power of attorney of Cynthia L. Kahn
    
    Incorporated by reference to Exhibit 24(i)
to Post-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-60288, filed March
31, 1994.24.4
    
    Power of attorney of Robert A. King
    
    Incorporated by reference to Exhibit 24(j)
to Post-Effective Amendment No. 1 the
Registrants registration statement on
Form S-1, File No. 33-60288, filed March
31, 1994.24.5
    
    Power of attorney of Irving M. Pollack
    
    Incorporated by reference to Exhibit 24(k)
to Post-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-60288, filed March
31, 1994.24.6
    
    Power of attorney of Barry G. Skolnick
    
    Incorporated by reference to Exhibit 24(l)
to Post-Effective Amendment No. 1 to the
Registrants registration statement on
Form S-1, File No. 33-60288, filed March
31, 1994.24.7
    
    Power of attorney of Richard M. Drew
    
    Incorporated by reference to Exhibit 24.14
to Annual Report on Form 10-K, File Nos.
33-34562, 33-60288, and 333-48983,
filed March 30, 2000.24.8
    
    Power of attorney of Christopher J. Grady
    
    Incorporated by reference to Exhibit 24.12
to Annual Report on Form 10-K, File Nos.
33-34562, 33-60288, and 333-48983,
filed April 2, 2001.24.9
    
    Power of attorney of H. McIntyre Gardner
    
    Incorporated by reference to ML of New
York Variable Annuity Separate Account As
registration statement on Form N-4, File
No. 333-69220, filed September 10, 2001.24.10
    
    Power of attorney of Joseph Justice
    
    Incorporated by reference to ML of New
York Variable Annuity Separate Account As
registration statement on Form N-4, File
No. 333-69220, filed September 10, 2001.24.11
    
    Power of attorney of Nikos K. Kardassis
    
    Incorporated by reference to ML of New
York Variable Annuity Separate Account As
registration statement on Form N-4, File
No. 333-69220, filed September 10, 2001.24.12
    
    Power of attorney of Lori M. Salvo
    
    Incorporated by reference to ML of New
York Variable Annuity Separate Account As
registration statement on Form N-4, File
No. 333-69220, filed September 10, 2001.24.13
    
      Power of attorney of Deborah
        J. Adler
    
      Exhibit
        24.1324.14
    
      Power of attorney of Concetta
        M. Ruggiero
    
      Exhibit
        24.1431.1
    
    Certification by the Chief Executive Officer of the Registrant
pursuant to Rule 15d-14(a).
    
    Exhibit 31.131.2
    
    Certification of the Chief Financial Officer of the Registrant
pursuant to Rule 15d-14(a).
    
    Exhibit 31.232.1
    
    Certification by the Chief Executive Officer of the
Registrant pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
    
    Exhibit 32.132.2
    
    Certification by the Chief Financial Officer of the
Registrant pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
    
    Exhibit 32.2 E-5