##### 



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, 2004

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

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

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes  [  ]  No

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

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

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

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

Common 220,000

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a)
AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.





---



##### 



PART I

Item 1.  Business.

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

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

The Registrant is currently licensed to conduct life insurance and
annuity business in nine states. It currently markets its annuity products and
variable life insurance products only in the state of New York.
During 2004, annuity and life insurance sales were made principally
in New York (98%, 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, 2004, approximately 1,365 agents of MLLA were
authorized to act for the Registrant.

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

Item 2.  Properties.

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

Item 3. Legal Proceedings.

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

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

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

PART II

Item 5.  Market for
Registrants Common Equity, 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 2004, the
Registrant paid an ordinary dividend of $2,500,000 to MLIG. During 2003, the Registrant did not pay any dividends. No other cash dividends have
been declared on Registrants common stock at any time during the two most
recent fiscal years. Under laws applicable to insurance companies domiciled in
the State of New York, notice of intention to declare a dividend must be filed
with the New York Superintendent of Insurance who may disallow the payment. See
Note 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.

-2-



---



##### 



Item 7. Managements Narrative Analysis of Results of Operations This Managements Narrative Analysis of Results of Operations should be read in conjunction with
the Financial Statements and Notes to Financial Statements included herein for the Registrant
(referred to as ML of New York for purposes of Items 7 and 7A). Forward Looking Statements Certain statements contained in this Report may be considered forward-looking, including statements
about management expectations, strategic objectives, business prospects, anticipated financial
performance, and other similar matters. These forward-looking statements are not statements of
historical fact and represent only managements beliefs regarding future events, which are
inherently uncertain. There are a variety of factors, many of which are beyond ML of New Yorks
control, which affect its operations, performance, business strategy, and results and could cause
its actual results and experience to differ materially from the expectations and objectives
expressed in any forward-looking statements. These factors include, but are not limited to, the
factors listed in the Business Environment, Industry Environment, Regulatory Environment, Tax
Legislation,and Economic Environmentsections listed below, as well as actions and initiatives
taken by both current and potential competitors, general economic conditions, the effects of
current, pending, and future legislation, regulation and regulatory actions, and the other risks
and uncertainties detailed in ML of New Yorks Financial Statements and Notes to Financial
Statements. Accordingly, readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the dates on which they are made. ML of New York does not
undertake to update forward-looking statements to reflect the impact of circumstances or events
that arise after the dates the forward-looking statements are made. The reader should, however,
consult any further disclosures ML of New York may make in future filings of its Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Business Environment ML of New York conducts its business primarily in the annuity markets and to a lesser extent in the
life insurance markets of the financial services industry. These markets are highly regulated with
particular emphasis on company solvency and sales practice monitoring. Demographically, the
population is aging and there is a growing number of individuals preparing for retirement, which
favors life insurance and annuity products. ML of New York believes that the demand for retirement
products containing guarantee features will continue to increase in the future. ML of New York
believes it is well positioned to continue meeting these demands for product guarantees with the
introduction of its new variable annuity product line during 2005. Industry Environment The financial services industry continues to be affected by an intensifying competitive
environment, as demonstrated by consolidation through mergers, competition from new and established
competitors, and diminishing margins in many mature products and services. Regulatory Environment The financial services industry is also impacted by the regulatory and legislative environment. In
2003 and 2004, additional aspects of the Sarbanes-Oxley Act of 2002 were implemented as rules
relating to corporate governance, auditor independence and disclosure became effective and/or were
adopted in their final form. Various federal and state securities regulators and self-regulatory
organizations (including the Securities and Exchange Commission, New York Stock Exchange, and the
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. -3-




---



##### 



Life Insurance Strategy During the first quarter 2003, ML of New York discontinued manufacturing its single premium
variable life insurance product. As a result, ML of New York currently does not manufacture,
market, or issue life insurance products. During the first quarter 2005, ML of New York will transition the policy administration of its
inforce life insurance contracts to an unaffiliated third party service provider, which is
considered a leading provider of insurance products administration services. ML of New York
remains committed to the delivery of high quality services for all life insurance contracts
inforce. Tax Legislation During May 2003, Congress passed the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the
Act). A key provision in the Act is reduced federal income tax rates on dividends and capital
gains paid to investors on stocks and mutual funds held individually. These reduced rates would
not apply to distributions from variable annuity contracts. Pending future Congressional action,
these federal income tax rate reductions are set to expire after 2008. These enacted tax rate
reductions may impact the relative attractiveness of annuities as compared to stocks and mutual
funds. Economic Environment ML of New Yorks financial position and/or results of operations are primarily impacted by the
following economic factors: equity market performance, fluctuations in medium term interest rates,
and the corporate credit environment via credit quality and fluctuations in credit spreads. The
following discusses the impact of each economic factor. Equity Market Performance Changes in the U.S. equity market directly affect the values of the underlying U.S. equity-based
mutual funds supporting separate accounts assets and, accordingly, the values of variable contract
owner account balances. Since asset-based fees collected on inforce variable contracts represent a
significant source of revenue, ML of New Yorks financial condition will be impacted by
fluctuations in investment performance of separate accounts assets. Fluctuations in the U.S.
equity market also directly impact ML of New Yorks exposure to guaranteed minimum death benefit
(GMDB) provisions contained in the variable annuities it manufactures. Negative investment
performance generally results in greater exposure to GMDB provisions, to the extent there is an
increase in the number of variable contracts (and amount per contract) in which the GMDB exceeds
the variable account balance. Prolonged periods of negative investment performance may result in
greater GMDB expense because it may change ML of New Yorks assumptions regarding the long term
cost of GMDBs. If ML of New York increases its estimated long term GMDB cost, it will result in
establishing greater GMDB reserves as compared to current practice. GMDB expense is recorded as a
component of policy benefits. There are several standard indices published on a daily basis that measure performance of selected
components of the U.S. equity market. Examples include the Dow Jones Industrial Average (Dow),
NASDAQ Composite Index (NASDAQ) and the Standard & Poors 500 Composite Stock Price Index
(S&P). The following table provides the increase for each equity market index for the years ended
December 31 as compared to the prior year ended December 31: 2004
    
    2003Dow
    
    
    3.3
    %
    
    
    25.3
    %NASDAQ
    
    
    9.1
    %
    
    
    50.0
    %S&P
    
    
    9.0
    %
    
    
    26.4
    %
 -4-




---



##### 



As evidenced in the above table, the U.S. equity markets improved in 2004. This improvement
primarily occurred in the latter part of the year. The major U.S. equity indices ended 2004 at new
post-2000 highs despite rising oil prices and uncertainties over interest rates and geo-political
events. The investment performance of the underlying U.S. equity-based mutual funds supporting ML of New
Yorks variable products do not replicate the returns of any specific U.S. equity market index.
However, investment performance will generally increase or decrease with corresponding increases or
decreases of the overall U.S. equity market. During 2004, positive investment performance
contributed to an increase in asset-based policy charge revenue of $1.8 million and a decrease in
GMDB expense of $0.6 million as compared to 2003. Medium Term Interest Rates ML of New York defines medium term interest rates as the average interest rate on U.S. Treasury
securities with terms of 1 to 10 years. During 2004, the Federal Reserve Board increased the
federal funds effective rate from .94% at December 31, 2003 to 1.97% at December 31, 2004. The
successive increases in the short term interest rates raised the medium term interest rate yield to
3.44% at December 31, 2004 as compared to 2.60% at December 31, 2003. Changes in interest rates
affect the value of investments, primarily fixed maturity securities and preferred equity
securities, as well as interest sensitive liabilities. Changes in interest rates have an inverse
relationship to the value of investments and interest sensitive liabilities. Also, since ML of New
York has certain fixed products that contain guaranteed minimum crediting rates, decreases in
interest rates can decrease the amount of interest spread earned by ML of New York. Corporate Credit and Credit Spreads Changes in the corporate credit environment directly impact the value of ML of New Yorks
investments, primarily fixed maturity securities. ML of New York primarily invests in
investment-grade corporate debt to support its fixed rate product liabilities. ML of New York defines credit spreads according to the Merrill Lynch U.S. Corporate Bond Index for
BBB-A Rated bonds with three to five year maturities. Credit spreads represent the credit risk
premiums required by market participants for a given credit quality, e.g. the additional yield that
a debt instrument issued by a AA-rated entity must produce over a risk-free alternative (e.g., U.S.
Treasury instruments). Changes in credit spreads have an inverse relationship to the value of
investments. The impact of changes in medium term interest rates, corporate credit and credit spreads on market
valuations for the years ended December 31 were as follows: 2004
    
    2003Average medium term interest rate yield
    
    
    3.97
    %
    
    
    2.42
    %Increase (decrease) in medium term interest rates (in basis points)
    
    
    155
    
    
    
    (77
    )Credit spreads (in basis points)
    
    
    72
    
    
    
    85Contracting of credit spreads (in basis points)
    
    
    (13
    )
    
    
    (113
    )Increase (decrease) on market valuations: (in millions)Available-for-sale investment securities
    
    $
    (2.3
    )
    
    $
    0.9Interest-sensitive policyholder liabilities
    
    
    1.1
    
    
    
    0.9Net increase (decrease) on market valuations
    
    $
    (1.2
    )
    
    $
    1.8
 -5-




---



##### 



Critical Accounting Policies and Estimates The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the reported amounts of revenues and expenses. Estimates, by their nature, are
based on judgment and available information. Therefore, actual results could differ and could have
a material impact on the Financial Statements, and it is possible that such changes could occur in
the near term. ML of New Yorks critical accounting policies and estimates are discussed below. See Note 1 to the
Financial Statements for additional information regarding accounting policies. Valuation of Fixed Maturity Securities ML of New Yorks principal investments are available-for-sale fixed maturity securities as defined
by Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments
in Debt and Equity Securities. The fair value of publicly traded fixed maturity securities are
based on independently quoted market prices. ML of New York primarily utilizes pricing services
and broker quotes to determine the fair value of non-publicly traded fixed maturity securities.
Since significant judgment is required for the valuation of non-publicly traded securities, the
estimated fair value of these securities may differ from amounts realized upon an immediate sale.
At December 31, 2004 and 2003, approximately, $31.8 million (or 18%) and $22.6 million (or 12%),
respectively, of ML of New Yorks fixed maturity securities portfolio consisted of non-publicly
traded securities. Changes in the fair value of fixed maturity securities are reported as a component of the
accumulated other comprehensive income on the Balance Sheets and are not reflected in the
Statements of Earnings until a sale transaction occurs or when declines in fair value are deemed
other-than-temporary. Other-Than-Temporary Impairment Losses on Investments ML of New York regularly reviews each investment in its fixed maturity securities portfolio to
evaluate the necessity of recording impairment losses for other-than-temporary (OTT) declines in
the fair value of investments. Management makes this determination through a series of discussions
with ML of New Yorks portfolio managers and credit analysts, information obtained from external
sources (i.e. company announcements, ratings agency announcements, or news wire services) and ML of
New York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 OTT 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. OTT impairment losses result in a
permanent reduction of the cost basis of the investment. There were no realized investment losses
due to OTT declines in fair value for the year ended December 31, 2004. ML of New York recorded
realized investment losses due to OTT declines in fair value of $0.8 million and $3.5 million for
the years ended December 31, 2003 and 2002 respectively. Deferred Policy Acquisition Costs for Variable Annuities and Variable Life Insurance The costs of acquiring business, principally commissions, certain expenses related to policy
issuance, and certain variable sales expenses that relate to and vary with the production of new
and renewal business, are deferred and amortized in accordance with SFAS No. 97, Accounting and
Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and
Losses from the Sale of Investments. Deferred policy acquisition costs (DAC) are subject to
recoverability testing at the time of policy issuance and loss recognition testing at the end of
each reporting period. At December 31, 2004, variable annuities and variable life insurance
accounted for $19.0 million (or 68%) and $9.1 million (or 32%), respectively, of ML of -6-




---



##### 



New Yorks DAC asset. At December 31, 2003, variable annuities and variable life insurance
accounted for $14.8 million (or 59%) and $10.2 million (or 41%), respectively, of ML of New Yorks
DAC asset. DAC for variable annuities is amortized with interest over the lives of the policies in relation to
the present values of estimated future gross profits from asset-based fees, contract fees, and
surrender charges, less a provision for GMDB expenses, policy maintenance expenses, and
non-capitalized commissions. DAC for variable life insurance is amortized with interest over the lives of the policies in
relation to the present values of estimated future gross profits from fees related to contract
loans, asset-based fees, and cost of insurance charges, less claims (net of reinsurance), cost of
mortality reinsurance, policy maintenance expenses, and non-capitalized commissions. Future gross profit estimates are subject to periodic evaluation by ML of New York, with necessary
revisions applied against amortization to date. The impact of revisions to estimates on cumulative
amortization is recorded as a charge or benefit to current operations, commonly referred to as DAC
unlocking. See Note 4 to the Financial Statements for period-to-period differences in DAC
unlocking. During 2004, ML of New York elected to adopt new assumptions for market returns
associated with assets held in the ML of New York variable annuity separate accounts. If returns
over a determined historical period differ from the ML of New York 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. ML of New York 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. Changes in assumptions can have a significant impact on the amount of DAC
reported for variable annuities and variable life insurance products and their related amortization
patterns. In general, increases in the estimated separate accounts return and decreases in
surrender or mortality assumptions increase the expected future profitability of the underlying
business and may lower the rate of DAC amortization. Conversely, decreases in the estimated
separate accounts returns and increases in surrender or mortality assumptions reduce the expected
future profitability of the underlying business and may increase the rate of DAC amortization. The most significant assumptions involved in the estimation of future gross profits are future net
separate accounts performance, surrender rates, and mortality rates. For variable annuities, ML of
New York generally establishes a long-term rate of net separate accounts growth. The long-term rate
may be adjusted if ML of New Yorks long-term expectations change. Using the mean reversion
technique, ML of New York modifies the rate of net variable annuity separate accounts growth over
the near term, based on recent historical returns. The result is that the long-term rate is assumed
to be realized over a period of approximately ten years. For variable life, ML of New York
generally assumes a level long-term rate of net variable life separate accounts growth for all
future years. The long-term rate may be adjusted if ML of New Yorks long-term expectations change.
Additionally, ML of New York may modify the rate of net separate accounts growth over the short
term to reflect ML of New Yorks near-term expectations of the economy and financial market
performance in which separate accounts assets are invested. Policyholder Liabilities ML of New York establishes liabilities for amounts payable for its life insurance and annuity
contracts. At December 31 2004 and 2003, life and annuity policyholder liabilities were $207.6
million and $216.2 million, respectively. These liabilities are actuarially determined reserves,
which are calculated to meet ML of New Yorks future obligations. Reserves are calculated using
actuarial methods and mortality tables in general use in the United States and in accordance with
SFAS 60, Accounting and Reporting by Insurance Enterprises, SFAS 97, Accounting and Reporting by
Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from
the Sale of Investments, and Statement of Position (SOP) 03-1, Accounting and Reporting by
Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts.
Inherent in these standards are estimates and assumptions regarding mortality, surrender rates,
policy expenses, investment yields, and inflation. These estimates and assumptions are influenced
by ML of New Yorks historical experience, current developments, and anticipated market trends.
Changes in actuarial -7-




---



##### 



estimates and assumptions or differences between actual and expected experience can significantly
affect ML of New Yorks reserve liabilities and subsequently impact future operations. Federal Income Taxes ML of New York uses the asset and liability method in providing income taxes on all transactions
that have been recognized in the financial statements. The asset and liability method requires
that deferred taxes be adjusted to reflect the tax rates at which future taxable amounts will be
settled or realized. ML of New York provides for federal income taxes based on amounts ML of New
York believes it will ultimately owe. Inherent in the provision for federal income taxes are
estimates regarding the realization of certain tax deductions and credits. Specific estimates include the realization of the dividend-received deduction (DRD) and the
foreign tax credit (FTC). A portion of ML of New Yorks investment income related to separate
accounts business qualifies for the DRD and FTC. Information necessary to calculate these tax
adjustments is typically not available until the following year. However, during the current
years provision, management makes estimates regarding the future deductibility of these items.
These estimates are primarily based on recent historic experience. See Note 6 to the Financial
Statements for period-to-period differences in DRD and FTC adjustments. Recent Developments New Accounting Pronouncements On January 1, 2004, ML of New York adopted the provisions of SOP 03-1, Accounting and Reporting by
Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts.
SOP 03-1 requires the establishment of a liability for contracts that contain death or other
insurance benefits using a reserve methodology that is different from the methodology that ML of
New York previously employed. As a result, ML of New York recorded a $3.1 million increase in
policyholder liabilities resulting in a charge to earnings of $2.0 million, net of a federal income
tax benefit of $1.1 million, which was reported as a cumulative effect of a change in accounting
principle. For the year ended December 31, 2004, changes in policyholder liabilities, excluding
the change in accounting principle, did not have a material impact on ML of New Yorks Statements
of Earnings. In March 2004, the Emerging Issues Task Force (EITF) reached a final consensus on Issue 03-1, The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. EITF 03-1
requires that when the fair value of an investment security is less than its carrying value, an
impairment exists for which the determination must be made as to whether the impairment is
other-than-temporary. The EITF 03-1 impairment model applies to all investment securities
accounted for under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities,
and to investment securities accounted for under the cost method to the extent an impairment
indicator exists. Under the guidance, the determination of whether an impairment is
other-than-temporary and therefore would result in a recognized loss depends on market conditions
and managements intent and ability to hold the securities with unrealized losses. In September
2004, the Financial Accounting Standards Board (FASB) approved FASB Staff Position EITF 03-1,
which defers the effective date for recognition and measurement guidance contained in EITF 03-1
until certain issues are resolved. The impact on ML of New Yorks Financial Statements will be
determined when the final EITF 03-1 is issued. ML of New York will adopt the guidance at the time
it is issued. ML of New York previously implemented the disclosure requirements of EITF 03-1 in its
2003 Financial Statements. See Note 3 to the Financial Statements for additional information. New Business ML of New York sells variable and interest sensitive annuity products through the retail network of
Merrill Lynch, Pierce, Fenner & Smith, Incorporated, a wholly owned broker-dealer subsidiary of
Merrill Lynch & Co. -8-




---



##### 



ML of New York competes for Merrill Lynch & Co.s clients annuity business with unaffiliated
insurers whose products are also sold through Merrill Lynch & Co.s retail network, and with
insurers who solicit this business directly. The product lines that ML of New York offers are
focused in the highly competitive market segment of retirement planning. ML of New York competes in
this market segment by integrating its products into Merrill Lynch & Co.s planning-based financial
management program. ML of New York seeks to provide superior customer service and financial management to promote the
competitiveness of its products. ML of New Yorks customer service center has established
standards of performance that are monitored on a regular basis. Managers and employees in the
customer service center are periodically evaluated based on their performance in meeting these
standards. ML of New York has strategically placed its marketing emphasis on the sale of variable annuity
products. These products are designed to address the retirement planning needs of Merrill Lynch &
Co.s clients. ML of New York issues three types of variable annuity products. These products are
differentiated by the degree of liquidity afforded to the contract owner. The B-Share variable
annuities offer a guaranteed minimum income benefit (GMIB) provision and contain a seven year
surrender charge period, L-Share variable annuities do not offer a GMIB provision and contain a
three year surrender charge period, and C-Share variable annuities do not offer a GMIB provision
and have no surrender charge period. All variable annuity products offer some form of GMDB. Each
variable annuity product provides tax-deferred retirement savings with the opportunity for
diversified investing in a wide selection of underlying mutual fund portfolios. In addition, ML of
New York issues a modified guaranteed annuity product. The modified guaranteed annuity product
also provides tax-deferred retirement savings through a guaranteed fixed interest rate for a period
selected by the contract owner, but imposes a market value adjustment for withdrawals prior to the
expiration of the guarantee period. During 2005, ML of New York plans to introduce a new variable annuity product line which will
replace the existing variable annuity products (subject to state approval). The new variable
annuity product line provides the ability to customize variable annuity products with specific
contract features, charge structures, and investment options tailored to meet clients specific
financial objectives. Total direct deposits by product for the three years ended December 31 were as follows: (In Millions)
    
    % Change2004
    
    2003
    
    2002
    
    2004 - 2003
    
    2003 - 2002Variable Annuities:B-Share
    
    $
    65.5
    
    
    $
    37.9
    
    
    $
    16.7
    
    
    
    73
    %
    
    
    127
    %C-Share
    
    
    4.6
    
    
    
    10.4
    
    
    
    20.8
    
    
    
    -56
    
    
    
    -50L-Share
    
    
    4.3
    
    
    
    9.9
    
    
    
    10.5
    
    
    
    -57
    
    
    
    -674.4
    
    
    
    58.2
    
    
    
    48.0
    
    
    
    28
    
    
    
    21Modified Guaranteed
Annuities
    
    
    1.3
    
    
    
    0.2
    
    
    
    15.2
    
    
    
    550
    
    
    
    -99Variable Life Insurance
    
    
    0.5
    
    
    
    0.7
    
    
    
    1.2
    
    
    
    -29
    
    
    
    -42Other
    
    
    0.1
    
    
    
    1.3
    
    
    
    0.1
    
    
    
    -92
    
    
    
    n/mTotal Direct Deposits
    
    $
    76.3
    
    
    $
    60.4
    
    
    $
    64.5
    
    
    
    26
    %
    
    
    -6
    %
 During 2004, total direct deposits increased $15.9 million (or 26%) to $76.3 million as compared to
2003. Variable annuity deposits increased $16.2 million (or 28%) to $74.4 million during 2004 as
compared to 2003. Management attributes the increase in variable annuity deposits primarily to the
introduction of a new B-Share variable annuity product during the third quarter of 2003. Sales of
the new B-Share variable annuity product were $41.3 million and $20.8 million during 2004 and 2003,
respectively. The new B-Share variable annuity product is designed for the tax-qualified IRA
market and includes a GMIB provision. Also, during the second -9-




---



##### 



quarter of 2003 ML of New York added a GMIB provision to its existing B-Share variable annuity.
GMIB provisions have increased in popularity due to consumers increasing demand for guaranteed
living benefits. Management believes that the volatility in the equity markets over the past three
years has been the catalyst for this demand. C-Share and L-Share variable annuity deposits
decreased $5.8 million (or 56%) and $5.6 million (or 57%), respectively, during 2004. ML of New
Yorks C-Share and L-Share variable annuities do not contain GMIB provisions. Modified guaranteed annuity deposits increased $1.1 million (or 550%) to $1.3 million during 2004
as compared to 2003. This increase is primarily due to a single large contract sale during the
fourth quarter 2004. Excluding this contract sale, modified guaranteed annuity deposits were
relatively unchanged as compared to 2003. During 2004, variable life insurance deposits decreased $0.2 million (or 29%) to $0.5 million as
compared to 2003. The decrease in variable life insurance deposits is primarily due to the
discontinuation of manufacturing variable life insurance products during the first quarter 2003.
Variable life insurance deposits displayed above generally represent renewal deposits on existing
life insurance contracts. During 2004, other deposits decreased $1.2 million (or 92%) to $0.1 million as compared to 2003.
Other deposits displayed above generally represent deposits for individual fixed annuities and
single premium immediate annuities. Surrenders Policy and contract surrenders increased $23.0 million (or 28%) to $104.6 million during 2004 as
compared to 2003. During 2004, variable annuity surrenders increased $21.4 million (or 43%) to
$70.6 million as compared to 2003. Management attributes the increase in variable annuity
surrenders to the increasing consumer demand for variable annuity products containing guaranteed
living benefit provisions. As contracts reach the end of their surrender charge period, contract
owners are more willing to surrender variable annuities without guaranteed living benefit
provisions in favor of variable annuities with guaranteed living benefit provisions. In addition,
variable life surrenders increased $5.0 million (or 23%) to $26.1 million during 2004. The
increase in variable life surrenders primarily represents movement by contract owners to other
insurance products issued by insurance companies unaffiliated with ML of New York. As previously
noted, ML of New York no longer manufactures life insurance products. Financial Condition At December 31, 2004, ML of New Yorks assets were $1,281.6 million or $29.8 million higher than
the $1,251.8 million in assets at December 31, 2003. Assets excluding separate accounts assets
decreased $7.3 million (or 2%) primarily due to a reduction in the number of fixed rate contracts
inforce, a dividend payment to Merrill Lynch Insurance Group, Inc. (MLIG), and a decrease in
market values on investment securities as a result of the rising interest rate environment during
2004. Separate accounts assets, which represent 76% of total assets, increased $37.2 million (or
4%) to $980.4 million. Changes in separate accounts assets during each quarter of 2004 were as
follows: 1Q04
    
    2Q04
    
    3Q04
    
    4Q04
    
    Total(In Millions)Investment performance  variable
products
    
    $
    26.1
    
    
    $
    2.4
    
    
    $
    (7.2
    )
    
    $
    70.1
    
    
    $
    91.4Net cash outflow  variable products
    
    
    (6.5
    )
    
    
    (10.7
    )
    
    
    (16.9
    )
    
    
    (20.1
    )
    
    
    (54.2
    )Net increase (decrease)
    
    $
    19.6
    
    
    $
    (8.3
    )
    
    $
    (24.1
    )
    
    $
    50.0
    
    
    $
    37.2
 During 2004, ML of New York experienced contract owner withdrawals that exceeded deposits on all
products by $53.7 million. The components of contract owner transactions were as follows: -10-




---



##### 



2004(In Millions)Deposits collected
    
    $
    76.3Internal tax-free exchanges
    
    
    (4.3
    )Net contract owner deposits
    
    
    72.0Contract owner withdrawals
    
    
    91.6Net transfers from separate accounts
    
    
    34.1Net contract owner withdrawals
    
    
    125.7Net contract owner activity
    
    $
    (53.7
    )
 ML of New York maintains a conservative general account investment portfolio. ML of New York has no
mortgage or real estate investments and its investment in below investment grade fixed maturity
securities are below the industry average. The following schedule identifies ML of New Yorks
general account invested assets by type for the years ended December 31: 2004
    
    2003Investment Grade Fixed Maturity Securities (Rated A or higher)
    
    
    61
    %
    
    
    62
    %Policy Loans
    
    
    30
    
    
    
    30Investment Grade Fixed Maturity Securities (Rated BBB)
    
    
    9
    
    
    
    7Below Investment Grade Fixed Maturity Securities
    
    
    
    
    
    
    1100
    %
    
    
    100
    %
 At December 31, 2004 and 2003, approximately $179.8 million (or 100%) and $180.9 million (or 99%),
respectively, of ML of New Yorks fixed maturity securities were considered investment grade. ML of
New York defines investment grade securities as unsecured debt obligations that have a rating
equivalent to Standard and Poors BBB- or higher (or similar rating agency). Also, at December 31,
2004, approximately $7.5 million (or 4%) of ML of New Yorks fixed maturity securities were rated
BBB-, which is the lowest investment grade rating given by Standard and Poors, compared to $3.5
million (or 2%) of ML of New Yorks fixed maturity securities at December 31, 2003. At December 31, 2004, ML of New York had no fixed maturity securities that were considered below
investment grade. At December 31, 2003, approximately $1.3 million (or 1%) of ML of New Yorks
fixed maturity securities were considered below investment grade. Below investment grade
securities are speculative and are subject to significantly greater risks related to the
creditworthiness of the issuers and the liquidity of the market for such securities. ML of New York
does not, currently, purchase below investment grade securities. ML of New Yorks investment in collateralized mortgage obligations (CMO) and mortgage backed
securities (MBS) had a carrying value of $1.4 million at December 31, 2004 and 2003. At December
31, 2004 and 2003, approximately $1.0 million (or 71%) and $1.4 million (or 100%), respectively, of
ML of New Yorks CMO and MBS holdings were fully collateralized by the Government National Mortgage
Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation. The decrease during 2004 is primarily due to the reinvestment of call proceeds into
other MBS securities with higher yields. CMO and MBS securities are structured to allow the
investor to determine, within certain limits, the amount of interest rate risk, prepayment risk and
default risk that the investor is willing to accept. It is this level of risk that determines the
degree to which the yields on CMO and MBS securities will exceed the yields that can be obtained
from similarly rated corporate securities. -11-




---



##### 



At December 31, 2004, ML of New York had 1,853 life insurance and annuity contracts inforce with
interest rate guarantees. The estimated average rate of interest credited on behalf of contract
owners was 4.30% and 4.35% during 2004 and 2003, respectively. Invested assets supporting
liabilities with interest rate guarantees had an estimated average effective yield of 4.43% and
4.82% during 2004 and 2003, respectively. The number of life insurance and annuity contracts
inforce with interest rate guarantees decreased 152 (or 8%) as compared to 2003. Liquidity and Capital Resources ML of New Yorks liquidity requirements include the payment of sales commissions and other
underwriting expenses and the funding of its contractual obligations for the life insurance and
annuity contracts it has inforce. ML of New York has developed and utilizes a cash flow projection
system and regularly performs asset / liability duration matching in the management of its asset
and liability portfolios. ML of New York anticipates funding all its cash requirements utilizing
cash from operations, normal investment maturities and anticipated calls and repayments, consistent
with prior years. As of December 31, 2004 and 2003, ML of New Yorks assets included $154.6 million
and $190.4 million, respectively, of cash, short-term investments, and investment grade publicly
traded available-for-sale securities that could be liquidated if funds were required. The following table summarizes ML of New Yorks contractual obligations as of December 31, 2004: Less Than
    
    Three to
    
    More ThanThree Years
    
    Five Years
    
    Five Years
    
    Total(In Millions)Long-term liabilities (1)
    
    $
    1.7
    
    
    $
    1.9
    
    
    $
    16.4
    
    
    $
    20.0
  (1)
    The long-term liabilities include policyholder liabilities 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.Liabilities for future policyholder benefits of approximately $187.6 million have been
excluded from this table. These amounts primarily relate to contracts where i) ML of
New York is not currently making payments and will not make payments in the future
until the occurrence of an insurable event or ii) the occurrence of a payment
triggering event (i.e. death or withdrawal) is outside the control of ML of New York.
Such amounts are not determinable. In order to continue to issue annuity products, ML of New York must meet or exceed the statutory
capital and surplus requirements of the insurance departments of the states in which it conducts
business. Statutory accounting practices differ from generally accepted accounting principles
(GAAP) in two major respects. First, under statutory accounting practices, the acquisition costs
of new business are charged to expense, while under GAAP they are amortized over a period of time.
Second, under statutory accounting practices, the required additions to statutory reserves for new
business in some cases may initially exceed the statutory revenues attributable to such business.
These practices result in a reduction of statutory income and surplus at the time of recording new
business. The National Association of Insurance Commissioners utilizes the Risk Based Capital (RBC)
adequacy monitoring system. The RBC calculates the amount of adjusted capital that a life insurance
company should have based upon that companys risk profile. As of December 31, 2004 and 2003, based
on the RBC formula, ML of New Yorks total adjusted capital level was well in excess of the minimum
amount of capital required to avoid regulatory action. -12-




---



##### 



ML of New York receives claims paying ability ratings from Standard and Poors and A.M. Best. At
December 31, 2004, ML of New York received ratings from Standard and Poors and A.M. Best of A+
and A, respectively. These ratings were unchanged from the ratings at December 31, 2003. ML of New York has developed a comprehensive capital management plan that will continue to provide
appropriate levels of capital for the risks that ML of New York assumes, but will allow ML of New
York to reduce its absolute level of surplus. In implementing this plan, ML of New York paid an
ordinary cash dividend of $2.5 million to MLIG during 2004. No dividends were paid during 2003 or
2002. ML of New York believes that it will be able to fund the capital and surplus requirements of
projected new business from current statutory earnings and existing statutory capital and surplus.
If sales of new business significantly exceed projections, ML of New York may have to look to its
parent and other affiliated companies to provide the capital or borrowings necessary to support its
current marketing efforts. ML of New Yorks future marketing efforts could be hampered should its
parent and/or affiliates be unwilling to commit additional funding. During June 2003, ML of New York and Merrill Lynch & Co. executed a keepwell agreement. The
agreement obligates Merrill Lynch & Co. to maintain a level of capital in ML of New York in excess
of minimum regulatory capital requirements. Results of Operations ML of New Yorks gross earnings are principally derived from two sources:  
    the charges imposed on variable annuity and variable life insurance contracts, and
    the net earnings from investment of fixed rate life insurance and annuity contract owner deposits less interest
credited to contract owners, commonly known as interest spread The costs associated with acquiring contract owner deposits (DAC) are amortized over the period in
which ML of New York anticipates holding those funds, as noted in the Critical Accounting Policies
section above. Insurance expenses and taxes reported in the statements of earnings are net of
amounts deferred. In addition, ML of New York incurs expenses associated with the maintenance of
inforce contracts. 2004 compared to 2003 ML of New York recorded earnings before change in accounting principle of $7.9 and $4.4 million for
2004 and 2003, respectively. Policy charge revenue increased $2.0 million (or 12%) to $18.4 million during 2004 as compared to
$16.4 million in 2003. The increase in policy charge revenue is attributable to the increase in
average variable account balances during 2004. Average variable account balances increased $92.5
million (or 11%) as compared to 2003. During the same comparative period, asset-based policy charge
revenue increased $1.8 million (or 17%). Non-asset based policy charge revenue was relatively
unchanged during the 2004 as compared to 2003. Net earnings derived from interest spread decreased $0.9 million (or 30%) to $2.1 million during
2004 as compared to $3.0 million in 2003. The decrease in interest spread is primarily due to the
reduction in fixed rate contracts inforce, as well as, reductions in invested asset yields
resulting from the increase in credit quality of the portfolio and a higher level of call activity. ML of New York experienced net realized investment gains of $0.1 and $0.6 million during 2004 and
2003, respectively. The following table provides the changes in net realized investment gains
(losses) by type: -13-




---



##### 



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 decreased $1.0 million (or 25%) to $3.0 million during 2004 as compared to $4.0
million in 2003. The following table provides the changes in policy benefits by type: 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 is due to a decrease in net amount at risk per death claim.(2)
    The decrease is due to decreased death benefit expense incurred under GMDB
provisions due to improving equity markets. Reinsurance premium ceded increased $0.1 million (or 9%) to $1.7 million during 2004 as compared to
$1.6 million in 2003. Reinsurance premium ceded related to ML of New Yorks annuity products
increased $0.2 million during 2004 as compared to 2003. The increase is attributable to the
reinsurance of variable annuity products containing GMIB provisions. Reinsurance premium ceded
related to ML of New Yorks life insurance products decreased $0.1 million during 2004 as compared
to 2003. The decrease is attributable to the decrease in life insurance inforce. Amortization of DAC decreased $4.0 million (or 83%) to $0.8 million during 2004 as compared to $4.8
million in 2003 primarily due to period-to-period differences in DAC unlocking as noted in the
Critical Accounting Policiessection above. Excluding DAC unlocking, amortization of DAC remained
relatively unchanged during 2004 as compared to 2003. Insurance expenses and taxes increased $0.4 million (or 12%) to $4.0 million during 2004 as
compared to $3.6 million in 2003. The increase in insurance expenses and taxes is primarily due to
increased New York State franchise tax expense. ML of New Yorks effective federal income tax rate increased to 29% for 2004 from 28% for 2003
primarily due to period-to-period differences in DRD and FTC adjustments as noted in the Critical
Accounting Policiessection above. As noted in the Recent Developmentssection above, effective January 1, 2004, ML of New York
adopted SOP 03-1 and recorded a cumulative change in accounting principle of $2.0 million, net of a
federal income tax benefit of $1.1 million. -14-




---



##### 



2003 compared to 2002 ML of New York recorded net earnings of $4.4 million and $3.1 million for 2003 and 2002,
respectively. Policy charge revenue decreased $1.6 million (or 9%) to $16.4 million during 2003 as compared to
$18.0 million in 2002. The decrease in policy charge revenue is primarily due to a decrease in
non-asset based policy charge revenue. Non-asset-based policy charge revenue decreased $1.1 million
(or 15%) due to decreases in cost of insurance charges on variable life insurance contracts and
deferred policy load amortization. In addition, asset-based policy charge revenue decreased $0.5
million (or 4%) during 2003 as compared to 2002. The decrease in asset-based policy charge
revenue is attributable to lower average variable account balances. During the same comparative
period, average variable account balances decreased $41.7 million (or 5%). Net earnings derived from interest spread decreased $1.0 million (or 24%) to $3.0 million during
2003 as compared to $4.0 million in 2002. The decrease in interest spread is primarily a result of
the reduction in yields on invested assets resulting from (i) the lower interest rate environment
during 2003 as compared to 2002 and (ii) the increase in credit quality of the portfolio. ML of New York experienced net realized investment gains (losses) of $0.6 million and ($3.2)
million during 2003 and 2002, respectively. The following table provides the changes in net
realized investment gains (losses) by type: Realized Gains (Losses)
    
    2003
    
    2002
    
    Change(In Millions)Interest related gains
    
    $
    2.4
    
    
    $
    0.2
    
    
    $
    2.2
    
    
    
    (1
    )Credit related losses
    
    
    (1.8
    )
    
    
    (3.4
    )
    
    
    1.6
    
    
    
    (2
    )$
    0.6
    
    
    $
    (3.2
    )
    
    $
    3.8
  (1)
    The increase in interest related gains is primarily attributable to
increases in invested asset market valuations resulting from generally
lower interest rates and contracting credit spreads during 2003 as compared
to 2002.(2)
    The decrease in credit related losses is primarily due to the
reduction in OTT declines in the carrying value of fixed maturity
securities. Policy benefits decreased $0.5 million (or 10%) to $4.0 million during 2003 as compared to $4.5
million in 2002 primarily due to decreased variable annuity death benefit payments incurred under
GMDB provisions. Reinsurance premium ceded decreased $0.1 million (or 10%) to $1.6 million during 2003 as compared
to $1.7 million in 2002. The decrease is attributable to the decrease in life insurance inforce. Amortization of DAC decreased $0.7 million (or 12%) to $4.8 million during 2003 as compared to $5.5
million in 2002 primarily due to period-to-period differences in DAC unlocking as noted in the
Critical Accounting Policiessection above. Excluding DAC unlocking, amortization of DAC remained
relatively unchanged during 2003 as compared to 2002. Insurance expenses and taxes increased $0.2 million (or 5%) to $3.6 million during 2003 as compared
to $3.4 million in 2002. The increase in insurance expenses and taxes is primarily due to increased
New York State Insurance Department assessments. ML of New Yorks effective federal income tax rate increased to 28% for 2003 from 15% for 2002
primarily due to period-to-period differences in DRD and FTC adjustments as noted in the Critical
Accounting Policiessection above. Also, during 2003, deferred tax components have been
significantly impacted by fluctuations in -15-




---



##### 



GMDB tax reserves. The reserve fluctuations have resulted in a decreased deferred tax expense
during 2003 as compared to 2002. Segment Information ML of New Yorks operating results are categorized into two business segments: Life Insurance and
Annuities. ML of New Yorks Life Insurance segment consists of variable life insurance products and
interest-sensitive life products. ML of New Yorks Annuity segment consists of variable annuities
and interest-sensitive annuities. The Other earnings category represents earnings on invested
assets that do not support contract owner liabilities. Earnings before change in accounting principle by segment were as follows: Segment
    
    2004
    
    2003
    
    2002(In Millions)Life Insurance
    
    $
    2.1
    
    
    $
    1.3
    
    
    $
    1.4Annuities
    
    
    5.2
    
    
    
    2.6
    
    
    
    1.3Other
    
    
    0.6
    
    
    
    0.5
    
    
    
    0.4
 Net earnings by segment were as follows: Segment
    
    2004
    
    2003
    
    2002(In Millions)Life Insurance
    
    $
    1.9
    
    
    $
    1.3
    
    
    $
    1.4Annuities
    
    
    3.3
    
    
    
    2.6
    
    
    
    1.3Other
    
    
    0.6
    
    
    
    0.5
    
    
    
    0.4
 The products that comprise the Life Insurance and Annuity segments generally possess similar
economic characteristics. As such, the financial condition and results of operations of each
business segment are generally consistent with ML of New Yorks consolidated financial condition
and results of operations presented herein. OTT impairment losses on investments by segment were as follows: Segment
    
    2004
    
    2003
    
    2002(In Millions)Life Insurance
    
    
    
    
    
    
    
    
    
    
    Annuities
    
    
    
    
    
    $
    0.8
    
    
    $
    3.5Other
    
    
    
    
    
    
    
    
    
    
    
 ML of New York is not dependent upon any single customer, and no single customer accounted for more
than 10% of its revenues during 2004, 2003, or 2002. Inflation ML of New Yorks operations have not been materially impacted by inflation and changing prices
during the preceding three years. -16-




---



##### 



Item 7A. Quantitative and Qualitative Disclosures About Market Risk Market risk is the potential change in a financial instruments value caused by fluctuations in
certain underlying risk factors. ML of New York is primarily subject to market risk resulting from
fluctuations in interest rates, credit spreads, credit risk, and equity prices. ML of New York
utilizes an integrated approach to manage financial market risks including a comprehensive asset /
liability management process, product design, and reinsurance programs. A number of assumptions must be made to obtain the expected fair value changes illustrated below.
ML of New York has no reason to believe that historically simulated interest rate and credit spread
movements have any predictive power for future fair value changes. The volatility experienced
during recent years demonstrates the limitations of these models. Interest Rate Risk Interest rate risk arises from the possibility that changes in interest rates will affect the value
of investments, primarily fixed maturity securities and preferred equity securities, as well as
interest sensitive liabilities. Changes in interest rates have an inverse relationship to the value
of investments and interest sensitive liabilities. ML of New York manages interest rate risk as
part of its asset / liability management strategy. For each portfolio, management monitors the
expected changes in assets and liabilities, as produced by ML of New Yorks model, resulting from
various interest rate scenarios. Based on these results, management closely matches the duration
and convexity of insurance liabilities to the duration and convexity of assets supporting those
liabilities. The following table presents the estimated net impact on the fair value of investments and interest
sensitive liabilities resulting from various hypothetical interest rate scenarios, based on
assumptions contained in ML of New Yorks model: Change in Fair ValueChange in Interest Rates
    
    2004
    
    2003(In Millions)+ 100 basis points
    
    
    ($2.2
    )
    
    
    ($3.5
    )+ 50 basis points
    
    
    ($1.1
    )
    
    
    ($1.7
    )+ 10 basis points
    
    
    ($0.2
    )
    
    
    ($0.3
    )- 10 basis points
    
    
    $0.2
    
    
    
    $0.3- 50 basis points
    
    
    $1.1
    
    
    
    $1.7- 100 basis points
    
    
    $2.2
    
    
    
    $3.4
 ML of New Yorks model is based on existing business inforce as of the year ended 2004 without
considering the impact of new annuity sales on assets or liabilities. The model incorporates ML of
New Yorks fixed maturity securities and preferred equity investments excluding variable rate
securities with rate resetting in less than ninety days, securities with a maturity of less than
ninety days, and securities that are in or near default. The changes in interest rate scenarios,
noted above, assume parallel shifts in the yield curve occurring uniformly throughout the year. Additionally, certain products have features that mitigate the impact of interest rate risk.
Examples include surrender charges, market value adjustments, and resetting of interest credited
rates (subject to certain guaranteed minimum crediting rates). For interest sensitive life
products the guaranteed minimum rate is 4%. However, for some products, the minimum rate may be
reduced by a charge for mortality that varies by the attained age of the insured. For interest
sensitive annuity products the guaranteed minimum rates range from 3% to 4.5%, with the greatest
concentration in the 3% to 4% range. -17-




---



##### 



Credit Spread Risk Credit spread risk arises from the possibility that changes in credit spreads will affect the value
of investments. Credit spreads represent the credit risk premiums required by market participants
for a given credit quality, i.e., the additional yield that a debt instrument issued by an AA-rated
entity must produce over a risk-free alternative (e.g., U.S. Treasury instruments). The following table presents the estimated net impact on the fair value of investments resulting
from various hypothetical fluctuations in credit spreads, based on assumptions contained in ML of
New Yorks model: Change in Fair ValueChange in Credit Spreads
    
    2004
    
    2003(In Millions)+ 50 basis points
    
    
    ($2.3
    )
    
    
    ($2.4
    )+ 10 basis points
    
    
    ($0.5
    )
    
    
    ($0.5
    )- 10 basis points
    
    
    $0.5
    
    
    
    $0.5- 50 basis points
    
    
    $2.3
    
    
    
    $2.4
 ML of New Yorks model is based on existing business inforce as of the year ended 2004 without
considering the impact of new annuity sales on assets. The model incorporates ML of New Yorks
fixed maturity securities and preferred equity investments excluding securities with a maturity of
less than ninety days and securities that are in or near default. The changes in credit spreads,
noted above, assume a uniform occurrence throughout the year. Liability valuations for modified guaranteed annuities mitigate ML of New Yorks exposure to credit
spread risk on these products. Contract owner surrender values reflect changes in spread between
corporate bonds and U.S. Treasury securities since the market value adjusted account value is based
on current crediting rates for new and renewal contracts. These crediting rates are adjusted weekly
and reflect current market conditions. Credit Risk Credit risk represents the loss that ML of New York would incur if an issuer fails to perform its
contractual obligations and the value of the security held has been impaired or is deemed
worthless. ML of New York manages its credit risk by setting investment policy guidelines that
assure diversification with respect to investment, issuer, geographic location and credit quality.
Management regularly monitors compliance of each investment portfolios status with the investment
policy guidelines, including timely updates of credit-related securities. Equity Price Risk Equity price risk arises from the possibility that general reductions in equity prices will
negatively affect the value of assets and liabilities, primarily separate accounts assets and
separate accounts liabilities. ML of New York manages its exposure to equity risk via certain
product design features (e.g., waiting periods, age caps, subsequent premium restrictions, and
adjusted withdrawals) and reinsurance programs to the extent reinsurance capacity is available in
the marketplace. General reductions in equity prices impact ML of New York in the following ways: -18-




---



##### 




    Reductions in separate accounts assets. Asset-based policy fees collected on separate accounts assets are a primary
source of earnings for ML of New York, thus lower asset balances will result in lower policy fee income.
    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 mortality expense.
    Potential hindrance of sales and marketing efforts for variable annuity products. -19-




---



##### 



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 2004 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.


-20-



---



##### 



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, 2004 and 2003 and fees billed for other
services rendered by Deloitte & Touche LLP during those periods. 2004
        
        2003Audit (1)
        
        $
        207,506
        
        
        $
        192,560Audit Related (2)
        
        
        4,554
        
        
        
        4,246Tax (3)
        
        
        2,277
        
        
        
        2,123All Other (4)
        
        
        13,362
        
        
        
        13,362Total
        
        $
        227,699
        
        
        $
        212,290
  (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.


-21-



---



##### 



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 March 2, 2005.                                       
|b.  |  | Balance Sheets at
December 31, 2004 and 2003.                                           
|c.  |  | Statements of Earnings for the Years Ended
December 31, 2004, 2003 and 2002.            
|d.  |  | Statements of Comprehensive Income for the
Years Ended December 31, 2004, 2003 and
2002.
|e.  |  | Statements of Stockholders Equity for the
Years Ended December 31, 2004, 2003 and
2002.
|f.  |  | Statements of Cash Flows for the Years Ended
December 31, 2004, 2003 and 2002.          
|g.  |  | Notes to Financial Statements for the Years
Ended December 31, 2004, 2003 and 2002.     
|(2) |  | Not applicable.                                                                         
|(3) |  | The following exhibits are filed as part of
this report as indicated below:             

-22-



---



##### 



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

-23-



---



##### 



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

-24-



---



##### 



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

-25-



---



##### 



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

-26-



---



##### 



|      |  |                                                                                                                                                                                                                
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|24.7  |  | Power of attorney of Richard M. Drew. (Incorporated by
reference to Exhibit 24.14 to Annual Report on Form 10-K,
File Nos. 33-34562, 33-60288, and 333-48983, filed
March 30, 2000.)                           
|24.8  |  | Power of attorney of Christopher J. Grady. (Incorporated by
reference to Exhibit 24.12 to Annual Report on Form 10-K,
File Nos. 33-34562, 33-60288, and 333-48983, filed April 2,
2001.)                       
|24.9  |  | Power of attorney of H. McIntyre Gardner. (Incorporated by
reference to ML of New York Variable Annuity Separate
Account As registration statement on Form N-4, File No.
333-69220, filed September 10, 2001.)
|24.10 |  | Power of attorney of Joseph Justice. (Incorporated by
reference to ML of New York Variable Annuity Separate
Account As registration statement on Form N-4, File No.
333-69220, filed September 10, 2001.)     
|24.11 |  | Power of attorney of Nikos K. Kardassis. (Incorporated by
reference to ML of New York Variable Annuity Separate
Account As registration statement on Form N-4, File No.
333-69220, filed September 10, 2001.) 
|24.12 |  | Power of attorney of Lori M. Salvo. (Incorporated by
reference to ML of New York Variable Annuity Separate
Account As registration statement on Form N-4, File No.
333-69220, filed September 10, 2001.)      
|24.13 |  | Power of attorney of Deborah J. Adler. (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.)                          
|24.14 |  | 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.                    

-27-



---



##### 



INDEX TO FINANCIAL STATEMENTS

|                                                                                       
|---------------------------------------------------------------------------------------
|Independent Auditors Report                                                           
|Balance
Sheets at December 31, 2004 and 2003                                           
|Statements
of Earnings for the Years Ended December 31, 2004, 2003 and 2002            
|Statements
of Comprehensive Income for the Years Ended December 31, 2004,
2003 and 2002
|Statements
of Stockholders Equity for the Years Ended December 31,
2004, 2003 and 2002
|Statements
of Cash Flows for the Years Ended December 31, 2004, 2003 and
2002          
|Notes
to Financial Statements for the Years Ended December 31, 2004,
2003 and 2002     





---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors
ML Life Insurance Company of New York We have audited the accompanying balance sheets of ML Life Insurance Company of New York (the
Company) as of December 31, 2004 and 2003, and the related statements of earnings, comprehensive
income, stockholders equity, and cash flows for each of the three years in the period ended
December 31, 2004. These financial statements are the responsibility of the Companys management.
Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audit includes consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Companys internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial
position of ML Life Insurance Company of New York as of December 31, 2004 and 2003, and the results
of its operations and its cash flows for each of the three years in the period ended December 31,
2004, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 to the financial statements, in 2004 the Company changed its method of
accounting for long-duration contracts to conform to Statement of Position 03-1 Accounting and
Reporting by Insurance Enterprises for Certain Non-Traditional Long-Duration Contract and for
Separate Accounts. March 2, 2005




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) BALANCE SHEETS
AS OF DECEMBER 31, 2004 AND 2003
(Dollars in thousands, except common stock par value and shares)  ASSETS
    
    2004
    
    2003INVESTMENTS:Fixed
maturity available-for-sale securities, at estimated fair value
(amortized cost: 2004 - $177,601; 2003 - $177,770)
    
    $
    179,753
    
    
    $
    182,182Policy loans on insurance contracts
    
    
    76,750
    
    
    
    80,992Total Investments
    
    
    256,503
    
    
    
    263,174CASH AND CASH EQUIVALENTS
    
    
    6,649
    
    
    
    12,338ACCRUED INVESTMENT INCOME
    
    
    3,919
    
    
    
    4,332DEFERRED POLICY ACQUISITION COSTS
    
    
    28,132
    
    
    
    25,035OTHER ASSETS
    
    
    5,978
    
    
    
    3,648SEPARATE ACCOUNTS ASSETS
    
    
    980,398
    
    
    
    943,233TOTAL ASSETS
    
    $
    1,281,579
    
    
    $
    1,251,760
 See accompanying notes to financial statements.
    
    (Continued)




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) BALANCE SHEETS (Continued)
AS OF DECEMBER 31, 2004 AND 2003
(Dollars in thousands, except common stock par value and shares)  LIABILITIES AND STOCKHOLDER'S EQUITY
    
    2004
    
    2003LIABILITIES:POLICYHOLDER LIABILITIES AND ACCRUALS:Policyholders account balances
    
    $
    207,639
    
    
    $
    216,197Claims and claims settlement expenses
    
    
    5,265
    
    
    
    4,071Total Policyholder Liabilities and Accruals
    
    
    212,904
    
    
    
    220,268OTHER POLICYHOLDER FUNDS
    
    
    1,099
    
    
    
    2,114FEDERAL INCOME TAXES  DEFERRED
    
    
    3,871
    
    
    
    4,698FEDERAL INCOME TAXES  CURRENT
    
    
    734
    
    
    
    965AFFILIATED PAYABLES  NET
    
    
    2,357
    
    
    
    2,837OTHER LIABILITIES
    
    
    
    
    
    
    28SEPARATE ACCOUNTS LIABILITIES
    
    
    980,398
    
    
    
    943,233Total Liabilities
    
    
    1,201,363
    
    
    
    1,174,143STOCKHOLDER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
    
    
    25,088
    
    
    
    21,756Accumulated other comprehensive income
    
    
    618
    
    
    
    1,351Total Stockholders Equity
    
    
    80,216
    
    
    
    77,617TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,281,579
    
    
    $
    1,251,760
 See accompanying notes to financial statements.




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) STATEMENTS OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in thousands)  2004
    
    2003
    
    2002REVENUES:Policy charge revenue
    
    $
    18,426
    
    
    $
    16,388
    
    
    $
    17,963Net investment income
    
    
    11,222
    
    
    
    12,775
    
    
    
    14,583Net realized investment gains (losses)
    
    
    127
    
    
    
    633
    
    
    
    (3,158
    )Total Revenues
    
    
    29,775
    
    
    
    29,796
    
    
    
    29,388BENEFITS AND EXPENSES:Interest credited to policyholders account balances
    
    
    9,096
    
    
    
    9,756
    
    
    
    10,610Policy benefits (net of reinsurance recoveries: 2004 - $1,066;
2003 - $705; 2002 - $959)
    
    
    3,014
    
    
    
    4,027
    
    
    
    4,486Reinsurance premium ceded
    
    
    1,722
    
    
    
    1,577
    
    
    
    1,748Amortization of deferred policy acquisition costs
    
    
    821
    
    
    
    4,810
    
    
    
    5,467Insurance expenses and taxes
    
    
    3,999
    
    
    
    3,562
    
    
    
    3,402Total Benefits and Expenses
    
    
    18,652
    
    
    
    23,732
    
    
    
    25,713Earnings Before Federal Income Tax Provision
    
    
    11,123
    
    
    
    6,064
    
    
    
    3,675FEDERAL INCOME TAX PROVISION (BENEFIT):Current
    
    
    2,597
    
    
    
    4,510
    
    
    
    (2,856
    )Deferred
    
    
    662
    
    
    
    (2,818
    )
    
    
    3,423Total Federal Income Tax Provision
    
    
    3,259
    
    
    
    1,692
    
    
    
    567EARNINGS BEFORE CHANGE IN ACCOUNTING PRINCIPLE
    
    
    7,864
    
    
    
    4,372
    
    
    
    3,108Change in Accounting Principle, Net of Tax
    
    
    (2,032
    )
    
    
    
    
    
    
    NET EARNINGS
    
    $
    5,832
    
    
    $
    4,372
    
    
    $
    3,108
 See accompanying notes to financial statements.




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in thousands)  2004
    
    2003
    
    2002NET EARNINGS
    
    $
    5,832
    
    
    $
    4,372
    
    
    $
    3,108OTHER COMPREHENSIVE INCOME (LOSS):Net unrealized gains (losses) on available-for-sale securities:Net unrealized holding gains (losses) arising during the period
    
    
    (2,133
    )
    
    
    1,245
    
    
    
    (237
    )Reclassification adjustment for (gains) losses included in net
earnings
    
    
    (127
    )
    
    
    (321
    )
    
    
    3,160Total net unrealized gains (losses) on available-for-sale securities
    
    
    (2,260
    )
    
    
    924
    
    
    
    2,923Adjustments for:Policyholder liabilities
    
    
    1,132
    
    
    
    864
    
    
    
    (880
    )Deferred federal income taxes
    
    
    395
    
    
    
    (626
    )
    
    
    (715
    )Total other comprehensive income (loss), net of tax
    
    
    (733
    )
    
    
    1,162
    
    
    
    1,328COMPREHENSIVE INCOME
    
    $
    5,099
    
    
    $
    5,534
    
    
    $
    4,436
 See accompanying notes to financial statements.




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in thousands)  AccumulatedAdditional
    
    
    
    
    
    other
    
    TotalCommon
    
    paid-in
    
    Retained
    
    comprehensive
    
    stockholder'sstock
    
    capital
    
    earnings
    
    income (loss)
    
    equityBALANCE, JANUARY 1, 2002
    
    $
    2,200
    
    
    $
    52,310
    
    
    $
    14,276
    
    
    $
    (1,139
    )
    
    $
    67,647Net earnings
    
    
    
    
    
    
    
    
    
    
    3,108
    
    
    
    
    
    
    
    3,108Other comprehensive income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,328
    
    
    
    1,328BALANCE, DECEMBER 31, 2002
    
    
    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
    
    
    $
    80,216
 See accompanying notes to financial statements.




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in thousands)  2004
    
    2003
    
    2002Cash Flows From Operating Activities:Net earnings
    
    $
    5,832
    
    
    $
    4,372
    
    
    $
    3,108Noncash items included in earnings:Change in accounting principle, net of tax
    
    
    2,032
    
    
    
    
    
    
    
    Amortization of deferred policy acquisition costs
    
    
    821
    
    
    
    4,810
    
    
    
    5,467Capitalization of policy acquisition costs
    
    
    (3,924
    )
    
    
    (2,323
    )
    
    
    (2,074
    )Amortization of investments
    
    
    622
    
    
    
    689
    
    
    
    837Interest credited to policyholders account balances
    
    
    9,096
    
    
    
    9,756
    
    
    
    10,610Change in variable contract reserves
    
    
    (188
    )
    
    
    
    
    
    
    Provision (benefit) for deferred Federal income tax
    
    
    662
    
    
    
    (2,818
    )
    
    
    3,423(Increase) decrease in operating assets:Accrued investment income
    
    
    413
    
    
    
    513
    
    
    
    (197
    )Federal income taxes  current
    
    
    
    
    
    
    1,628
    
    
    
    (1,628
    )Other
    
    
    (2,330
    )
    
    
    495
    
    
    
    6Increase (decrease) in operating liabilities:Claims and claims settlement expenses
    
    
    1,338
    
    
    
    782
    
    
    
    (820
    )Other policyholder funds
    
    
    (1,015
    )
    
    
    1,327
    
    
    
    (338
    )Federal income taxes  current
    
    
    (231
    )
    
    
    965
    
    
    
    (194
    )Affiliated payables  net
    
    
    (480
    )
    
    
    367
    
    
    
    1,710Other
    
    
    (28
    )
    
    
    (470
    )
    
    
    (483
    )Other operating activities:Net realized investment (gains) losses
    
    
    (127
    )
    
    
    (633
    )
    
    
    3,158Net cash and cash equivalents provided by operating activities
    
    
    12,493
    
    
    
    19,460
    
    
    
    22,585Cash Flow From Investing Activities:Proceeds from (payments for):Sales of available-for-sale securities
    
    
    26,368
    
    
    
    38,922
    
    
    
    32,338Maturities of available-for-sale securities
    
    
    26,870
    
    
    
    60,331
    
    
    
    24,996Purchases of available-for-sale securities
    
    
    (53,564
    )
    
    
    (109,475
    )
    
    
    (74,117
    )Policy loans on insurance contracts
    
    
    4,242
    
    
    
    5,611
    
    
    
    6,364Net cash and cash equivalents provided by (used in) investing
activities
    
    $
    3,916
    
    
    $
    (4,611
    )
    
    $
    (10,419
    )
 See accompanying notes to financial statements.
    
    (Continued)




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) STATEMENTS OF CASH FLOWS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(Dollars in thousands)  2004
    
    2003
    
    2002Cash Flows From Financing Activities:Proceeds from (payments for):Cash dividend paid to parent
    
    $
    (2,500
    )
    
    $
    
    
    
    $
    Policyholder deposits (excludes internal policy replacement deposits)
    
    
    71,983
    
    
    
    57,372
    
    
    
    62,927Policyholder withdrawals (including transfers from separate accounts)
    
    
    (91,581
    )
    
    
    (82,975
    )
    
    
    (72,525
    )Net cash and cash equivalents used in financing activities
    
    
    (22,098
    )
    
    
    (25,603
    )
    
    
    (9,598
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (5,689
    )
    
    
    (10,754
    )
    
    
    2,568CASH AND CASH EQUIVALENTS:Beginning of year
    
    
    12,338
    
    
    
    23,092
    
    
    
    20,524End of year
    
    $
    6,649
    
    
    $
    12,338
    
    
    $
    23,092Supplementary Disclosure of Cash Flow Information:Cash paid to (received from) affiliates for:Federal income taxes
    
    $
    2,828
    
    
    $
    1,917
    
    
    $
    (1,034
    )Interest
    
    
    25
    
    
    
    18
    
    
    
    11
 See accompanying notes to financial statements.




---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.) NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)  NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business: ML Life Insurance Company of New York (the Company) is a
wholly owned subsidiary of Merrill Lynch Insurance Group, Inc. (MLIG). The Company is an
indirect wholly owned subsidiary of Merrill Lynch & Co., Inc. (Merrill Lynch & Co.). The
Company is domiciled in the State of New York. The Company sells non-participating annuity products, including variable annuities, modified
guaranteed annuities and immediate annuities. The Company is licensed to sell insurance and
annuities in nine states; however, it currently limits its marketing activities to the State of
New York. The Company markets its products solely through the retail network of Merrill Lynch,
Pierce, Fenner & Smith, Incorporated (MLPF&S), a wholly owned broker-dealer subsidiary of
Merrill Lynch & Co. Basis of Reporting: The accompanying financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of America and
prevailing industry practices, both of which require management to make estimates that affect the
reported amounts and disclosure of contingencies in the financial statements. Actual results
could differ from those estimates. The significant accounting policies and related 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 securities are classified as
available-for-sale and are carried at estimated fair value with unrealized gains and losses
included in stockholders equity as a component of accumulated other comprehensive income, net of
tax. If management determines that a decline in the value of an available-for-sale security is
other-than-temporary, the carrying value is adjusted to estimated fair value and the decline in
value is recorded as a net realized investment loss. Management makes this determination through
a series of discussions with the Companys portfolio managers and credit analysts, 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. Realized
gains and losses on the sale or maturity of investments are determined on the basis of specific
identification. Investment transactions are recorded on the trade date. Certain fixed maturity securities are considered below investment grade. The Company defines
below investment grade fixed maturity securities as unsecured debt obligations that have a rating
equivalent to Standard and Poors (or similar rating agency) BB+ or lower. Policy loans on insurance contracts are stated at unpaid principal balances. Deferred Policy Acquisition Costs (DAC): Certain policy acquisition costs for life and
annuity contracts are deferred and amortized based on the estimated future gross profits for each
group of contracts. These future gross profit estimates are subject to periodic evaluation by the
Company, with necessary revisions applied against amortization to date. The impact of these
revisions on cumulative amortization is recorded as a charge or credit to current operations,
commonly referred to as DAC 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: 2004
    
    2003
    
    2002Beginning balance
    
    $
    8,830
    
    
    $
    9,703
    
    
    $
    11,341Interest accrued
    
    
    662
    
    
    
    728
    
    
    
    851Amortization
    
    
    (1,325
    )
    
    
    (1,601
    )
    
    
    (2,489
    )Ending balance
    
    $
    8,167
    
    
    $
    8,830
    
    
    $
    9,703
 The following table presents the expected amortization, net of interest accrued, of these
deferred acquisition costs over the next five years. Amortization may be adjusted based on
periodic evaluation of the expected gross profits on the reinsured policies. 2005
    
    $
    6462006
    
    $
    7382007
    
    $
    7262008
    
    $
    7182009
    
    $
    711




---



##### 



Separate Accounts: The Companys Separate Accounts consist of variable annuities and
variable life 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 revenue in the Statements of Earnings. Policyholders Account Balances: Liabilities for the Companys universal life type
contracts, including its life insurance and annuity products, are equal to the full accumulation
value of such contracts as of the valuation date plus deficiency reserves for certain products.
Interest-crediting rates for the Companys fixed-rate products are as follows: Interest-sensitive life products
    
    4.00%Interest-sensitive deferred annuities
    
    3.00%  7.40%Immediate annuities
    
    3.00%  8.80%
 These rates may be changed at the option of the Company after initial guaranteed rates expire,
unless contracts are subject to minimum interest rate guarantees. Claims and Claims Settlement Expenses: Liabilities for claims and claims settlement
expenses equal the death benefit (plus accrued interest) for claims that have been reported to
the Company but have not settled and an estimate, based upon prior experience, for unreported
claims. 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. See Note 6 to the Financial Statements for further
information. The Company is generally subject to taxes on premiums and, in substantially all states, is exempt
from state income taxes. Accounting Pronouncements: On 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 requires the
establishment of a liability for contracts that contain death or other insurance benefits using a
reserve methodology that is 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. For the
year ended December 31, 2004, changes in policyholder liabilities related to SOP 03-1, excluding
the change in accounting principle, did not have a material impact on the Companys Statements of
Earnings. SOP 03-1 requires new disclosures regarding the Companys Separate Accounts and insurance
contracts containing guarantee provisions. See Note 5 to the Financial Statements for these
disclosures.




---



##### 



In March 2004, the Emerging Issues Task Force (EITF) reached a final consensus on Issue 03-1,
The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. EITF
03-1 requires that when the fair value of an investment security is less than its carrying value,
an impairment exists for which the determination must be made as to whether the impairment is
other-than-temporary. The EITF 03-1 impairment model applies to all investment securities
accounted for under SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities, and to investment securities accounted for under the cost method to the extent an
impairment indicator exists. Under the guidance, the determination of whether an impairment is
other-than-temporary and therefore would result in a recognized loss depends on market conditions
and managements intent and ability to hold the securities with unrealized losses. In September
2004, the Financial Accounting Standards Board (FASB) approved FASB Staff Position EITF 03-1,
which defers the effective date for recognition and measurement guidance contained in EITF 03-1
until certain issues are resolved. The impact on the Companys Financial Statements will be
determined when the final EITF 03-1 is issued. The Company will adopt the guidance at the time
it is issued. The Company previously implemented the disclosure requirements of EITF 03-1 in its
2003 Financial Statements. See Note 3 to the Financial Statements for additional information. NOTE 2. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS Financial instruments are carried at fair value or amounts that approximate fair value. The
carrying value of financial instruments as of December 31 were: 2004
    
    2003Assets:Fixed maturity securities (1)
    
    $
    179,753
    
    
    $
    182,182Policy loans on insurance contracts (2)
    
    
    76,750
    
    
    
    80,992Cash and cash equivalents (3)
    
    
    6,649
    
    
    
    12,338Separate Accounts assets (4)
    
    
    980,398
    
    
    
    943,233Total assets
    
    $
    1,243,550
    
    
    $
    1,218,745Liabilities:Policyholders account balances
    
    $
    207,639
    
    
    $
    216,197
  (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, 2004 and 2003, securities without a readily ascertainable
market value, having an amortized cost of $31,189 and $21,702, had an estimated fair value
of $31,752 and $22,580, 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 as of
December 31 were: 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
 2003Gross
    
    Gross
    
    EstimatedAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueFixed maturity securities:Corporate debt securities
    
    $
    158,415
    
    
    $
    4,420
    
    
    $
    1,082
    
    
    $
    161,753U.S. Government and agencies
    
    
    15,049
    
    
    
    748
    
    
    
    
    
    
    
    15,797Foreign governments
    
    
    3,005
    
    
    
    248
    
    
    
    2
    
    
    
    3,251Mortgage-backed securities
    
    
    1,301
    
    
    
    90
    
    
    
    10
    
    
    
    1,381Total fixed maturity securities
    
    $
    177,770
    
    
    $
    5,506
    
    
    $
    1,094
    
    
    $
    182,182
 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: 2004Less 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
    
    $
    69,029
    
    
    $
    676
    
    
    $
    14,893
    
    
    $
    695
    
    
    $
    83,922
    
    
    $
    1,371Foreign governments
    
    
    2,476
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    2,476
    
    
    
    22Mortgage-backed securities
    
    
    829
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    829
    
    
    
    10Total temporarily impaired securities
    
    $
    72,334
    
    
    $
    708
    
    
    $
    14,893
    
    
    $
    695
    
    
    $
    87,227
    
    
    $
    1,403
 2003Less than 12 Months
    
    More than 12 Months
    
    TotalEstimated
    
    Unrealized
    
    Estimated
    
    Unrealized
    
    Estimated
    
    UnrealizedFair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    LossesFixed maturity securities:Corporate debt securities
    
    $
    37,273
    
    
    $
    856
    
    
    $
    1,227
    
    
    $
    226
    
    
    $
    38,500
    
    
    $
    1,082Foreign governments
    
    
    997
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    997
    
    
    
    2Mortgage-backed securities
    
    
    604
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    604
    
    
    
    10Total temporarily impaired securities
    
    $
    38,874
    
    
    $
    868
    
    
    $
    1,227
    
    
    $
    226
    
    
    $
    40,101
    
    
    $
    1,094




---



##### 



Unrealized losses primarily relate to corporate debt securities rated BBB or higher and are due to
price fluctuations resulting from changes in interest rates and credit spreads. These investments
are not considered other-than-temporarily impaired since based on the most recent available
information the Company has the ability and intent to hold the investments for a period of time
sufficient for a forecasted market price recovery up to or beyond the amortized cost of the
investment. There were no realized investment losses due to other-than-temporary declines in fair value for
the year ended December 31, 2004. The Company recorded realized investment losses due to
other-than-temporary declines in fair value of $786 and $3,503 for the years ended December 31,
2003 and 2002 respectively. The amortized cost and estimated fair value of fixed maturity securities at December 31 by
contractual maturity were: 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
 2003Amortized
    
    EstimatedCost
    
    Fair ValueFixed maturity securities:Due in one year or less
    
    $
    20,935
    
    
    $
    21,123Due after one year through five years
    
    
    138,415
    
    
    
    141,602Due after five years through ten years
    
    
    8,437
    
    
    
    8,809Due after ten years
    
    
    8,682
    
    
    
    9,267176,469
    
    
    
    180,801Mortgage-backed securities
    
    
    1,301
    
    
    
    1,381Total fixed maturity securities
    
    $
    177,770
    
    
    $
    182,182
 Fixed maturity securities not due at a single maturity date have been included in the preceding
table in the year of final maturity. Expected maturities may differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or without call or
prepayment penalties.




---



##### 



The amortized cost and estimated fair value of fixed maturity securities at December 31 by rating
agency equivalent were: 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
    
    
    $
    179,753
 2003Amortized
    
    EstimatedCost
    
    Fair ValueAAA
    
    $
    52,686
    
    
    $
    54,211AA
    
    
    29,903
    
    
    
    30,067A
    
    
    75,576
    
    
    
    78,176BBB
    
    
    18,211
    
    
    
    18,395Below investment grade
    
    
    1,394
    
    
    
    1,333Total fixed maturity securities
    
    $
    177,770
    
    
    $
    182,182
 The Company has recorded certain adjustments to policyholders account balances in conjunction
with unrealized holding gains or losses on investments classified as available-for-sale. The
Company adjusts those liabilities as if the unrealized holding gains or losses had actually been
realized, with corresponding credits or charges reported in accumulated other comprehensive
income, net of taxes. The components of net unrealized gains included in accumulated other
comprehensive income as of December 31 were as follows: 2004
    
    2003Assets:Fixed maturity securities
    
    $
    2,152
    
    
    $
    4,412Liabilities:Policyholders account balances
    
    
    1,202
    
    
    
    2,334Federal income taxes  deferred
    
    
    332
    
    
    
    7271,534
    
    
    
    3,061Stockholders equity:Accumulated other comprehensive income
    
    $
    618
    
    
    $
    1,351
 Proceeds and gross realized investment gains and losses from the sale of available-for-sale
securities for the years ended December 31 were: 2004
    
    2003
    
    2002Proceeds
    
    $
    26,368
    
    
    $
    38,922
    
    
    $
    32,338Gross realized investment gains
    
    
    280
    
    
    
    2,485
    
    
    
    1,259Gross realized investment losses
    
    
    153
    
    
    
    1,852
    
    
    
    4,417
 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 $14,811, $7,903 and
$12,335 for the years ended December 31, 2004, 2003, and 2002, respectively.




---



##### 



The Company had investment securities with a carrying value of $906 and $959 that were deposited
with insurance regulatory authorities at December 31, 2004 and 2003, 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: 2004
    
    2003
    
    2002Fixed maturity securities
    
    $
    7,416
    
    
    $
    8,589
    
    
    $
    9,131Equity securities
    
    
    
    
    
    
    206
    
    
    
    855Policy loans on insurance contracts
    
    
    3,751
    
    
    
    4,004
    
    
    
    4,400Cash and cash equivalents
    
    
    265
    
    
    
    221
    
    
    
    410Other
    
    
    129
    
    
    
    52
    
    
    
    72Gross investment income
    
    
    11,561
    
    
    
    13,072
    
    
    
    14,868Less investment expenses
    
    
    (339
    )
    
    
    (297
    )
    
    
    (285
    )Net investment income
    
    $
    11,222
    
    
    $
    12,775
    
    
    $
    14,583
 Net realized investment gains (losses), for the years ended December 31 were as follows: 2004
    
    2003
    
    2002Fixed maturity securities
    
    $
    127
    
    
    $
    460
    
    
    $
    (3,642
    )Equity securities
    
    
    
    
    
    
    173
    
    
    
    484Net realized investment gains (losses)
    
    $
    127
    
    
    $
    633
    
    
    $
    (3,158
    )
 NOTE 4. DAC The components of amortization of DAC for the years ended December 31 were as follows: 2004
    
    2003
    
    2002Normal amortization related to variable
life insurance and annuity contracts
    
    $
    3,788
    
    
    $
    3,774
    
    
    $
    3,957DAC unlocking
    
    
    (2,967
    )
    
    
    1,036
    
    
    
    1,510Total amortization of DAC
    
    $
    821
    
    
    $
    4,810
    
    
    $
    5,467
 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. SEPARATE ACCOUNTS 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. At December 31, 2004, the Company had the following variable annuity contracts containing
guarantees: GMDB
    
    GMIBNet amount at risk
    
    $
    63,233
    (1)
    
    $
    
    (2)Average attained age of contract owners
    
    
    67
    
    
    
    58Weighted average period remaining until expected annuitization
    
    
    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.(2)
    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 has recorded liabilities for contracts containing guarantees as a component of
policyholder liabilities in the December 31, 2004 Balance Sheet. Prior to the adoption of SOP
03-1, the Companys liability was $144 and was included as a component of claims and claims
settlement expenses in the December 31, 2003 Balance Sheet. Changes in these guarantee
liabilities are included as a component of policy benefits in the Statements of Earnings. The
variable annuity liability for each type of guarantee at December 31, 2004 was as follows: GMDB
    
    GMIBBalance at January 1, 2004
    
    $
    3,087
    
    
    $
    Incurred guarantee benefits
    
    
    1,287
    
    
    
    26Paid guarantee benefits
    
    
    (1,511
    )
    
    
    Balance at December 31,
2004
    
    $
    2,863
    
    
    $
    26
 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 that are based on actual and projected experience for each contract type.
These estimates are consistent with the estimates used in the calculation of DAC. At December 31, 2004, contract owners account balances by mutual fund class for contracts
containing each type of guarantee were distributed as follows:




---



##### 



MoneyMarket
    
    Bond
    
    Equity
    
    Balanced
    
    TotalGMDB only
    
    $
    24,189
    
    
    
    136,476
    
    
    
    410,449
    
    
    
    53,533
    
    
    $
    624,647GMIB and GMDB (3)
    
    $
    2,516
    
    
    
    15,743
    
    
    
    59,369
    
    
    
    9,746
    
    
    $
    87,374Total
    
    $
    26,705
    
    
    
    152,219
    
    
    
    469,818
    
    
    
    63,279
    
    
    $
    712,021
  (3)
    All variable annuity contracts with GMIB provisions include a GMDB. Variable Life Contracts Containing Guarantees The 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 has recorded liabilities for contracts containing guarantees as a component of
policyholder liabilities in the Balance Sheets. Changes in the guarantee liability are included
as a component of policy benefits in the Statements of Earnings. The variable life GMDB
liability at December 31, 2004 was $191. 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, 2004, contract owners account balances by mutual fund class for contracts
containing GMDB provisions were distributed as follows: MoneyMarket
    
    Bond
    
    Equity
    
    Balanced
    
    Other
    
    TotalGMDB
    
    $
    35,725
    
    
    
    38,075
    
    
    
    88,514
    
    
    
    104,748
    
    
    
    1,315
    
    
    $
    268,377
 NOTE 6. 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: 2004
    
    2003
    
    2002Provision for income taxes computed at Federal statutory rate
    
    $
    3,893
    
    
    $
    2,123
    
    
    $
    1,286Increase (decrease) in income taxes resulting from:Dividend received deduction
    
    
    (622
    )
    
    
    (243
    )
    
    
    (707
    )Foreign tax credit
    
    
    (12
    )
    
    
    (188
    )
    
    
    (12
    )Federal income tax provision
    
    $
    3,259
    
    
    $
    1,692
    
    
    $
    567
 The Federal statutory rate for each of the three years ended December 31 was 35%. The Company provides for deferred income taxes resulting from temporary differences that arise
from recording certain transactions in different years for income tax reporting purposes than for
financial reporting purposes. The sources of these differences and the tax effect of each are as
follows:




---



##### 



2004
    
    2003
    
    2002DAC
    
    $
    1,414
    
    
    $
    (508
    )
    
    $
    (852
    )Investment adjustments
    
    
    (19
    )
    
    
    (2
    )
    
    
    (60
    )Policyholders account balances (1)
    
    
    (733
    )
    
    
    (2,308
    )
    
    
    4,335Deferred Federal income tax provision (benefit)
    
    $
    662
    
    
    $
    (2,818
    )
    
    $
    3,423
  (1)
    The 2004 amount excludes a deferred tax benefit of $1,094 related to the adoption
of SOP 03-1, as described in Note 1. Deferred tax assets and liabilities as of December 31 are determined as follows: 2004
    
    2003Deferred tax assets:Policyholders account balances
    
    $
    2,751
    
    
    $
    924Investment adjustments
    
    
    1,465
    
    
    
    1,446Total deferred tax assets
    
    
    4,216
    
    
    
    2,370Deferred tax liabilities:DAC
    
    
    7,755
    
    
    
    6,341Net unrealized investment gain
on investment securities
    
    
    332
    
    
    
    727Total deferred tax liabilities
    
    
    8,087
    
    
    
    7,068Net deferred tax liability
    
    $
    3,871
    
    
    $
    4,698
 The Company anticipates that all deferred tax assets will be realized; therefore no valuation
allowance has been provided. NOTE 7. 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 $93 that can
be drawn upon for delinquent reinsurance recoverables. As of December 31, 2004, 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
    
    $
    656,699
    
    
    $
    91,717
    
    
    $
    2,079
    
    
    $
    567,061
    
    
    
    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, 2004, 100% and 5% of the account value for variable annuity
contracts containing GMIB and GMDB provisions, respectively, were reinsured. NOTE 8. RELATED PARTY TRANSACTIONS The Company and MLIG are parties to a service agreement whereby MLIG has agreed to provide
certain accounting, data processing, legal, actuarial, management, advertising and other services
to the Company. Expenses incurred by MLIG, in relation to this service agreement, are reimbursed
by the Company on an allocated cost basis. Charges billed to the Company by MLIG pursuant to the
agreement were $3,616, $3,441 and $3,478 for 2004, 2003 and 2002, 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 $25, $18 and $11 for 2004, 2003 and 2002,
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 $169, $171 and
$150 for 2004, 2003 and 2002, respectively. During 2002, MLIG entered into an agreement with Roszel Advisors, LLC (Roszel), a subsidiary of
MLIG, with respect to administrative services for the MLIG Variable Insurance Trust (the
Trust). Certain Separate Accounts of the Company may invest in the various mutual fund
portfolios of the Trust in connection with variable annuity contracts the Company has inforce.
Under this agreement, Roszel pays MLIG an amount equal to a percentage of the assets invested in
the Trust through the Separate Accounts. Revenue attributable to this agreement is included in
policy charge revenue. The Company received from MLIG its allocable share of such compensation
in the amount of $180, $101 and $22 during 2004, 2003 and 2002, respectively. The Company has a general agency agreement with Merrill Lynch Life Agency Inc. (MLLA) whereby
registered representatives of MLPF&S, who are the Companys licensed insurance agents, solicit
applications for contracts to be issued by the Company. MLLA is paid commissions for the
contracts sold by such agents. Commissions paid to MLLA were $3,304, $2,267 and $1,902 for 2004,
2003 and 2002, 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 9. STOCKHOLDERS EQUITY AND STATUTORY REGULATIONS During 2004, the Company paid an ordinary cash dividend of $2,500 to MLIG. The Company filed no
dividend requests during 2003 or 2002. Applicable insurance department regulations require that the Company report its accounts in
accordance with statutory accounting practices. Statutory accounting practices differ from
principles utilized in these financial statements as follows: policy acquisition costs are
expensed as incurred, future policy benefit reserves are established using different actuarial
assumptions, provisions for deferred income taxes are limited to temporary differences that will
be recognized within one year, and securities are valued on a different basis. The Companys statutory 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, 2004 and 2003, was $32,680 and $28,371,
respectively. At December 31, 2004 and 2003, approximately $3,048 and $2,617, 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 (loss) for 2004, 2003 and 2002 was $7,141, $6,567 and
($13,824), respectively. The statutory net loss incurred during 2002 was primarily due to
establishing additional policy benefit reserves required by state insurance regulation. 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, 2004, and 2003, 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 10. 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 11. 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 contract owner liabilities. The following table summarizes each business segments contribution to the consolidated amounts. 2004LifeInsurance
    
    Annuities
    
    Other
    
    TotalPolicy charge revenue
    
    $
    7,624
    
    
    $
    10,802
    
    
    $
    
    
    
    $
    18,426Net interest spread (1)
    
    
    552
    
    
    
    707
    
    
    
    867
    
    
    
    2,126Net realized investment gains
    
    
    
    
    
    
    113
    
    
    
    14
    
    
    
    127Net revenues
    
    
    8,176
    
    
    
    11,622
    
    
    
    881
    
    
    
    20,679Policy benefits
    
    
    1,705
    
    
    
    1,309
    
    
    
    
    
    
    
    3,014Reinsurance premium ceded
    
    
    1,479
    
    
    
    243
    
    
    
    
    
    
    
    1,722Amortization of DAC
    
    
    1,130
    
    
    
    (309
    )
    
    
    
    
    
    
    821Insurance expenses and taxes
    
    
    1,269
    
    
    
    2,730
    
    
    
    
    
    
    
    3,999Net benefits and expenses
    
    
    5,583
    
    
    
    3,973
    
    
    
    
    
    
    
    9,556Earnings before federal income tax provision
    
    
    2,593
    
    
    
    7,649
    
    
    
    881
    
    
    
    11,123Federal income tax provision
    
    
    520
    
    
    
    2,431
    
    
    
    308
    
    
    
    3,259Earnings before change in accounting principle
    
    
    2,073
    
    
    
    5,218
    
    
    
    573
    
    
    
    7,864Change in accounting principle, net of tax
    
    
    (115
    )
    
    
    (1,917
    )
    
    
    
    
    
    
    (2,032
    )Net earnings
    
    $
    1,958
    
    
    $
    3,301
    
    
    $
    573
    
    
    $
    5,832Balance Sheet Information:Total assets
    
    $
    380,257
    
    
    $
    875,359
    
    
    $
    25,963
    
    
    $
    1,281,579DAC
    
    
    9,119
    
    
    
    19,013
    
    
    
    
    
    
    
    28,132Policyholder liabilities and accruals
    
    
    90,451
    
    
    
    122,453
    
    
    
    
    
    
    
    212,904Other policyholder funds
    
    
    449
    
    
    
    650
    
    
    
    
    
    
    
    1,099




---



##### 



2003LifeInsurance
    
    Annuities
    
    Other
    
    TotalPolicy charge revenue
    
    $
    7,605
    
    
    $
    8,783
    
    
    $
    
    
    
    $
    16,388Net interest spread (1)
    
    
    485
    
    
    
    1,697
    
    
    
    837
    
    
    
    3,019Net realized investment gains
    
    
    
    
    
    
    633
    
    
    
    
    
    
    
    633Net revenues
    
    
    8,090
    
    
    
    11,113
    
    
    
    837
    
    
    
    20,040Policy benefits
    
    
    2,114
    
    
    
    1,913
    
    
    
    
    
    
    
    4,027Reinsurance premium ceded
    
    
    1,562
    
    
    
    15
    
    
    
    
    
    
    
    1,577Amortization of DAC
    
    
    1,632
    
    
    
    3,178
    
    
    
    
    
    
    
    4,810Insurance expenses and taxes
    
    
    1,219
    
    
    
    2,343
    
    
    
    
    
    
    
    3,562Net benefits and expenses
    
    
    6,527
    
    
    
    7,449
    
    
    
    
    
    
    
    13,976Earnings before federal income tax provision
    
    
    1,563
    
    
    
    3,664
    
    
    
    837
    
    
    
    6,064Federal income tax provision
    
    
    306
    
    
    
    1,093
    
    
    
    293
    
    
    
    1,692Net earnings
    
    $
    1,257
    
    
    $
    2,571
    
    
    $
    544
    
    
    $
    4,372Balance Sheet Information:Total assets
    
    $
    397,569
    
    
    $
    831,328
    
    
    $
    22,863
    
    
    $
    1,251,760DAC
    
    
    10,179
    
    
    
    14,856
    
    
    
    
    
    
    
    25,035Policyholder liabilities and accruals
    
    
    93,172
    
    
    
    127,096
    
    
    
    
    
    
    
    220,268Other policyholder funds
    
    
    677
    
    
    
    1,437
    
    
    
    
    
    
    
    2,114




---



##### 



2002LifeInsurance
    
    Annuities
    
    Other
    
    TotalPolicy charge revenue
    
    $
    8,440
    
    
    $
    9,523
    
    
    $
    
    
    
    $
    17,963Net interest spread (1)
    
    
    662
    
    
    
    2,503
    
    
    
    808
    
    
    
    3,973Net realized investment losses
    
    
    
    
    
    
    (3,045
    )
    
    
    (113
    )
    
    
    (3,158
    )Net revenues
    
    
    9,102
    
    
    
    8,981
    
    
    
    695
    
    
    
    18,778Policy benefits
    
    
    2,216
    
    
    
    2,270
    
    
    
    
    
    
    
    4,486Reinsurance premium ceded
    
    
    1,748
    
    
    
    
    
    
    
    
    
    
    
    1,748Amortization of DAC
    
    
    2,163
    
    
    
    3,304
    
    
    
    
    
    
    
    5,467Insurance expenses and taxes
    
    
    1,245
    
    
    
    2,157
    
    
    
    
    
    
    
    3,402Net benefits and expenses
    
    
    7,372
    
    
    
    7,731
    
    
    
    
    
    
    
    15,103Earnings before federal income tax provision
    
    
    1,730
    
    
    
    1,250
    
    
    
    695
    
    
    
    3,675Federal income tax provision (benefit)
    
    
    367
    
    
    
    (43
    )
    
    
    243
    
    
    
    567Net earnings
    
    $
    1,363
    
    
    $
    1,293
    
    
    $
    452
    
    
    $
    3,108Balance Sheet Information:Total assets
    
    $
    390,290
    
    
    $
    725,557
    
    
    $
    13,462
    
    
    $
    1,129,309DAC
    
    
    11,760
    
    
    
    15,762
    
    
    
    
    
    
    
    27,522Policyholder liabilities and accruals
    
    
    99,271
    
    
    
    136,926
    
    
    
    
    
    
    
    236,197Other policyholder funds
    
    
    588
    
    
    
    199
    
    
    
    
    
    
    
    787
  (1)
    Management considers investment income net of interest credited to contract
owners account balances in evaluating results.




---



##### 



The following table summarizes the Companys total revenues by contract type for 2004, 2003 and
2002: 2004
    
    2003
    
    2002Life Insurance:Variable life
    
    $
    8,134
    
    
    $
    8,041
    
    
    $
    8,919Interest-sensitive whole life
    
    
    42
    
    
    
    49
    
    
    
    183Total Life Insurance
    
    
    8,176
    
    
    
    8,090
    
    
    
    9,102Annuities:Variable annuities
    
    
    11,325
    
    
    
    9,587
    
    
    
    9,782Interest-sensitive annuities
    
    
    297
    
    
    
    1,526
    
    
    
    (801
    )Total Annuities
    
    
    11,622
    
    
    
    11,113
    
    
    
    8,981Other
    
    
    881
    
    
    
    837
    
    
    
    695Net Revenues
    
    $
    20,679
    
    
    $
    20,040
    
    
    $
    18,778
 * * * * * *




---



##### 



SIGNATURES

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

|                     |  |                                                   |                                                               
|-------------------- |  | ------------------------------------------------- | --------------------------------------------------------------
|                     |  | ML Life Insurance Company of New York(Registrant)
|                    
|Date:
March 30, 2005 |  | 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 30, 2005
|                                      
|/s/ Joseph E. JusticeJoseph E. Justice |  | Director, Senior Vice President,
Chief Financial Officer, and
Treasurer |  | March 30, 2005
|                                      
|*H. McIntyre Gardner                   |  | Director and Chairman of the Board                                      |  | March 30, 2005
|                                      
|*Nikos K. Kardassis                    |  | Director, President, and Chief
Executive Officer                        |  | March 30, 2005





---



##### 



|                                 |  |                                                                                                            |  |               
|-------------------------------- |  | ---------------------------------------------------------------------------------------------------------- |  | --------------
|*Deborah J. Adler                |  | Director, Senior Vice President and Chief Actuary                                                          |  | March 30, 2005
|                                
|*Frederick J. C. Butler          |  | Director                                                                                                   |  | March 30, 2005
|                                
|*Richard M. Drew                 |  | Director                                                                                                   |  | March 30, 2005
|                                
|*Christopher J. Grady            |  | Director and Senior Vice President                                                                         |  | March 30, 2005
|                                
|*Robert L. Israeloff             |  | Director                                                                                                   |  | March 30, 2005
|                                
|*Robert A. King                  |  | Director                                                                                                   |  | March 30, 2005
|                                
|*Irving M. Pollack               |  | Director                                                                                                   |  | March 30, 2005
|                                
|*Concetta M. Ruggiero            |  | Director and Senior Vice President                                                                         |  | March 30, 2005
|                                
|*Lori M. Salvo                   |  | Director, Vice President,
 Chief Compliance Officer, Senior Counsel, Director of Compliance, and Secretary |  | March 30, 2005
|                                
|*Cynthia Kahn Sherman            |  | Director                                                                                                   |  | March 30, 2005
|                                
|/s/ Connie F. YostConnie F. Yost |  | Vice President and Controller                                                                              |  | March 30, 2005

*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 Christopher J. Grady                                                                                                                                |  | Incorporated by reference to Exhibit 24.12
to Annual Report on Form 10-K, File Nos.
33-34562, 33-60288, and 333-48983,
filed April 2, 2001.                                  
|24.9  |  | Power of attorney of H. McIntyre Gardner                                                                                                                                 |  | Incorporated by reference to ML of New
York Variable Annuity Separate Account As
registration statement on Form N-4, File
No. 333-69220, filed September 10, 2001.          
|24.10 |  | Power of attorney of Joseph Justice                                                                                                                                      |  | Incorporated by reference to ML of New
York Variable Annuity Separate Account As
registration statement on Form N-4, File
No. 333-69220, filed September 10, 2001.          
|24.11 |  | Power of attorney of Nikos K. Kardassis                                                                                                                                  |  | Incorporated by reference to ML of New
York Variable Annuity Separate Account As
registration statement on Form N-4, File
No. 333-69220, filed September 10, 2001.          
|24.12 |  | Power of attorney of Lori M. Salvo                                                                                                                                       |  | Incorporated by reference to ML of New
York Variable Annuity Separate Account As
registration statement on Form N-4, File
No. 333-69220, filed September 10, 2001.          
|24.13 |  | Power of attorney of Deborah
        J. Adler                                                                                                                            |  | 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.                                 
|24.14 |  | 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