##### 



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, 2005

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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. [ ] Yes
[X] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Act. [ ] Yes
[X] No

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 a large accelerated filer, an accelerated filer,
or a non-accelerated filer.

[ ]
large accelerated filer [ ]
accelerated filer [X]
non-accelerated filer


Indicated by check mark whether the registrant is a shell company (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 (also referred to herein as ML of New York) 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 2005, annuity and life insurance sales were made principally
in New York (99%, 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, 2005, approximately 1,395 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 1A. Risk Factors


In the course of conducting its business operations, ML of New York could be exposed to a variety
of risks that are inherent to the insurance industry. A summary of some of the significant risks
that could affect ML of New Yorks financial condition and results of operations is included below.
Some of these risks are managed in accordance with established risk management policies and
procedures.


Competitive Environment

Industry Trends Could Adversely Affect Financial Results


ML of New York continues to be influenced by a variety of trends that affect the insurance
industry. The product development and product life-cycles have shortened in many product segments,
leading to more intense competition with respect to product features. Larger companies have the
ability to invest in brand equity, product development and risk management, which are among the
fundamentals for sustained profitable growth in the life insurance industry. In addition, several
of the industrys products can be quite homogeneous and subject to intense price competition, and
sufficient scale, financial strength and flexibility are becoming prerequisites for sustainable
growth in the life insurance industry. Larger market participants tend to have the capacity to
invest in additional distribution capability and the information technology needed to offer the
superior customer service demanded by an increasingly sophisticated industry client base.


Competitive Factors May Adversely Affect Market Share and Financial Results

ML of New York is subject to intense competition. Management believes that this competition is
based on a number of factors, including service, product features, scale, price, financial
strength, claims-paying ratings, credit ratings, e-business capabilities and name recognition. ML
of New York competes with a large number of other insurers for insurance products, as well as
non-insurance financial services companies for investment products. Some of these companies offer a
broader array of products, have more competitive pricing or, with respect to other insurers, have
higher claims paying ability ratings. Some may also have greater financial resources with which to
compete.


Regulatory and Legislative Risks

The Insurance Industry is Heavily Regulated, and Changes in Regulation May Adversely Affect
Financial Results


The life insurance industry is regulated at the state level, with some products also subject to
federal regulation. Various federal and state securities regulators and self-regulatory
organizations (including the Securities and Exchange Commission, New York Stock Exchange, and the
NASD, Inc.), 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,
mutual fund and variable annuity distribution practices, disclosure practices and auditor
independence.


-2-



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ML of New York is subject to a wide variety of insurance and other laws and regulations. As life
insurers introduce new and often more complex products, regulators refine capital requirements and
introduce new reserving standards for the life insurance industry. Regulation recently adopted or
currently under review can potentially impact the reserving/capital requirements and
marketing/sales practices for certain products, particularly variable annuities.


Compliance with applicable laws and regulations is time consuming and personnel-intensive, and
changes in these laws and regulations may materially increase ML of New Yorks direct and indirect
compliance and other expenses of doing business, thus having a material adverse effect on financial
results.


Changes in Tax Legislation Could Make Certain Products Less Attractive to Consumers

Changes in tax laws could make variable annuities less attractive to consumers. For example,
enacted reductions in the federal income tax that individual investors are required to pay on
dividends and capital gains on stocks and mutual funds provide an incentive for some customers and
potential customers to shift assets into mutual funds, and away from variable annuity products.
These enacted tax rate reductions may impact the relative attractiveness of annuities as compared
to stocks and mutual funds.


ML of New York cannot predict whether any other legislation will be enacted, what the specific
terms of any such legislation will be or how, if at all, this legislation or any other legislation
could have a material adverse effect on financial condition and results of operations.


Market Risk

Volatility in Equity Markets May Adversely Affect Sales of Variable Annuity Products and Financial
Results


Significant downturns and volatility in equity markets may have an adverse effect on ML of New
Yorks financial results.


Market downturns and volatility may discourage purchases of variable annuities which are generally
correlated to the performance of the equity markets and may cause existing customers to withdraw or
reduce investments in those products. In addition, 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 equity-based separate accounts
assets.


ML of New York also provides certain guarantees within its variable annuity products that protect
policyholders against significant downturns in the equity markets. For example, ML of New York
offers variable annuity products with guaranteed features, such as minimum death and minimum income
benefits. These guarantees may be more costly than expected in volatile or declining equity market
conditions, causing ML of New York to increase liabilities for future policy benefits and
negatively affecting financial results.


Credit Risk

Impairment in the Value of the Fixed Maturity Securities Portfolio May Adversely Affect Financial
Results


ML of New York is subject to the risk that the issuers of the fixed maturity securities owned may
default on principal and interest payments owed. The occurrence of a major economic downturn, acts
of corporate malfeasance or other events that adversely affect the issuers of these securities
could cause the value of the fixed maturities portfolio to decline and the default rate of fixed
maturity securities in the investment portfolio to increase. A ratings downgrade affecting
particular issuers or securities could also have a similar effect. With recent downgrades, as well
as economic uncertainty and increasing interest rates, credit quality of issuers could be adversely
affected. Any event reducing the value of these securities other than on a temporary basis could
have a material adverse effect on ML of New Yorks financial results.


Interest Rate Risk

Changes in Market Interest Rates May Adversely Affect Financial Results


ML of New Yorks fixed life and annuity products are exposed to the risk that changes in interest
rates will reduce the spread, or the difference between the amounts that it is required to pay
under fixed contracts and the rate of return it is able to earn on invested assets intended to
support obligations under the contracts.


-3-



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Spread is a key component of net earnings. A low level of short-term and long-term interest rates
can have a negative impact on the demand for and the profitability of spread-based products such as
fixed annuities. In addition, continued low interest rates could put pressure on interest spreads
on existing blocks of business as declining investment portfolio yields may draw closer to minimum
crediting rate guarantees on certain products.


As interest rates decrease or remain at low levels, ML of New York may be forced to reinvest
proceeds from investments that have matured or have been prepaid or sold at lower yields, reducing
its investment margin. Moreover, borrowers may prepay or redeem certain investments in the
investment portfolio with greater frequency in order to borrow at lower market rates, which
exacerbates this risk. Lowering interest crediting rates can help offset decreases in investment
margins on some products. However, ML of New Yorks ability to lower these rates could be limited
by competition or contractually guaranteed minimum rates and may not match the timing or magnitude
of changes in asset yields. As a result, the spread could decrease or potentially become negative.
A decline in market interest rates could also reduce the return on investments that do not support
particular policy obligations. Accordingly, declining interest rates may materially adversely
affect financial results.


Increases in market interest rates could also negatively affect net earnings. Surrenders and
withdrawals may tend to increase as policyholders seek investments with higher perceived returns as
interest rates rise. This process may result in cash outflows requiring sales of invested assets at
a time when the prices of those assets are adversely affected by the increase in market interest
rates, which may result in net realized investment losses. An increase in market interest rates
could also have a material adverse effect on the value of ML of New Yorks investment portfolio, by
decreasing the fair values of the fixed income securities that comprise a substantial majority of
the investment portfolio.


Liquidity Risk

ML of New Yorks Business and Financial Results May be Adversely Impacted by an Inability to Sell
Assets to Meet Maturing Obligations.


ML of New York could be exposed to liquidity risk, which is the potential inability to sell assets
that can be quickly converted into cash obligations. ML of New Yorks liquidity may be impaired due
to circumstances that it may be unable to control, such as general market disruptions or an
operational problem. ML of New Yorks ability to sell assets may also be impaired if other market
participants are seeking to sell similar assets at the same time. The inability of ML of New York
to sell assets to meet maturing obligations, a negative change in its credit ratings, or regulatory
capital restrictions, may have a negative effect on financial results.


Claims Experience and Reserving Assumptions

Differences between Actual Claims Experience and Reserving Assumptions May Adversely Affect
Financial Results


ML of New Yorks earnings significantly depend upon the extent to which actual claims experience is
consistent with the assumptions used in setting prices for variable annuity products and
establishing liabilities for future policy benefits. Liabilities for future policyholder benefits
and claims are established based on estimates. Principle assumptions used in the establishment of
liabilities for future policy benefits are mortality, surrender rates, policy expenses, investment
yields and inflation. These estimates and assumptions are influenced by historical experience,
current developments and anticipated market trends. To the extent that actual claims experience is
less favorable than the underlying assumptions used in establishing such liabilities, ML of New
York could be required to increase liabilities.


Due to the nature of the underlying risks and the high degree of uncertainty associated with the
determination of liabilities for future policyholder benefits and claims, ML of New York cannot
determine precisely the amounts which will ultimately be paid to settle liabilities. Such amounts
may vary from the


-4-



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estimated amounts, particularly when those payments may not occur until well into the future. ML of
New York evaluates liabilities periodically based on changes in the assumptions used to establish
the liabilities, as well as actual experience. ML of New York charges or credits changes in
liabilities to expenses in the period established or re-estimated. If the liabilities originally
established for future benefit payments prove inadequate, they must be increased. Such increases
could negatively affect earnings and have an adverse effect on ML of New Yorks financial results.


Operational Risk

ML of New York May Incur Losses From Inadequate or Failed Internal Processes, People and Systems or
From External Events.


ML of New York may incur losses arising from its exposure to operational risk. Insurance companies,
including ML of New York, are exposed to the risk of loss resulting from inadequate or failed
internal processes, people and systems or from external events. Such operational risks may include,
for example, exposure to natural or man-made disasters, mistakes made in the confirmation or
settlement of transactions or from improper recording, evaluating or accounting for transactions.
ML of New York could suffer financial loss, disruption of its business, liability to clients,
regulatory intervention or reputational damage, which would affect its business and financial
condition.


Litigation Risk

Legal Proceedings Could Adversely Affect ML of New Yorks Financial Results for a Particular
Period and Impact its Credit Ratings.


ML of New York may be named as a defendant in legal actions including arbitrations, class actions,
and other litigation arising in connection with its insurance business activities. These legal
actions can include claims for substantial compensatory and/or punitive damages or claims for
indeterminate amounts of damages. In accordance with Statement of Financial Accounting Standards
(SFAS) No. 5, Accounting for Contingencies, ML of New York will accrue a liability when it is
probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases
in which claimants seek substantial or indeterminate damages, ML of New York would not be able to
predict what the eventual loss or range of loss related to such matters could be, which may be
material to its financial results for any particular period and may impact its credit ratings .


Item 1B. Unresolved Staff Comments

Not
Applicable.


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.


-5-



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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, Related Stockholder Matters and
Issuer Purchases of Equity Securities.


(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
2005, the Registrant did not pay any dividends. During 2004, the
Registrant paid an ordinary dividend of $2,500,000 to MLIG.
 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 9 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.


-6-



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Item 7. Managements Narrative Analysis of Results of Operations
  Forward Looking Statements
  Overview
  Life Insurance Strategy
   -7-




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Critical Accounting Policies and Estimates
   Valuation of Fixed Maturity and Equity Securities
 Accounting for Certain Investments in Debt and Equity Securities
  Other-Than-Temporary Impairment Losses on Investments
  Deferred Policy Acquisition Costs for Variable Annuities and Variable Life Insurance
 Accounting and Reporting by Insurance
Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of
Investments
 -8-




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Policyholder Liabilities
 Accounting and Reporting by
Insurance
Enterprises Accounting and Reporting by Insurance Enterprises for Certain Long-Duration
Contracts and for Realized Gains and Losses from the Sale of Investments Accounting and Reporting by Insurance Enterprises for Certain Nontraditional
Long-Duration Contracts and for Separate Accounts
 -9-




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Federal Income Taxes
   Recent Developments
 New Accounting Pronouncements
 Accounting by Insurance Enterprises for Deferred
Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts.
  -10-




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New Business
     (In Millions)
    
    
    % Change2005
    
    
    2004
    
    
    2003
    
    
    2005 - 2004
    
    
    2004 - 2003Variable Annuities
(including ICA):B-Share
    
    $
    17.4
    
    
    $
    65.5
    
    
    $
    37.9
    
    
    
    -73
    %
    
    
    73
    %L-Share
    
    
    11.6
    
    
    
    4.3
    
    
    
    9.9
    
    
    
    170
    
    
    
    -57Bonus
    
    
    10.8
    
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    n/aC-Share
    
    
    2.3
    
    
    
    4.6
    
    
    
    10.4
    
    
    
    -50
    
    
    
    -5642.1
    
    
    
    74.4
    
    
    
    58.2
    
    
    
    -43
    
    
    
    28All Other Deposits
    
    
    0.9
    
    
    
    1.9
    
    
    
    2.2
    
    
    
    -53
    
    
    
    -14Total Direct Deposits
    
    $
    43.0
    
    
    $
    76.3
    
    
    $
    60.4
    
    
    
    -44
    %
    
    
    26
    %
  -11-




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Surrenders
  Financial Condition
  1Q05
    
    
    2Q05
    
    
    3Q05
    
    
    4Q05
    
    
    Total(In Millions)Investment performance
    
    $
    (10.3
    )
    
    $
    15.2
    
    
    $
    36.6
    
    
    $
    20.0
    
    
    $
    61.5Deposits
    
    
    9.0
    
    
    
    6.4
    
    
    
    10.2
    
    
    
    19.2
    
    
    
    44.8Policy fees and charges
    
    
    (4.4
    )
    
    
    (4.2
    )
    
    
    (4.4
    )
    
    
    (4.3
    )
    
    
    (17.3
    )Surrenders, benefits and withdrawals
    
    
    (27.8
    )
    
    
    (28.3
    )
    
    
    (31.0
    )
    
    
    (36.0
    )
    
    
    (123.1
    )Net increase (decrease)
    
    $
    (33.5
    )
    
    $
    (10.9
    )
    
    $
    11.4
    
    
    $
    (1.1
    )
    
    $
    (34.1
    )
  2005(In Millions)Deposits collected
    
    $
    43.0Internal tax-free exchanges
    
    
    (7.6
    )Net contract owner deposits
    
    
    35.4Contract owner withdrawals
    
    
    59.6Net transfers from separate accounts
    
    
    82.2Net contract owner withdrawals
    
    
    141.8Net contract owner activity
    
    $
    (106.4
    )
 -12-




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2005
    
    
    2004Investment grade fixed maturity securities (rated A or higher)
    
    
    58
    %
    
    
    61
    %Policy loans
    
    
    31
    
    
    
    30Investment grade fixed maturity securities (rated BBB)
    
    
    10
    
    
    
    9Below investment grade fixed maturity securities
    
    
    1
    
    
    
    100
    %
    
    
    100
    %
     Business Environment
  -13-




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Equity Market Performance
     Medium Term Interest Rates
   Corporate Credit and Credit Spreads
  -14-




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2005
    
    
    2004Average medium term interest rate yield
    
    
    4.36
    %
    
    
    3.16
    %Increase in medium term interest rates (in basis points)
    
    
    120
    
    
    
    111Credit spreads (in basis points)
    
    
    106
    
    
    
    72Expanding (contracting) of credit spreads (in basis points)
    
    
    34
    
    
    
    (13
    )Increase (decrease) on market valuations: (in millions)Available-for-sale investment securities
    
    $
    (3.3
    )
    
    $
    (2.3
    )Interest-sensitive policyholder liabilities
    
    
    0.5
    
    
    
    1.1Net decrease on market valuations
    
    $
    (2.8
    )
    
    $
    (1.2
    )
 Liquidity and Capital Resources
   Less Than
    
    
    Three to
    
    
    More ThanThree Years
    
    
    Five Years
    
    
    Five Years
    
    
    Total(In Millions)Long-term liabilities (1)
    
    $
    1.3
    
    
    $
    1.4
    
    
    $
    17.5
    
    
    $
    20.2
 
 (1)
    
    The long-term liabilities include the portion of future policy benefits for
which ML of New York believes the amount and timing of the payments are essentially
fixed and determinable. These amounts primarily relate to contracts where ML of New
York is currently making payments to policyholders and will continue to do so until the
occurrence of a specific event.  -15-




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.
   Results of Operations
  
    
    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
 Critical Accounting Policies
 -16-




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2005 compared to 2004
   Interest Spread
    
    2005
    
    
    2004
    
    
    Change(In Millions)Net investment income
    
    $
    11.3
    
    
    $
    11.2
    
    
    $
    0.1
    (1)Interest credited to policyholder
account balances
    
    
    (8.2
    )
    
    
    (9.1
    )
    
    
    0.9
    (2)$
    3.1
    
    
    $
    2.1
    
    
    $
    1.0
 
 (1)
    
    Despite the reduction in fixed rate contracts inforce, net investment income
was favorably impacted by an increase in asset yields during 2005 as compared to 2004.(2)
    
    The decrease in interest credited is primarily due to the reduction of fixed
rate contracts inforce.   Policy Benefits
    
    2005
    
    
    2004
    
    
    Change(In Millions)Life insurance mortality expense
    
    $
    1.4
    
    
    $
    1.7
    
    
    $
    (0.3
    )(1)Variable annuity mortality expense
    
    
    1.1
    
    
    
    1.3
    
    
    
    (0.2
    )(2)$
    2.5
    
    
    $
    3.0
    
    
    $
    (0.5
    )
 
 (1)
    
    The decrease in life insurance mortality expense is primarily due to a
decrease in the number of death claims.(2)
    
    The decrease in variable annuity mortality expense is due to favorable GMDB
liability unlocking during 2005 as noted in the Critical Accounting Policiessection
above.  Critical Accounting Policies
 -17-




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Insurance Expenses and Taxes  Net of Capitalization
    
    2005
    
    
    2004
    
    
    Change(In Millions)General insurance expenses
    
    $
    3.7
    
    
    $
    3.2
    
    
    $
    0.5
    (1)Commissions
    
    
    0.4
    
    
    
    0.1
    
    
    
    0.3
    (2)Taxes, licenses, and fees
    
    
    0.6
    
    
    
    0.7
    
    
    
    (0.1
    )$
    4.7
    
    
    $
    4.0
    
    
    $
    (0.7
    )
 
 (1)
    
    The increase in general insurance expenses is primarily due to new product
development expenses.(2)
    
    The increase in commissions is primarily due to an increase in variable
annuity asset-based commissions. Critical
Accounting Policies
 2004 compared to 2003
    -18-




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Realized Gains (Losses)
    
    2004
    
    
    2003
    
    
    Change(In Millions)Interest related gains
    
    $
    0.1
    
    
    $
    2.4
    
    
    $
    (2.3
    )(1)Credit related losses
    
    
    
    
    
    
    (1.8
    )
    
    
    1.8
    (2)$
    0.1
    
    
    $
    0.6
    
    
    $
    (0.5
    )
 
 (1)
    
    The decrease in interest related net realized gains is primarily due to
decreased invested asset sales and decreases to asset market valuations resulting from
the increasing interest rate environment during 2004 as compared to 2003.(2)
    
    The decrease in credit related net realized losses is primarily due to the
reduction in OTT declines in the carrying value of fixed maturity securities and asset
sales of several large security holdings. There were no OTT declines or credit
related asset sales during 2004. OTT declines were $0.8 million and losses on credit
related asset sales were $1.0 million during 2003.  Policy Benefits
    
    2004
    
    
    2003
    
    
    Change(In Millions)Life insurance mortality expense
    
    $
    1.7
    
    
    $
    2.1
    
    
    $
    (0.4
    )(1)Variable annuity mortality expense
    
    
    1.3
    
    
    
    1.9
    
    
    
    (0.6
    )(2)$
    3.0
    
    
    $
    4.0
    
    
    $
    (1.0
    )
 
 (1)
    
    The decrease in life insurance mortality expense is due to a decrease in net
amount at risk per death claim.(2)
    
    The decrease in variable annuity mortality expense is due to decreased death
benefit expense incurred under GMDB provisions due to improving equity markets.  Critical Accounting Policies
  Critical
Accounting Policies
 -19-




---



##### 



Recent Developments
 Segment Information
   Segment
    
    2005
    
    2004
    
    2003(In Millions)Life Insurance
    
    $
    2.1
    
    
    $
    2.1
    
    
    $
    1.3Annuities
    
    
    2.8
    
    
    
    5.2
    
    
    
    2.6Other
    
    
    0.6
    
    
    
    0.6
    
    
    
    0.5
  Segment
    
    2005
    
    2004
    
    2003(In Millions)Life Insurance
    
    $
    2.1
    
    
    $
    1.9
    
    
    $
    1.3Annuities
    
    
    2.8
    
    
    
    3.3
    
    
    
    2.6Other
    
    
    0.6
    
    
    
    0.6
    
    
    
    0.5
    Inflation
  20




---



##### 



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
   Interest Rate Risk
   Change in Fair ValueChange in Interest Rates


    2005
    
    2004(In Millions)+ 100 basis points
    
    ($
    1.1
    )
    
    ($
    2.2
    )+ 50 basis points
    
    ($
    0.6
    )
    
    ($
    1.1
    )+ 10 basis points
    
    ($
    0.1
    )
    
    ($
    0.2
    )
10 basis points
    
    $
    0.1
    
    
    $
    0.2 50 basis points
    
    $
    0.6
    
    
    $
    1.1 100 basis points
    
    $
    1.1
    
    
    $
    2.2
   -21-




---



##### 



Credit Spread Risk
   Change in Fair ValueChange in Credit Spreads
    
    2005
    
    2004(In Millions)+ 50 basis points
    
    ($
    1.6
    )
    
    ($
    2.3
    )+ 10 basis points
    
    ($
    0.3
    )
    
    ($
    0.5
    ) 10 basis points
    
    $
    0.5
    
    
    $
    0.5 50 basis points
    
    $
    1.7
    
    
    $
    2.3
   Credit Risk
  Equity Price Risk
  
    
    Reductions in separate accounts assets. Asset-based policy fees collected on separate accounts assets are a primary
source of earnings, thus lower asset balances will result in lower policy charge revenue.
    
    Increased exposure to GMDB. Decreasing variable contract owner account values increase the number of contracts, as
well as amounts per contract, in which GMDB exceed those variable contract owner account balances. This may result in
greater future policy benefit expense.
    
    Potential hindrance of sales and marketing efforts for variable annuity products.
 -22-




---



##### 



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 2005 that has materially
affected, or is reasonably likely to materially affect,
Registrants internal control over financial reporting. Item 9B. Other Information. No information is required to be disclosed under this item. PART III Information called
for by items 10 through 13 of this part is
omitted pursuant to General Instruction I. of Form 10-K.


-23-



---



##### 



PART IV Item 14.  Principal
Accounting 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.
    
    Audit-Related services include accounting consultations
relating to actuarial valuations.
    
    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, 2005 and 2004 and fees billed for other
services rendered by Deloitte & Touche LLP during those periods. 2005
        
        2004Audit (1)
        
        $
        242,146
        
        
        $
        207,506Audit Related (2)
        
        
        5,272
        
        
        
        4,554Tax (3)
        
        
        2,636
        
        
        
        2,277All Other (4)
        
        
        13,531
        
        
        
        13,362Total
        
        $
        263,585
        
        
        $
        227,699
 
 (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)
      
      AuditRelated Fees included accounting consultations relating to actuarial
        valuations.(3)
      
      Tax Fees included all services performed by the independent auditors
        tax personnel.(4)
      
      All Other Fees included miscellaneous out-of-pocket expenses.


-24-



---



##### 



PART IV

Item 15.  Exhibits and Financial Statement Schedules.

(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 February 27, 2006.                                   
|b.  |  | Balance Sheets at
December 31, 2005 and 2004.                                           
|c.  |  | Statements of Earnings for the Years Ended
December 31, 2005, 2004 and 2003.            
|d.  |  | Statements of Comprehensive Income for the
Years Ended December 31, 2005, 2004 and 2003.
|e.  |  | Statements of Stockholders Equity for the
Years Ended December 31, 2005, 2004 and 2003.
|f.  |  | Statements of Cash Flows for the Years Ended
December 31, 2005, 2004 and 2003.          
|g.  |  | Notes to Financial Statements for the Years
Ended December 31, 2005, 2004 and 2003.     
|(2) |  | Not applicable.                                                                         
|(3) |  | The following exhibits are filed as part of
this report as indicated below:             

-25-



---



##### 



|    |  |                                                                                                                                                                                                                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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).                                                                                        

-26-



---



##### 



|     |  |                                                                                                                                                                                                                                                                                                                                               
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.)                                                                  

-27-



---



##### 



|      |  |                                                                                                                                                                                                                                                                                                                                                                       
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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
registered public accounting firm, 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.)                                                                                                                                          

-28-



---



##### 



|     |  |                                                                                                                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.)  

-29-



---



##### 



|      |  |                                                                                                                                                                                                           
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 John C. Carroll, is filed herewith.                                                                                                                                                  
|24.9  |  | Power of attorney of Paul Michalowski, is filed herewith.                                                                                                                                                 
|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 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.) 
|24.12 |  | Power of attorney of Deborah J. Adler. (Incorporated by reference to
Exhibit 24.13 to Annual Report on Form 10-K, File Nos. 33-34562,
33-60288, and 333-48983, filed March 29, 2004.)                     
|24.13 |  | Power of attorney of Concetta M. Ruggiero. (Incorporated by reference to
Exhibit 24.13 to Annual Report on Form 10-K, File Nos. 33-34562,
33-60288, and 333-48983, filed March 29, 2004.)                 
|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.               

-30-



---



##### 



INDEX TO FINANCIAL STATEMENTS

|                                                                                       
|---------------------------------------------------------------------------------------
|Independent Auditors Report                                                           
|Balance
Sheets at December 31, 2005 and 2004                                           
|Statements
of Earnings for the Years Ended December 31, 2005, 2004 and 2003            
|Statements
of Comprehensive Income for the Years Ended December 31, 2005, 2004 and 2003
|Statements
of Stockholders Equity for the Years Ended December 31,
2005, 2004 and 2003
|Statements
of Cash Flows for the Years Ended December 31, 2005, 2004 and
2003          
|Notes
to Financial Statements for the Years Ended December 31, 2005, 2004 and 2003     





---



##### 








---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK  (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
 
 ASSETS
    
    2005
    
    
    2004INVESTMENTS:Fixed maturity available-for-sale securities, at estimated fair value
(amortized cost: 2005 - $165,404 ; 2004 - $177,601)
    
    $
    164,279
    
    
    $
    179,753Equity available-for-sale securities, at estimated fair value
(cost: 2005 - $702; 2004 - $0)
    
    
    706
    
    
    
    Policy loans on insurance contracts, at outstanding loan balances
    
    
    74,393
    
    
    
    76,750Total Investments
    
    
    239,378
    
    
    
    256,503CASH AND CASH EQUIVALENTS
    
    
    14,650
    
    
    
    6,649ACCRUED INVESTMENT INCOME
    
    
    3,934
    
    
    
    3,919DEFERRED POLICY ACQUISITION COSTS
    
    
    23,038
    
    
    
    28,132DEFERRED SALES INDUCEMENTS
    
    
    601
    
    
    
    OTHER ASSETS
    
    
    3,772
    
    
    
    5,978SEPARATE ACCOUNTS ASSETS
    
    
    946,261
    
    
    
    980,398TOTAL ASSETS
    
    $
    1,231,634
    
    
    $
    1,281,579
 See accompanying notes to financial statements.
    
    (Continued)




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK  (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
 
 LIABILITIES
AND STOCKHOLDERS EQUITY
    
    2005
    
    
    2004LIABILITIES:POLICYHOLDER LIABILITIES AND ACCRUALS:Policyholder account balances
    
    $
    168,880
    
    
    $
    185,538Future policy benefits
    
    
    22,546
    
    
    
    22,101Claims and claims settlement expenses
    
    
    3,329
    
    
    
    5,265Total Policyholder Liabilities and Accruals
    
    
    194,755
    
    
    
    212,904OTHER POLICYHOLDER FUNDS
    
    
    264
    
    
    
    1,099FEDERAL INCOME TAXES  DEFERRED
    
    
    2,091
    
    
    
    3,871FEDERAL INCOME TAXES  CURRENT
    
    
    642
    
    
    
    734AFFILIATED PAYABLES  NET
    
    
    2,869
    
    
    
    2,357OTHER LIABILITIES
    
    
    863
    
    
    
    SEPARATE ACCOUNTS LIABILITIES
    
    
    946,261
    
    
    
    980,398Total Liabilities
    
    
    1,147,745
    
    
    
    1,201,363STOCKHOLDER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
    
    
    30,556
    
    
    
    25,088Accumulated other comprehensive income (loss)
    
    
    (1,177
    )
    
    
    618Total Stockholders Equity
    
    
    83,889
    
    
    
    80,216TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,231,634
    
    
    $
    1,281,579




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK  (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
 
 2005
    
    
    2004
    
    
    2003REVENUES:Policy charge revenue
    
    $
    18,431
    
    
    $
    18,426
    
    
    $
    16,388Net investment income
    
    
    11,275
    
    
    
    11,222
    
    
    
    12,775Net realized investment gains
    
    
    1,799
    
    
    
    127
    
    
    
    633Total Revenues
    
    
    31,505
    
    
    
    29,775
    
    
    
    29,796BENEFITS AND EXPENSES:Interest credited to policyholder liabilities
    
    
    8,216
    
    
    
    9,096
    
    
    
    9,756Policy benefits (net of reinsurance recoveries: 2005 - $98;
2004 - $1,066; 2003 - $705)
    
    
    2,501
    
    
    
    3,014
    
    
    
    4,027Reinsurance premium ceded
    
    
    1,845
    
    
    
    1,722
    
    
    
    1,577Amortization of deferred policy acquisition costs
    
    
    7,005
    
    
    
    821
    
    
    
    4,810Insurance expenses and taxes
    
    
    4,699
    
    
    
    3,999
    
    
    
    3,562Total Benefits and Expenses
    
    
    24,266
    
    
    
    18,652
    
    
    
    23,732Earnings Before Federal Income Tax Provision
    
    
    7,239
    
    
    
    11,123
    
    
    
    6,064FEDERAL INCOME TAX PROVISION (BENEFIT):Current
    
    
    2,585
    
    
    
    2,597
    
    
    
    4,510Deferred
    
    
    (814
    )
    
    
    662
    
    
    
    (2,818
    )Total Federal Income Tax Provision
    
    
    1,771
    
    
    
    3,259
    
    
    
    1,692EARNINGS BEFORE CHANGE IN ACCOUNTING PRINCIPLE
    
    
    5,468
    
    
    
    7,864
    
    
    
    4,372Change in Accounting Principle, Net of Tax
    
    
    
    
    
    
    (2,032
    )
    
    
    NET EARNINGS
    
    $
    5,468
    
    
    $
    5,832
    
    
    $
    4,372




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK  (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
 
 2005
    
    
    2004
    
    
    2003NET EARNINGS
    
    $
    5,468
    
    
    $
    5,832
    
    
    $
    4,372OTHER COMPREHENSIVE INCOME (LOSS):Net unrealized gains (losses) on available-for-sale securities:Net unrealized holding gains (losses) arising during the period
    
    
    (1,474
    )
    
    
    (2,133
    )
    
    
    1,245Reclassification adjustment for gains included in net earnings
    
    
    (1,799
    )
    
    
    (127
    )
    
    
    (321
    )Total net unrealized gains (losses) on available-for-sale securities
    
    
    (3,273
    )
    
    
    (2,260
    )
    
    
    924Adjustments for:Policyholder liabilities
    
    
    512
    
    
    
    1,132
    
    
    
    864Deferred federal income taxes
    
    
    966
    
    
    
    395
    
    
    
    (626
    )Total other comprehensive income (loss), net of tax
    
    
    (1,795
    )
    
    
    (733
    )
    
    
    1,162COMPREHENSIVE INCOME
    
    $
    3,673
    
    
    $
    5,099
    
    
    $
    5,534




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK  (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
 
 AccumulatedAdditional
    
    
    
    
    
    
    other
    
    
    TotalCommon
    
    
    paid-in
    
    
    Retained
    
    
    comprehensive
    
    
    stockholdersstock
    
    
    capital
    
    
    earnings
    
    
    income (loss)
    
    
    equityBALANCE, JANUARY 1, 2003
    
    $
    2,200
    
    
    $
    52,310
    
    
    $
    17,384
    
    
    $
    189
    
    
    $
    72,083Net earnings
    
    
    
    
    
    
    
    
    
    
    4,372
    
    
    
    
    
    
    
    4,372Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,162
    
    
    
    1,162BALANCE, DECEMBER 31, 2003
    
    
    2,200
    
    
    
    52,310
    
    
    
    21,756
    
    
    
    1,351
    
    
    
    77,617Net earnings
    
    
    
    
    
    
    
    
    
    
    5,832
    
    
    
    
    
    
    
    5,832Cash dividend paid to parent
    
    
    
    
    
    
    
    
    
    
    (2,500
    )
    
    
    
    
    
    
    (2,500
    )Other comprehensive loss, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (733
    )
    
    
    (733
    )BALANCE, DECEMBER 31, 2004
    
    
    2,200
    
    
    
    52,310
    
    
    
    25,088
    
    
    
    618
    
    
    
    80,216Net earnings
    
    
    
    
    
    
    
    
    
    
    5,468
    
    
    
    
    
    
    
    5,468Other comprehensive loss, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,795
    )
    
    
    (1,795
    )BALANCE, DECEMBER 31, 2005
    
    $
    2,200
    
    
    $
    52,310
    
    
    $
    30,556
    
    
    $
    (1,177
    )
    
    $
    83,889




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK  (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
 
 2005
    
    
    2004
    
    
    2003Cash Flows From Operating Activities:Net earnings
    
    $
    5,468
    
    
    $
    5,832
    
    
    $
    4,372Noncash items included in earnings:Change in accounting principle, net of tax
    
    
    
    
    
    
    2,032
    
    
    
    Amortization of deferred policy acquisition costs
    
    
    7,005
    
    
    
    821
    
    
    
    4,810Capitalization of policy acquisition costs
    
    
    (1,911
    )
    
    
    (3,924
    )
    
    
    (2,323
    )Amortization of deferred sales inducements
    
    
    (28
    )
    
    
    
    
    
    
    Capitalization of deferred sales inducements
    
    
    (573
    )
    
    
    
    
    
    
    Amortization of investments
    
    
    821
    
    
    
    622
    
    
    
    689Interest credited to policyholder liabilities
    
    
    8,216
    
    
    
    9,096
    
    
    
    9,756Change in variable contract reserves
    
    
    285
    
    
    
    (188
    )
    
    
    Provision (benefit) for deferred Federal income tax
    
    
    (814
    )
    
    
    662
    
    
    
    (2,818
    )(Increase) decrease in operating assets:Accrued investment income
    
    
    (15
    )
    
    
    413
    
    
    
    513Federal income taxes  current
    
    
    
    
    
    
    
    
    
    
    1,628Other
    
    
    2,206
    
    
    
    (2,330
    )
    
    
    495Increase (decrease) in operating liabilities:Claims and claims settlement expenses
    
    
    (1,936
    )
    
    
    1,338
    
    
    
    782Other policyholder funds
    
    
    (835
    )
    
    
    (1,015
    )
    
    
    1,327Federal income taxes  current
    
    
    (92
    )
    
    
    (231
    )
    
    
    965Affiliated payables  net
    
    
    512
    
    
    
    (480
    )
    
    
    367Other
    
    
    863
    
    
    
    (28
    )
    
    
    (470
    )Other operating activities:Net realized investment gains
    
    
    (1,799
    )
    
    
    (127
    )
    
    
    (633
    )Net cash and cash equivalents provided by operating activities
    
    
    17,373
    
    
    
    12,493
    
    
    
    19,460Cash Flow From Investing Activities:Proceeds from (payments for):Sales of available-for-sale securities
    
    
    36,283
    
    
    
    26,368
    
    
    
    38,922Maturities of available-for-sale securities
    
    
    13,182
    
    
    
    26,870
    
    
    
    60,331Purchases of available-for-sale securities
    
    
    (36,992
    )
    
    
    (53,564
    )
    
    
    (109,475
    )Policy loans on insurance contracts
    
    
    2,357
    
    
    
    4,242
    
    
    
    5,611Net cash and cash equivalents provided by (used in) investing
activities
    
    $
    14,830
    
    
    $
    3,916
    
    
    $
    (4,611
    )
 See accompanying notes to financial statements.
    
    (Continued)




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK  (a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)
 
 2005
    
    
    2004
    
    
    2003Cash Flows From Financing Activities:Proceeds from (payments for):Cash dividend paid to parent
    
    $
    
    
    
    $
    (2,500
    )
    
    $
    Policyholder deposits (excludes internal policy replacement deposits)
    
    
    35,439
    
    
    
    71,983
    
    
    
    57,372Policyholder withdrawals (including transfers from separate accounts)
    
    
    (59,641
    )
    
    
    (91,581
    )
    
    
    (82,975
    )Net cash and cash equivalents used in financing activities
    
    
    (24,202
    )
    
    
    (22,098
    )
    
    
    (25,603
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    8,001
    
    
    
    (5,689
    )
    
    
    (10,754
    )CASH AND CASH EQUIVALENTS:Beginning of year
    
    
    6,649
    
    
    
    12,338
    
    
    
    23,092End of year
    
    $
    14,650
    
    
    $
    6,649
    
    
    $
    12,338Supplementary Disclosure of Cash Flow Information:Cash paid to affiliates for:Federal income taxes
    
    $
    2,677
    
    
    $
    2,828
    
    
    $
    1,917Interest
    
    
    67
    
    
    
    25
    
    
    
    18




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK  (A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.
 
 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 judgments underlying the Companys Financial
Statements are summarized below. In applying these policies, management makes subjective and
complex judgments that frequently require estimates about matters that are inherently uncertain.For the purpose of reporting cash flows, 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, immediate
annuities, and single premium deferred annuities) and interest-sensitive life insurance contracts
(single premium whole life insurance) 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. The Company does not currently manufacture single premium deferred
annuities or single premium whole life contracts.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 (loss), net of tax. These changes in estimated fair value are not reflected in the
Statements of Earnings until a sale transaction occurs or when declines in fair value are deemed
other-than-temporary.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,




---



##### 



information obtained from external sources (i.e. company
announcements, ratings agency announcements, or news wire services) and the Companys 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. The factors that may give rise to
a potential other-than-temporary impairment include, but are not limited to, i) certain
credit-related events such as default of principal or interest payments by the issuer, ii)
bankruptcy of issuer, iii) certain security restructurings, and iv) fair market value less than
amortized cost for an extended period of time. In the absence of a readily ascertainable market
value, the estimated fair value on these securities represents managements best estimate and is
based on comparable securities and other assumptions as appropriate. 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 and equity securities are considered below investment grade. The Company
defines below investment grade securities as unsecured debt obligations that have a Standard and
Poors (or similar rating agency) rating lower than BBB-.Policy loans on insurance contracts are stated at unpaid principal balances.Deferred Policy Acquisition Costs (DAC): Policy acquisition costs for variable
annuities and variable life insurance 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, commonly referred to as unlocking. 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 DAC.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:
 2005
    
    
    2004
    
    
    2003Beginning balance
    
    $
    8,167
    
    
    $
    8,830
    
    
    $
    9,703Interest accrued
    
    
    613
    
    
    
    662
    
    
    
    728Amortization
    
    
    (1,831
    )
    
    
    (1,325
    )
    
    
    (1,601
    )Ending balance
    
    $
    6,949
    
    
    $
    8,167
    
    
    $
    8,830




---



##### 



2006
    
    $
    8152007
    
    $
    7372008
    
    $
    6972009
    
    $
    6862010
    
    $
    681
 Deferred Sales Inducements: The Company offers a sales inducement whereby the contract
owner receives a bonus which increases the initial account balance by an amount equal to a
specified percentage of the contract owners deposit. This amount may be subject to recapture
under certain circumstances. The expense associated with offering this bonus is deferred and
amortized over the anticipated life of the related contracts consistent with the amortization of
DAC.Separate Accounts: The Companys Separate Accounts consist of variable annuities and
variable life insurance contracts, of which the assets and liabilities are legally segregated and
reported 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
claims of the Company only to the extent the value of such assets exceeds Separate Accounts
liabilities. The assets of the Separate Accounts are carried at the daily net asset value of the
mutual funds in which they invest.Absent any contract provision wherein the Company guarantees either a minimum return or account
value upon death or annuitization, the net investment income and net realized and unrealized
gains and losses attributable to Separate Accounts assets supporting variable annuities and
variable life contracts accrue directly to the contract owner and are not reported as revenue in
the Statements of Earnings. Mortality, policy administration and withdrawal charges associated
with Separate Accounts products are included in policy charge revenue in the Statements of
Earnings.Policyholder Account Balances: The Companys liability for policyholder account balances
represents the contract value that has accrued to the benefit of the policyholder as of the
balance sheet date. The liability is generally equal to the accumulated account deposits plus
interest credited less policyholders withdrawals and other charges assessed against the account
balance. 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% - 6.80%
 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.Future Policy Benefits: The Companys liability for future policy benefits consists of
liabilities for immediate annuities and liabilities for certain guarantee benefits contained in
the variable insurance products the Company manufactures. Liabilities for immediate annuities are
equal to the present value of estimated future payments to or on behalf of policyholders, where
the timing and amount of payment generally depends on policyholder mortality. Interest rates used
in establishing such liabilities range from 3.00% to 8.80%. Liabilities for guarantee benefits
for variable annuity and life insurance contracts are discussed in more detail in Note 6 of the
Financial Statements.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.Federal 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 provides for income taxes on all transactions that have been recognized in the
financial statements in accordance with Statement of Financial Accounting Standards (SFAS) No.
109, Accounting for Income Taxes. Accordingly, deferred taxes are 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.The Company is generally subject to taxes on premiums and, in substantially all states, is exempt
from state income taxes.Accounting Pronouncements: In September 2005, the Accounting Standards Executive
Committee of the American Institute of Certified Public Accountants issued SOP 05-1, Accounting
by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or
Exchanges of Insurance Contracts.SOP 05-1 provides guidance on accounting by insurance
enterprises for deferred acquisition costs on internal replacements of insurance and investment
contracts other than those specifically described in SFAS No. 97. The SOP defines an internal
replacement as a modification in product benefits, features, rights, or coverages that occurs by
the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a
contract, or by the election of a feature or coverage within a contract. This SOP is effective
for internal replacements occurring in fiscal years beginning after December 15, 2006. The
Company will adopt SOP 05-1 on January 1, 2007. The Company is currently assessing the Financial
Statement impact related to the adoption of SOP 05-1.On January 1, 2004, the Company adopted the provisions of Statement of Position (SOP) 03-1,
Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration
Contracts and for Separate Accounts.SOP 03-1 required the establishment of a liability for
contracts that contain death or other insurance benefits using a reserve methodology that was
different from the methodology that the Company previously employed. As a result, the Company
recorded a $3,120 increase in policyholder liabilities and a $6 decrease in DAC resulting in a
charge to earnings of $2,032, net of a federal income tax benefit of $1,094, which was reported
as a cumulative effect of a change in accounting principle during 2004. Excluding the cumulative
effect of a change in accounting principle during 2004, the changes in policyholder liabilities
related to SOP 03-1 did not have a material impact on the companys Statements of Earnings for
the years ended December 31, 2005 and 2004.




---



##### 



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 at December 31 were:
 2005
    
    
    2004Assets:Fixed maturity securities (1)
    
    $
    164,279
    
    
    $
    179,753Equity securities (1)
    
    
    706
    
    
    
    Policy loans on insurance contracts (2)
    
    
    74,393
    
    
    
    76,750Cash and cash equivalents (3)
    
    
    14,650
    
    
    
    6,649Separate Accounts assets (4)
    
    
    946,261
    
    
    
    980,398Total assets
    
    $
    1,200,289
    
    
    $
    1,243,550Liabilities:Policyholder account balances
    
    $
    168,880
    
    
    $
    185,538
 
 (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, 2005 and 2004, securities without a readily ascertainable
market value, having an amortized cost of $27,093 and $31,189, had an estimated fair value
of $27,223 and $31,752, 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 at
December 31 were:
 2005Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueFixed maturity securities:Corporate debt securities
    
    $
    151,263
    
    
    $
    1,052
    
    
    $
    2,650
    
    
    $
    149,665U.S. Government and agencies
    
    
    7,043
    
    
    
    221
    
    
    
    
    
    
    
    7,264Foreign governments
    
    
    4,499
    
    
    
    324
    
    
    
    59
    
    
    
    4,764Mortgage-backed securities
    
    
    2,599
    
    
    
    34
    
    
    
    47
    
    
    
    2,586Total fixed maturity securities
    
    $
    165,404
    
    
    $
    1,631
    
    
    $
    2,756
    
    
    $
    164,279Equity securities:Non redeemable preferred stock
    
    $
    702
    
    
    $
    4
    
    
    $
    
    
    
    $
    706




---



##### 



2004Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueFixed maturity securities:Corporate debt securities
    
    $
    164,746
    
    
    $
    2,675
    
    
    $
    1,371
    
    
    $
    166,050U.S. Government and agencies
    
    
    7,048
    
    
    
    508
    
    
    
    
    
    
    
    7,556Foreign governments
    
    
    4,501
    
    
    
    316
    
    
    
    22
    
    
    
    4,795Mortgage-backed securities
    
    
    1,306
    
    
    
    56
    
    
    
    10
    
    
    
    1,352Total fixed maturity securities
    
    $
    177,601
    
    
    $
    3,555
    
    
    $
    1,403
    
    
    $
    179,753
 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 were:
 2005Less 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
    
    $
    54,548
    
    
    $
    874
    
    
    $
    64,241
    
    
    $
    1,776
    
    
    $
    118,789
    
    
    $
    2,650Foreign governments
    
    
    
    
    
    
    
    
    
    
    2,440
    
    
    
    59
    
    
    
    2,440
    
    
    
    59Mortgage-backed securities
    
    
    1,469
    
    
    
    21
    
    
    
    743
    
    
    
    26
    
    
    
    2,212
    
    
    
    47Total temporarily impaired securities
    
    $
    56,017
    
    
    $
    895
    
    
    $
    67,424
    
    
    $
    1,861
    
    
    $
    123,441
    
    
    $
    2,756
 Unrealized losses are primarily due to price fluctuations resulting from changes in interest rates
and credit spreads. 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.There were no realized investment losses due to other-than-temporary declines in fair value for
the years ended December 31, 2005 and 2004. The Company recorded realized investment losses due
to other-than-temporary declines in fair value of $786 for the year ended December 31, 2003.The amortized cost and estimated fair value of fixed maturity securities at December 31 by
contractual maturity were:
 2005Amortized
    
    
    EstimatedCost
    
    
    Fair ValueFixed maturity securities:Due in one year or less
    
    $
    43,051
    
    
    $
    42,782Due after one year through five years
    
    
    102,664
    
    
    
    100,914Due after five years through ten years
    
    
    9,708
    
    
    
    9,742Due after ten years
    
    
    7,382
    
    
    
    8,255162,805
    
    
    
    161,693Mortgage-backed securities
    
    
    2,599
    
    
    
    2,586Total fixed maturity securities
    
    $
    165,404
    
    
    $
    164,279




---



##### 



2004Amortized
    
    
    EstimatedCost
    
    
    Fair ValueFixed maturity securities:Due in one year or less
    
    $
    12,678
    
    
    $
    12,751Due after one year through five years
    
    
    140,870
    
    
    
    141,725Due after five years through ten years
    
    
    14,094
    
    
    
    14,586Due after ten years
    
    
    8,653
    
    
    
    9,339176,295
    
    
    
    178,401Mortgage-backed securities
    
    
    1,306
    
    
    
    1,352Total fixed maturity securities
    
    $
    177,601
    
    
    $
    179,753
 In the preceding tables fixed maturity securities not due at a single maturity date have been
included 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 by rating
agency equivalent were:
 2005Amortized
    
    
    EstimatedCost
    
    
    Fair ValueAAA
    
    $
    37,172
    
    
    $
    37,277AA
    
    
    28,547
    
    
    
    27,906A
    
    
    72,124
    
    
    
    71,953BBB
    
    
    25,338
    
    
    
    24,958Below investment grade
    
    
    2,223
    
    
    
    2,185Total fixed maturity securities
    
    $
    165,404
    
    
    $
    164,279Investment grade
    
    
    99
    %
    
    
    99
    %Below investment grade
    
    
    1
    %
    
    
    1
    %
 2004Amortized
    
    
    EstimatedCost
    
    
    Fair ValueAAA
    
    $
    41,191
    
    
    $
    41,917AA
    
    
    35,057
    
    
    
    35,057A
    
    
    77,483
    
    
    
    78,885BBB
    
    
    23,870
    
    
    
    23,894Total fixed maturity securities
    
    $
    177,601
    
    
    $
    179,753Investment grade
    
    
    100
    %
    
    
    100
    %




---



##### 



The Company has recorded certain adjustments to policyholder 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 (loss), net of taxes. The components of net unrealized gains (losses) included in
accumulated other comprehensive income (loss) at December 31 were as follows:
 2005
    
    
    2004Assets:Fixed maturity securities
    
    $
    (1,125
    )
    
    $
    2,152Equity securities
    
    
    4
    
    
    
    Federal income taxes  deferred
    
    
    634
    
    
    
    (487
    )
    
    
    2,152Liabilities:Policyholders account balances
    
    
    690
    
    
    
    1,202Federal income taxes  deferred
    
    
    
    
    
    
    332690
    
    
    
    1,534Stockholders equity:Accumulated other comprehensive income (loss)
    
    $
    (1,177
    )
    
    $
    618
 Proceeds and gross realized investment gains and losses from the sale of available-for-sale
securities for the years ended December 31 were:
 2005
    
    
    2004
    
    
    2003Proceeds
    
    $
    36,283
    
    
    $
    26,368
    
    
    $
    38,922Gross realized investment gains
    
    
    2,114
    
    
    
    280
    
    
    
    2,485Gross realized investment losses
    
    
    315
    
    
    
    153
    
    
    
    1,852
 The Company considers fair value at the date of sale to be equal to proceeds received. Proceeds
on the sale of available-for-sale securities sold at a realized loss
were $17,299, $14,811 and
$7,903 for the years ended December 31, 2005, 2004, and 2003, respectively.The Company had investment securities with a carrying value of $869 and $906 that were deposited
with insurance regulatory authorities at December 31, 2005 and 2004, respectively.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 by source for the years ended December 31 was as follows:
 2005
    
    
    2004
    
    
    2003Fixed maturity securities
    
    $
    7,411
    
    
    $
    7,416
    
    
    $
    8,589Policy loans on insurance contracts
    
    
    3,679
    
    
    
    3,751
    
    
    
    4,004Cash and cash equivalents
    
    
    480
    
    
    
    265
    
    
    
    221Equity securities
    
    
    17
    
    
    
    
    
    
    
    206Other
    
    
    
    
    
    
    129
    
    
    
    52Gross investment income
    
    
    11,587
    
    
    
    11,561
    
    
    
    13,072Less investment expenses
    
    
    (312
    )
    
    
    (339
    )
    
    
    (297
    )Net investment income
    
    $
    11,275
    
    
    $
    11,222
    
    
    $
    12,775




---



##### 



Net realized investment gains (losses), for the years ended December 31 were as follows:
 2005
    
    
    2004
    
    
    2003Fixed maturity securities
    
    $
    1,799
    
    
    $
    127
    
    
    $
    460Equity securities
    
    
    
    
    
    
    
    
    
    
    173Net realized investment gains
    
    $
    1,799
    
    
    $
    127
    
    
    $
    633
 NOTE 4. DAC
 The components of amortization of DAC for the years ended December 31 were as follows:
 2005
    
    
    2004
    
    
    2003Normal
amortization related to life insurance and annuity contracts
    
    $
    3,820
    
    
    $
    3,788
    
    
    $
    3,774Unlocking related to life insurance products
    
    
    (157
    )
    
    
    
    
    
    
    507Unlocking related to annuity insurance products
    
    
    3,342
    
    
    
    (2,967
    )
    
    
    529Total amortization of DAC
    
    $
    7,005
    
    
    $
    821
    
    
    $
    4,810
 During 2005, the Company lowered its future gross profit assumptions on certain life insurance
and annuity products resulting from historical surrender experience and reinsurance assumptions.During 2004, the Company elected to adopt new assumptions for market returns associated with
assets held in the Companys variable annuity separate accounts. If returns over a determined
historical period differ from the Companys long-term assumption, returns for future determined
periods are calculated so that the long-term assumption is achieved. This method for projecting
market returns is known as reversion to the mean, a standard industry practice. The Company
previously established estimates for market returns based on actual historical results and on
future anticipated market returns without the use of a mean reversion technique.
 NOTE 5. DEFERRED SALES INDUCEMENTS
 During May 2005, the Company introduced a new variable annuity product in which certain contracts
contain sales inducements. The expense associated with offering the deferred sales inducement and
the subsequent capitalization and amortization are recorded as a component of policy benefits in
the Statements of Earnings. The deferred sales inducement asset at December 31, 2005 was $601.
 NOTE 6. VARIABLE CONTRACTS CONTAINING GUARANTEES
 Variable Annuity Contracts Containing Guarantees
 The Company issues variable annuity contracts in which the Company may contractually guarantee
to the contract owner a guaranteed minimum death benefit (GMDB) and/or an optional guaranteed
minimum income benefit (GMIB). In general, contracts containing GMDB provisions provide a
death benefit equal to the greater of the GMDB or the contract value. Depending on the type of
contract, the GMDB may equal: i) the contract value on specified contract anniversaries, ii)
return of contract deposits, or iii) some combination of these benefits. Each benefit type is
reduced for contract withdrawals. In general, contracts containing GMIB provisions provide the
option to receive a guaranteed future income stream upon annuitization. There is a waiting
period of ten years that must elapse before the GMIB provision can be exercised. The Company
began offering GMIB benefits in 2003.




---



##### 



The Company had the following variable annuity contracts containing guarantees at December 31:
 2005
    
    
    2004GMDB
    
    
    GMIB
    
    
    GMDB
    
    
    GMIBNet amount at risk (1)
    
    $
    49,572
    
    
    $
    100
    
    
    $
    63,233
    
    
    $
    Average attained age
of
contract owners
    
    
    67
    
    
    
    59
    
    
    
    67
    
    
    
    58Weighted average
period
remaining until
expected
annuitization
    
    
    n/a
    
    
    
    9 yrs
    
    
    
    n/a
    
    
    
    9 yrs
 
 (1)
    
    Net amount at risk for GMDB is defined as the current GMDB in excess of the
contract owners account balance at the balance sheet date. Net amount at risk for GMIB is defined as the present value of the minimum
guaranteed annuity payments available to the contract owner determined in accordance
with the terms of the contract in excess of the contract owners account
balance at the balance sheet date.
 The Company records liabilities for contracts containing guarantees as a component of future
policy benefits in the Balance Sheets. Changes in these guarantee liabilities are included as a
component of policy benefits in the Statements of Earnings. The GMDB liability is determined by
projecting future expected guaranteed benefits under multiple scenarios for returns on Separate
Accounts assets. The Company uses estimates for mortality and surrender assumptions based on
actual and projected experience for each contract type. These estimates are consistent with the
estimates used in the calculation of DAC. The Company regularly evaluates the estimates used and
adjusts the GMDB and/or GMIB liability balances with a related charge or credit to earnings
(unlocking), if actual experience or evidence suggests that earlier assumptions should be
revised.
 The variable annuity liability for each type of guarantee at December 31, 2005 was as
follows:
 GMDB
    
    
    GMIBBalance at January 1, 2005
    
    $
    2,863
    
    
    $
    26Guarantee benefits incurred
    
    
    1,345
    
    
    
    50Guarantee benefits paid
    
    
    (892
    )
    
    
    Unlocking
    
    
    (233
    )
    
    
    Balance at December 31,
2005
    
    $
    3,083
    
    
    $
    76
 At December 31, contract owners account balances by mutual fund class for contracts containing
guarantee provisions were distributed as follows:
 2005MoneyMarket
    
    
    Bond
    
    
    Equity
    
    
    Balanced
    
    
    Other
    
    
    TotalGMDB only
    
    $
    53,033
    
    
    
    117,433
    
    
    
    371,277
    
    
    
    20,933
    
    
    
    161
    
    
    $
    562,837GMIB and GMDB (2)
    
    
    17,093
    
    
    
    20,512
    
    
    
    79,528
    
    
    
    3,815
    
    
    
    699
    
    
    
    121,647GMIB only
    
    
    
    
    
    
    513
    
    
    
    1,847
    
    
    
    316
    
    
    
    114
    
    
    
    2,790Total
    
    $
    70,126
    
    
    
    138,458
    
    
    
    452,652
    
    
    
    25,064
    
    
    
    974
    
    
    $
    687,274




---



##### 



2004MoneyMarket
    
    
    Bond
    
    
    Equity
    
    
    Balanced
    
    
    TotalGMDB only
    
    $
    24,189
    
    
    
    136,476
    
    
    
    410,449
    
    
    
    53,533
    
    
    $
    624,647GMIB and GMDB (2)
    
    
    2,516
    
    
    
    15,743
    
    
    
    59,369
    
    
    
    9,746
    
    
    
    87,374Total
    
    $
    26,705
    
    
    
    152,219
    
    
    
    469,818
    
    
    
    63,279
    
    
    $
    712,021
 
 (2)
    
    Certain variable annuity contracts with GMIB provisions include a GMDB provision.
 At December 31, 2005, $1,488 of contract owners account balances did not contain any guarantee
provisions. At December 31, 2004, all contract owners account balances contained guarantee
provisions.Variable Life Contracts Containing GuaranteesThe Company has issued variable life contracts in which the Company contractually guarantees to
the contract owner a GMDB. In general, contracts containing GMDB provisions provide a death
benefit equal to the amount specified in the contract regardless of the level of the contracts
account value.The Company records liabilities for contracts containing guarantees as a component of future
policy benefits. Changes in these guarantee liabilities are included as a component of policy
benefits in the Statements of Earnings. The variable life GMDB liability at December 31, 2005
and 2004 was $205 and $191, respectively. The variable life GMDB liability is set as a percentage
of asset-based fees and cost of insurance charges deducted from contracts that include a GMDB
provision. The percentage is established based on the Companys estimate of the likelihood of
future GMDB claims.At December 31, contract owners account balances by mutual fund class for contracts containing
GMDB provisions were distributed as follows:
 2005
    
    
    2004Balanced
    
    $
    102,463
    
    
    $
    104,748Equity
    
    
    83,953
    
    
    
    88,514Bond
    
    
    35,692
    
    
    
    38,075Money market
    
    
    33,530
    
    
    
    35,725Other
    
    
    1,861
    
    
    
    1,315Total
    
    $
    257,499
    
    
    $
    268,377
 NOTE 7. 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:
 2005
    
    
    2004
    
    
    2003Provision for income taxes computed at Federal statutory rate
    
    $
    2,533
    
    
    $
    3,893
    
    
    $
    2,123Increase (decrease) in income taxes resulting from:Dividend received deduction
    
    
    (772
    )
    
    
    (622
    )
    
    
    (243
    )Foreign tax credit
    
    
    10
    
    
    
    (12
    )
    
    
    (188
    )Federal income tax provision
    
    $
    1,771
    
    
    $
    3,259
    
    
    $
    1,692




---



##### 



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 were as
follows:
 2005
    
    
    2004
    
    
    2003DAC (1)
    
    $
    (1,401
    )
    
    $
    1,414
    
    
    $
    (508
    )Policyholder account balances (1)
    
    
    (316
    )
    
    
    (733
    )
    
    
    (2,308
    )Deferred sales inducements
    
    
    210
    
    
    
    
    
    
    
    Investment adjustments
    
    
    693
    
    
    
    (19
    )
    
    
    (2
    )Deferred Federal income tax provision (benefit)
    
    $
    (814
    )
    
    $
    662
    
    
    $
    (2,818
    )
 
 (1)
    
    The 2004 amounts exclude deferred tax benefits related to the adoption of SOP
03-1 (see Note 1 to the Financial Statements).
 Deferred tax assets and liabilities at December 31 were as follows:
 2005
    
    
    2004Deferred tax assets:Policyholder account balances
    
    $
    3,067
    
    
    $
    2,751Investment adjustments
    
    
    772
    
    
    
    1,465Net unrealized investment loss on investment securities
    
    
    634
    
    
    
    Total deferred tax assets
    
    
    4,473
    
    
    
    4,216Deferred tax liabilities:DAC
    
    
    6,354
    
    
    
    7,755Deferred sales inducements
    
    
    210
    
    
    
    Net unrealized investment gain on investment securities
    
    
    
    
    
    
    332Total deferred tax liabilities
    
    
    6,564
    
    
    
    8,087Net deferred tax liability
    
    $
    2,091
    
    
    $
    3,871
 The Company anticipates that all deferred tax assets will be realized; therefore no valuation
allowance has been provided.
 NOTE 8. 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 contract
owners. 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 $112 that can
be drawn upon for delinquent reinsurance recoverables.




---



##### 



As of December 31, 2005, 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
    
    $
    622,008
    
    
    $
    83,655
    
    
    $
    2,158
    
    
    $
    540,511
    
    
    
    0.4
    %
 In addition, the Company seeks to limit its exposure to guaranteed features contained in certain
variable annuity contracts. Specifically, the Company reinsures certain GMIB and GMDB provisions
to the extent reinsurance capacity is available in the marketplace. As of December 31, 2005, 83%
and 6% of the account value for variable annuity contracts containing GMIB and GMDB provisions,
respectively, were reinsured.
 NOTE 9. 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 allocated to the Company by MLIG pursuant to
the agreement were $3,954, $3,616 and $3,441 for 2005, 2004 and 2003, 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 $67, $25 and $18 for 2005, 2004 and 2003,
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 $155, $169 and
$171 for 2005, 2004 and 2003, respectively.MLIG has 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 $205, $180 and $101 during 2005, 2004 and 2003, 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 $2,042, $3,304 and $2,267 for 2005,
2004 and 2003, respectively. Certain commissions were capitalized as DAC
and are being amortized in accordance with the accounting policy discussed in Note 1 to the
Financial Statements. Charges attributable to this agreement are included in insurance expenses
and taxes, net of amounts capitalized.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 10. STOCKHOLDERS EQUITY AND STATUTORY REGULATIONS
 During 2005 and 2003, the Company did not pay a dividend. During 2004, the Company paid an
ordinary cash dividend of $2,500 to MLIG. Pending regulatory approval, the Company intends to
pay a cash dividend during 2006.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, policyholder liabilities 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 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 Commissioners (NAIC) statutory accounting practices as a
component of prescribed or permitted practices by the State of New York.Statutory capital and surplus at December 31, 2005 and 2004, was $43,307 and $32,680,
respectively. At December 31, 2005 and 2004, approximately $4,111 and $3,048, respectively, of
stockholders equity was available for distribution to MLIG that does not require approval by the
New York Insurance Department.The Companys statutory net income for 2005, 2004 and 2003 was $10,662, $7,141 and $6,567,
respectively.The NAIC 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, 2005, and 2004, 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 11. 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 contract owners 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 contract owner 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 12. 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 and interest-sensitive life insurance contracts. The Company currently
does not manufacture, market, or issue life insurance contracts. The Companys Annuity segment
consists of variable annuity and interest-sensitive annuity contracts. 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 contract 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
invested assets that do not support life or annuity policyholder liabilities.The following tables summarize each business segments contribution to the consolidated amounts,
for the years ended December 31.
 Life Insurance2005
    
    
    2004
    
    
    2003Policy charge revenue
    
    $
    7,346
    
    
    $
    7,624
    
    
    $
    7,605Net interest spread (1)
    
    
    1,045
    
    
    
    552
    
    
    
    485Net realized investment gains
    
    
    
    
    
    
    
    
    
    
    Net revenues
    
    
    8,391
    
    
    
    8,176
    
    
    
    8,090Policy benefits
    
    
    1,365
    
    
    
    1,705
    
    
    
    2,114Reinsurance premium ceded
    
    
    1,439
    
    
    
    1,479
    
    
    
    1,562Amortization of DAC
    
    
    1,476
    
    
    
    1,130
    
    
    
    1,632Insurance expenses and taxes
    
    
    1,311
    
    
    
    1,269
    
    
    
    1,219Net benefits and expenses
    
    
    5,591
    
    
    
    5,583
    
    
    
    6,527Earnings before federal income tax provision
    
    
    2,800
    
    
    
    2,593
    
    
    
    1,563Federal income tax provision
    
    
    700
    
    
    
    520
    
    
    
    306Earnings before change in accounting principle
    
    
    2,100
    
    
    
    2,073
    
    
    $
    1,257Change in accounting principle, net of tax
    
    
    
    
    
    
    (115
    )
    
    
    Net earnings
    
    $
    2,100
    
    
    $
    1,958
    
    
    $
    1,257Balance Sheet Information:Total assets
    
    $
    359,982
    
    
    $
    380,257
    
    
    $
    397,569DAC
    
    
    7,655
    
    
    
    9,119
    
    
    
    10,179Policyholder liabilities and accruals
    
    
    85,973
    
    
    
    90,451
    
    
    
    93,172Other policyholder funds
    
    
    431
    
    
    
    449
    
    
    
    677




---



##### 



Annuities2005
    
    
    2004
    
    
    2003Policy charge revenue
    
    $
    11,085
    
    
    $
    10,802
    
    
    $
    8,783Net interest spread (1)
    
    
    1,055
    
    
    
    707
    
    
    
    1,697Net realized investment gains
    
    
    1,799
    
    
    
    113
    
    
    
    633Net revenues
    
    
    13,939
    
    
    
    11,622
    
    
    
    11,113Policy benefits
    
    
    1,136
    
    
    
    1,309
    
    
    
    1,913Reinsurance premium ceded
    
    
    406
    
    
    
    243
    
    
    
    15Amortization of DAC
    
    
    5,529
    
    
    
    (309
    )
    
    
    3,178Insurance expenses and taxes
    
    
    3,388
    
    
    
    2,730
    
    
    
    2,343Net benefits and expenses
    
    
    10,459
    
    
    
    3,973
    
    
    
    7,449Earnings before federal income tax provision
    
    
    3,480
    
    
    
    7,649
    
    
    
    3,664Federal income tax provision
    
    
    736
    
    
    
    2,431
    
    
    
    1,093Earnings before change in accounting principle
    
    
    2,744
    
    
    
    5,218
    
    
    
    2,571Change in accounting principle, net of tax
    
    
    
    
    
    
    (1,917
    )
    
    
    Net earnings
    
    $
    2,744
    
    
    $
    3,301
    
    
    $
    2,571Balance Sheet Information:Total assets
    
    $
    837,047
    
    
    $
    875,359
    
    
    $
    831,328DAC
    
    
    15,383
    
    
    
    19,013
    
    
    
    14,856Policyholder liabilities and accruals
    
    
    108,782
    
    
    
    122,453
    
    
    
    127,096Other policyholder funds
    
    
    (167
    )
    
    
    650
    
    
    
    1,437




---



##### 



Other2005
    
    
    2004
    
    
    2003Policy charge revenue
    
    $
    
    
    
    $
    
    
    
    $
    Net interest spread (1)
    
    
    959
    
    
    
    867
    
    
    
    837Net realized investment gains
    
    
    
    
    
    
    14
    
    
    
    Net revenues
    
    
    959
    
    
    
    881
    
    
    
    837Earnings before federal income tax provision
    
    
    959
    
    
    
    881
    
    
    
    837Federal income tax provision
    
    
    335
    
    
    
    308
    
    
    
    293Net earnings
    
    $
    624
    
    
    
    573
    
    
    $
    544Balance Sheet Information:Total assets
    
    $
    34,605
    
    
    $
    25,963
    
    
    $
    22,863
 
 (1)
    
    Management considers investment income net of interest credited to policyholder
liabilities in evaluating results.
 The following table summarizes the Companys total revenues by contract type for the years
ended December 31:
 2005
    
    
    2004
    
    
    2003Life Insurance:Variable life
    
    $
    8,346
    
    
    $
    8,134
    
    
    $
    8,041Interest-sensitive whole life
    
    
    45
    
    
    
    42
    
    
    
    49Total Life Insurance
    
    
    8,391
    
    
    
    8,176
    
    
    
    8,090Annuities:Variable annuities
    
    
    11,658
    
    
    
    11,325
    
    
    
    9,587Interest-sensitive annuities
    
    
    2,281
    
    
    
    297
    
    
    
    1,526Total Annuities
    
    
    13,939
    
    
    
    11,622
    
    
    
    11,113Other
    
    
    959
    
    
    
    881
    
    
    
    837Net Revenues
    
    $
    23,289
    
    
    $
    20,679
    
    
    $
    20,040




---



##### 



SIGNATURES

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

|                     |  |                                                   |                                                               
|-------------------- |  | ------------------------------------------------- | --------------------------------------------------------------
|                     |  | ML Life Insurance Company of New York(Registrant)
|                    
|Date:
March 27, 2006 |  | 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 27, 2006
|                                      
|/s/ Joseph E. JusticeJoseph E. Justice |  | Director, Senior Vice President,
Chief Financial Officer, and
Treasurer      |  | March 27, 2006
|                                      
|*Deborah J. Adler                      |  | Chairman of the Board, President, Chief
Executive Officer, and Chief Actuary |  | March 27, 2006





---



##### 



|                                         |  |                                                                                                            |  |               
|---------------------------------------- |  | ---------------------------------------------------------------------------------------------------------- |  | --------------
|                                        
|*Frederick J. C. Butler                  |  | Director                                                                                                   |  | March 27, 2006
|                                        
|*John C. Carroll                         |  | Director and Senior Vice President                                                                         |  | March 27, 2006
|                                        
|*Richard M. Drew                         |  | Director                                                                                                   |  | March 27, 2006
|                                        
|*Robert L. Israeloff                     |  | Director                                                                                                   |  | March 27, 2006
|                                        
|*Robert A. King                          |  | Director                                                                                                   |  | March 27, 2006
|                                        
|*Paul Michalowski                        |  | Director and Vice President                                                                                |  | March 27, 2006
|                                        
|*Irving M. Pollack                       |  | Director                                                                                                   |  | March 27, 2006
|                                        
|*Concetta M. Ruggiero                    |  | Director and Senior Vice President                                                                         |  | March 27, 2006
|                                        
|*Lori M. Salvo                           |  | Director, Vice President,
 Chief Compliance Officer, Senior Counsel, Director of Compliance, and Secretary |  | March 27, 2006
|                                        
|*Cynthia Kahn Sherman                    |  | Director                                                                                                   |  | March 27, 2006
|                                        
|/s/ Elizabeth
GarrisonElizabeth Garrison |  | Vice President and Controller                                                                              |  | March 27, 2006




*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                                                                      |  | Location                                                                                                                                                                                                      
|            |  |                                                                                  |  |                                                                                                                                                                                                               
|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.                                 

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 registered public accounting firm                       |  | Exhibit 23.1                                                                                                                                                                 
|     
|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.
|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 John C. Carroll                                                                                                                                     |  | Exhibit 24.8                                                                                                                                                                 
|24.9  |  | Power of attorney of Paul Michalowski                                                                                                                                    |  | Exhibit 24.9                                                                                                                                                                 
|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 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.          
|24.12 |  | Power of attorney of Deborah
        J. Adler                                                                                                                            |  | Incorporated by
reference to Exhibit 24.13 to Annual Report on Form 10-K, File Nos.
33-34562, 33-60288, and 333-48983, filed March 29, 2004.                                 
|24.13 |  | Power of attorney of Concetta
        M. Ruggiero                                                                                                                        |  | 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 29, 2004.                                 
|31.1  |  | Certification by the Chief Executive Officer of the Registrant
pursuant to Rule 15d-14(a).                                                                               |  | Exhibit 31.1                                                                                                                                                                 
|31.2  |  | Certification of the Chief Financial Officer of the Registrant
pursuant to Rule 15d-14(a).                                                                               |  | Exhibit 31.2                                                                                                                                                                 
|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. |  | Exhibit 32.1                                                                                                                                                                 
|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. |  | Exhibit 32.2                                                                                                                                                                 

E-5