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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, 2002

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.)

|                                                                            
|----------------------------------------------------------------------------
|2 World Financial CenterSouth Tower, 5th Floor
New York, New York 10080-6511
|                                                                            
|(Address of Principal Executive Offices)                                    
|1-800-333-6524                                                              
|                                                                            
|(Registrants telephone no. including area code)                            

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

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

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

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

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

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

Common 220,000

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





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PART I

Item 1.  Business.

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

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

The Registrant is currently licensed to conduct life insurance and
annuity business in nine states. It currently markets its annuity products and
variable life insurance products only in the state of New York. During 2002,
annuity and life insurance sales were made principally in New York (94%, 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, 2002, approximately 1,197 agents of MLLA were
authorized to act for the Registrant.

Item 2.  Properties.

The Registrants home office is located at
2 World Financial Center, South Tower, 5th Floor, New York, New York. This office space is
leased from MLPF&S. In addition, personnel performing services for the Registrant pursuant to its Management
Services Agreement operate in MLIG office space. MLIG occupies certain
office space in Pennington, New Jersey through Merrill Lynch & Co. An allocable
share of the cost of each of these premises is paid by the Registrant through
the service agreement with MLIG. Merrill Lynch Insurance Group
Services, Inc. (MLIGS), an affiliate of MLIG owns office space in
Jacksonville, Florida. MLIGS also leases certain office space in Springfield,
Massachusetts from Picknelly Family Limited Partnership. During 2001, MLIGS
consolidated operations into the Jacksonville, Florida location. MLIGS continues
to lease the office space in Springfield, Massachusetts, although there are no
personnel at that location.

Item 3. Legal Proceedings.

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

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

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

PART II

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

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

During 2002 and 2001, the Registrant did not pay any dividends. No other cash dividends have
been declared on Registrants common stock at any time during the two most
recent fiscal years. Under laws applicable to insurance companies domiciled in
the State of New York, notice of intention to declare a dividend must be filed
with the New York Superintendent of Insurance who may disallow the payment. See
Note 7 to the Registrants financial statements.

(b)  Not applicable.

Item 6.  Selected Financial Data.

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

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Item 7.  Managements Discussion and Analysis of Financial Condition and Results of Operations.

This Managements Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Financial Statements and
Notes to Financial Statements included herein for the Registrant
(referred to as "ML of New York" for purposes of Items 7 and 7A).

Certain statements contained in this Report may be considered forward-looking,
including statements about management expectations, strategic objectives,
business prospects, anticipated financial performance, and other similar
matters. These forward-looking statements are not statements of historical fact
and represent only managements beliefs regarding future events, which are
inherently uncertain. There are a variety of factors, many of which are beyond
ML of New Yorks control, which affect its operations, performance, business
strategy, and results and could cause its actual results and experience to
differ materially from the expectations and objectives expressed in any
forward-looking statements. These factors include, but are not limited to, the
factors listed in the Business Environmentand Economic Environmentsections
listed below, as well as actions and initiatives taken by both current and
potential competitors, the effect of current, pending, and future legislation
and regulation, and the other risks and uncertainties detailed in ML of New
Yorks Financial Statements and Notes to Financial Statements. Accordingly,
readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the dates on which they are made. ML of New
York does not undertake to update forward-looking statements to reflect the
impact of circumstances or events that arise after the dates the
forward-looking statements are made. The reader should, however, consult any
further disclosures ML of New York may make in its Quarterly Reports on Form
10-Q.

Business Environment

ML of New York conducts its business in the life insurance and annuity markets
of the financial services industry. These markets are highly regulated with
particular emphasis on company solvency and sales practice monitoring.
Demographically, the population is aging, which favors life insurance and
annuity products.

The financial services industry continues to be affected by an intensifying
competitive environment as demonstrated by consolidation through mergers and
competition from new and established competitors using the internet or other
technology to provide financial services. In addition, the Gramm-Leach-Bliley
Act, passed in 1999, represented a significant accomplishment in the effort to
modernize the financial services industry in the U.S. by repealing
Depression-era barriers between commercial banking, investment banking, and
insurance activities. This legislation, together with other changes in the
financial services industry made possible by previous reforms, has increased
the number of companies competing for a similar customer base.

In 2002, the U.S. Congress passed the Sarbanes-Oxley Act of 2002 which is a
broad overhaul of existing corporate and securities laws. In addition, various
Federal and state securities regulators, self-regulatory organizations
(including the New York Stock Exchange) and industry participants reviewed and
in many cases adopted sweeping changes to their established rules including
rules in the areas of corporate governance and auditor independence.

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 earnings 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

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minimum death benefit (GMDB) provisions contained in the variable annuities
it manufactures. Negative investment performance generally results in greater
exposure to GMDB provisions, as there is an increase in the number of variable
contracts (and amount per contract) in which the GMDB exceeds the variable
account balance. Prolonged periods of negative investment performance may
result in greater GMDB claim payments. GMDB claim payments are recorded as a
component of policy benefits.

There are several standard indices published on a daily basis that measure
performance of selected components of the U.S. equity market. Examples include
the Dow Jones Industrial Average (Dow), NASDAQ Composite Index (NASDAQ) and
the Standard & Poors 500 Composite Stock Price Index (S&P Index). The
following table provides the decrease for each equity market index for the
years ended December 31:

|          |  |      |       |      |  |  |       |  
|--------- |  | ---- | ----- | ---- |  |  | ----- | -
|          |  | 2002 |       | 2001
|          |  |      |       |     
|Dow       |  |      | -16.8 | %    |  |  | -7.1  | %
|NASDAQ    |  |      | -31.5 | %    |  |  | -21.1 | %
|S&P Index |  |      | -23.4 | %    |  |  | -13.0 | %

The investment performance in the underlying U.S. equity-based mutual funds
supporting ML of New Yorks variable products do not replicate the returns on
any specific U.S. equity market index. However, investment performance will
generally increase or decrease with corresponding increases or decreases in the
overall U.S. equity market.

Medium Term Interest Rates

Changes in interest rates affect the value of investments, primarily fixed
maturity securities and preferred equity securities, as well as interest
sensitive liabilities. Changes in interest rates have an inverse relationship
to the value of investments and interest sensitive liabilities.

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 2002, medium
term interest rates decreased approximately 112 basis points to yield, on
average, 2.53%. During 2001, medium term interest rates decreased approximately
148 basis points to yield, on average, 3.65%.

Corporate Credit

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
largely invests in investment-grade corporate debt to support its fixed rate
product liabilities. During 2002, corporate debt defaults on a dollar-weighted
volume basis increased significantly as a result of continuing weakness in the
economy, as well as several large high-profile defaults. ML of New York holds
corporate debt of certain of these companies and has adjusted its carrying
value in these investments to reflect amounts anticipated to ultimately be
recovered. The decrease in book value is recorded as a component of net
realized investment losses.

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). ML of New York defines
credit spreads according to the Merrill Lynch U.S. Corporate Bond Index for
BBB-A Rated bonds with three to five year maturities. During 2002, credit
spreads widened approximately 20 basis points and ended the year at 198 basis
points. During 2001, credit spreads contracted approximately 9 basis point and
ended the year at 178 basis points. Widening credit spreads have a negative
impact on the value of fixed maturity securities.

-4-



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New Business

ML of New York sells variable and interest sensitive life insurance and annuity
products through Merrill Lynch & Co.s retail network of Financial Advisors. ML
of New York competes for Merrill Lynch & Co.s clients life insurance and
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 and death
benefit planning. ML of New York competes in this market segment by integrating
its products into Merrill Lynch & Co.s planning-based financial management
program.

ML of New Yorks financial management is based on conservative investment and
liability management and regular monitoring of its risk profile. ML of New York
also seeks to provide superior customer service and financial management to
promote the competitiveness of its products. ML of New Yorks customer service
center has established standards of performance that are monitored on a regular
basis. Managers and employees in the customer service centers 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 annuities and modified guaranteed annuities. These products are
designed to address the retirement planning needs of Merrill Lynch & Co.s
clients. ML of New York offers three types of variable annuity products. These
products are differentiated by the degree of liquidity afforded to the contract
owner. The B-Share variable annuity contains a seven year surrender charge
period, the L-Share variable annuity contains a three year surrender charge
period, and the C-Share variable annuity has no surrender charge period. Each
variable annuity product provides tax-deferred retirement savings with the
opportunity for diversified investing in a wide selection of underlying mutual
fund portfolios. ML of New York offers a variable life insurance product that
provides life insurance protection and allows the contract owner to allocate
the cash value of the policy to underlying diversified mutual fund portfolios.
The modified guaranteed annuity product also provides tax-deferred retirement
savings through a guaranteed fixed interest rate for a period selected by the
contract owner, but imposes a market value adjustment for withdrawals prior to
the expiration of the guarantee period. Total direct premiums by product type
for the three years ended December 31 were as follows:

|                              |                       |  |               |      |          |  |       |       |             |  |             |      |  |  |     |     |   |  |     |     |  
|----------------------------- | --------------------- |  | ------------- | ---- | -------- |  | ----- | ----- | ----------- |  | ----------- | ---- |  |  | --- | --- | - |  | --- | --- | -
|                              |                       |  | (In Millions) |      | % Change
|                              |                       |  |               |      |         
|                              |                       |  | 2002          |      | 2001     |  | 2000  |       | 2002 - 2001 |  | 2001 - 2000
|                              |                       |  |               |      |          |  |       |       |             |  |            
|Variable Annuities:           |                       |  |               |      |          |  |       |       |             |  |             |      |  |  |     |     |   |  |     |    
|                              | C-Share (a)           |  | $             | 20.8 |          |  | $     | 71.5  |             |  | $           |     |  |  |     | -71 | % |  |     | 100 | %
|                              | B-Share               |  |               | 16.7 |          |  |       | 36.5  |             |  |             | 74.3 |  |  |     | -54 |   |  |     | -51 |  
|                              | L-Share (b)           |  |               | 10.5 |          |  |       | 1.2   |             |  |             |     |  |  |     | 775 |   |  |     | 100 |  
|                              |                       |  |               |      |          |  |       |       |             |  |             |      |  |  |     |     |   |  |     |    
|                              |                       |  | 48.0          |      |          |  | 109.2 |       |             |  | 74.3        |      |  |  | -56 |     |   |  | 47  |    
|                              |                       |  |               |      |          |  |       |       |             |  |             |      |  |  |     |     |   |  |     |    
|Modified Guaranteed
Annuities |                       |  | 15.2          |      |          |  | 0.8   |       |             |  | 3.1         |      |  |  | n/m |     |   |  | -74 |    
|Variable Life Insurance       |                       |  | 1.2           |      |          |  | 4.3   |       |             |  | 5.2         |      |  |  | -72 |     |   |  | -17 |    
|Other                         |                       |  | 0.1           |      |          |  | 0.4   |       |             |  | 0.1         |      |  |  | -75 |     |   |  | 300 |    
|                              |                       |  |               |      |          |  |       |       |             |  |             |      |  |  |     |     |   |  |     |    
|                              | Total Direct Premiums |  | $             | 64.5 |          |  | $     | 114.7 |             |  | $           | 82.7 |  |  |     | -44 | % |  |     | 39  | %
|                              |                       |  |               |      |          |  |       |       |             |  |             |      |  |  |     |     |   |  |     |    



|(a) |  | ML of New York offers two C-Share variable annuity products that were
introduced in the fourth quarter 2002 and the first quarter 2001,
respectively.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | ML of New Yorks L-Share variable annuity product was introduced in the
fourth quarter 2001.                                                         

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During 2002, ML of New Yorks total direct premiums decreased $50.2 million (or
44%) as compared to 2001. Variable annuity premiums decreased $61.2 million (or
56%) to $48.0 million during 2002 as compared to 2001. Management attributes
the decrease in variable annuity premiums to increasing customer demand for
annuity products that offer guarantee provisions, such as fixed rate products,
variable products with fixed account options, variable products with guaranteed
minimum income benefits, or variable products with guaranteed minimum account
values. With the exception of ML of New Yorks modified guaranteed annuity
product, which offers a fixed interest crediting rate, ML of New York currently
does not offer these types of guarantees in its products. During 2002, sales of
non-proprietary products with these types of guarantee features have been
strong within the Merrill Lynch & Co. distribution system. ML of New York is
currently developing a guaranteed minimum income benefit provision for
placement in certain of its existing variable annuity products and anticipates
offering this feature in 2003.

During the fourth quarter 2002, ML of New York introduced a new C-Share
variable annuity product. This product differs from ML of New Yorks existing
C-Share product by offering investment options managed by different investment
advisors and a fee structure that varies with asset size. Sales of the new
variable annuity product were $0.5 million during the nine-week period ended
December 31, 2002.

Management believes that the increasing demand for annuity products with
guarantee provisions has been fueled by the increasing volatility and general
negative performance of the equity markets that has occurred over the past
three years. As such, future sales of ML of New Yorks variable annuity
products without these provisions could be negatively impacted if this trend
continues.

Modified guaranteed annuity sales increased $14.4 million from $0.8 million to
$15.2 million during 2002 as compared to 2001. The increase is primarily due to
increasing demand for products with guarantee features, as noted above.

Withdrawals

Policy and contract surrenders increased $11.8 million (or 17%) to $80.0
million during 2002 as compared to 2001. During 2002, variable annuity
surrenders increased $10.7 million (or 25%) to $54.2 million as compared to
2001. The increase is primarily a result of the anticipated increase in lapse
rates on variable annuity contracts reaching the end of their surrender charge
period. In addition, variable life surrenders increased $6.9 million (or 63%)
during 2002 as compared to 2001. Partially offsetting the increases in
variable annuity and variable life surrenders was a decrease in modified
guaranteed annuity surrenders, which decreased $5.4 million (or 40%) during
2002 as compared to 2001. Management attributes the decrease to volatility in
the equity markets, whereby modified guaranteed annuity contract owners have
less incentive to give up guaranteed income.

Financial Condition

At December 31, 2002, ML of New Yorks assets were $1.1 billion, or $0.2
billion lower than the $1.3 billion in assets at December 31, 2001 primarily
due to a decrease in separate accounts assets. Separate accounts assets
decreased $182.7 million (or 18%) to $810.4 million primarily due to
unfavorable investment performance and an increase in net cash outflow.
Changes in separate accounts assets during 2002 by quarter were as follows:

|                                           |  |      |       |      |  |      |       |      |  |       |        |   |  |   |       |   |  |   |        |  
|------------------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ----- | ------ | - |  | - | ----- | - |  | - | ------ | -
|(In Millions)                              |  | 1Q02 |       | 2Q02 |  | 3Q02 |       | 4Q02 |  | Total
|                                           |  |      |       |      |  |      |       |      |  |      
|Investment performance  variable
products |  | $    | 7.4   |      |  | $    | (74.5 | )    |  | $     | (98.1  | ) |  | $ | 35.7  |   |  | $ | (129.5 | )
|Net cash outflow  variable products       |  |      | (12.4 | )    |  |      | (9.1  | )    |  |       | (13.8  | ) |  |   | (17.9 | ) |  |   | (53.2  | )
|                                           |  |      |       |      |  |      |       |      |  |       |        |   |  |   |       |   |  |   |        |  
|                                           |  | $    | (5.0  | )    |  | $    | (83.6 | )    |  | $     | (111.9 | ) |  | $ | 17.8  |   |  | $ | (182.7 | )
|                                           |  |      |       |      |  |      |       |      |  |       |        |   |  |   |       |   |  |   |        |  

During 2002, ML of New York experienced contract owner withdrawals that
exceeded deposits by $44.6 million. The components of contract owner
transactions were as follows:

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|                                        |                                |      |       |       | 
|--------------------------------------- | ------------------------------ | ---- | ----- | ----- | 
|(In Millions)                           |                                | 2002
|                                        |                                |     
|Premiums collected                      |                                | $    | 64.5  |      
|Internal tax-free exchanges             |                                |      | (1.6  | )    
|                                        |                                |      |       |      
|                                        | Net contract owner deposits    |      |       | 62.9  | 
|Contract owner withdrawals              |                                |      | 72.5  |      
|Net transfers to/from separate accounts |                                |      | 35.0  |      
|                                        | Net contract owner withdrawals |      |       | 107.5 | 
|                                        |                                |      |       |      
|Net contract owner activity             |                                | $    | (44.6 | )    
|                                        |                                |      |       |      

ML of New York maintains a conservative general account investment portfolio.
ML of New York has no mortgage or real estate investments. The following
schedule identifies ML of New Yorks general account invested assets by type:

|                                                               |  |  |     |  
|-------------------------------------------------------------- |  |  | --- | -
|Investment Grade Fixed Maturity Securities (Rated A or
higher) |  |  | 51  | %
|Policy
Loans                                                   |  |  | 34  | %
|Investment Grade Fixed Maturity Securities (Rated
BBB)         |  |  | 11  | %
|Equity
Securities                                              |  |  | 2   | %
|Non-Investment Grade Fixed Maturity
Securities                 |  |  | 2   | %
|                                                               |  |  |     |  
|                                                               |  |  | 100 | %
|                                                               |  |  |     |  

The continuing decline in overall credit quality among corporate bonds has
placed added pressure on ML of New Yorks fixed income
portfolio. As of December 31, 2002 and 2001, approximately $4.1 million (or 3%) and $4.8 million
(or 3%), respectively, of ML of New Yorks fixed maturity securities were
considered non-investment grade. ML of New York defines non-investment grade as
unsecured debt obligations that do not have a rating equivalent to Standard and
Poors BBB- or higher (or similar rating agency). Non-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. Current non-investment grade holdings are the result of
ratings downgrades on ML of New Yorks portfolio as ML of New York does not
purchase non-investment grade securities. Also, as of December 31, 2002,
approximately $10.9 million (or 7%) 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 $12.8 million (or 9%) of ML of New Yorks
fixed maturity securities as of December 31, 2001. ML of New York closely
monitors such investments.

ML of New Yorks investment in collateralized mortgage obligations (CMO) and
mortgage backed securities (MBS) had a carrying value of $2.1 million as of
December 31, 2002. At December 31, 2002, all of ML of New Yorks CMO and MBS
holdings were fully collateralized by the Government National Mortgage
Association, the Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation. CMO and MBS securities are structured to allow the
investor to determine, within certain limits, the amount of interest rate risk,
prepayment risk and default risk that the investor is willing to accept. It is
this level of risk that determines the degree to which the yields on CMO and
MBS securities will exceed the yields that can be obtained from similarly rated
corporate securities.

As of December 31, 2002, ML of New York had 2,154 life insurance and annuity
contracts inforce with interest rate guarantees. The estimated average rate of
interest credited on behalf of contract owners was 4.57% during 2002. Invested
assets supporting liabilities with interest rate guarantees had an estimated
effective yield of 5.76% during 2002. The number of life insurance and annuity
contracts inforce with interest rate guarantees decreased 1% as compared to
2001.

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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, 2002, ML of New Yorks assets included $183.0 million of cash, short-term
investments and investment grade publicly traded available-for-sale securities
that could be liquidated if funds were required.

In order to continue to issue life insurance and 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, 2002 and 2001, based on the RBC
formula, ML of New Yorks total adjusted capital level was in excess of the
minimum amount of capital required to avoid regulatory action.

ML of New York receives claims paying ability ratings from Standard and Poors
and A.M. Best. During 2002, Standard and Poors downgraded Merrill Lynch & Co.
to A+ from AA-. As a result, ML of New Yorks rating was similarly
downgraded to A+. At December 31, 2002, A.M. Bests rating of ML of New York
was A+. However, the rating was downgraded to A during January 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 $35.0 million in
dividends to MLIG during 2000. No dividends were paid during 2002 and 2001.

ML of New York believes that it will be able to fund the capital and surplus
requirements of projected new business from current statutory earnings and
existing statutory capital and surplus. If sales of new business significantly
exceed projections, ML of New York may have to look to its parent and other
affiliated companies to provide the capital or borrowings necessary to support
its current marketing efforts. ML of New Yorks future marketing efforts could
be hampered should its parent and/or affiliates be unwilling to commit
additional funding.

Management Estimates

ML of New York amortizes deferred policy acquisition costs based on the
expected future gross profits for each group of contracts. In estimating future
gross profits, management makes assumptions regarding such factors as policy
charge revenue, investment performance, policy lapse rates, mortality, and
expenses for the expected life of each group of contracts. Actual gross
profits can vary from managements estimates resulting in increases or
decreases in the rate of amortization. Management periodically updates these
estimates and evaluates the recoverability of deferred policy acquisition
costs. The impact of revisions to estimates on cumulative amortization is
recorded as a charge or credit to current operations (commonly referred to as
DAC unlocking). During 2002, ML of New York reduced earnings by $1.5
million, via an increase in amortization

-8-



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##### 



of deferred policy acquisition costs. During 2001 ML of New York increased
earnings by $0.8 million, via a reduction in amortization of deferred policy
acquisition costs.

Results of Operations

ML of New Yorks gross earnings are principally derived from two sources:



| |  | the charges imposed on variable life insurance and variable annuity contracts, and                                                                                            
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | the net earnings from investment of fixed rate life insurance and annuity contract owner deposits less interest credited to
contract owners, commonly known as interest spread

The costs associated with acquiring contract owner deposits (deferred policy
acquisition costs) are amortized over the period in which ML of New York
anticipates holding those funds, as noted in the Management Estimatessection
above. Deferred 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. In addition, ML of New York incurs expenses
associated with the maintenance of inforce contracts.

2002 compared to 2001

ML of New York recorded net earnings of $3.2 million and $4.3 million for 2002
and 2001, respectively.

Policy charge revenue decreased $0.8 million (or 4%) during 2002 as compared to
2001. The decrease in policy charge revenue is primarily attributable to
reductions in asset-based fees collected on variable account balances. Variable
annuity and variable life asset-based fees decreased $0.4 million (or 4%) and
$0.3 million (or 12%), respectively, generally consistent with decreases in
average variable account balances for those products. Asset-based fees were
favorably impacted by increases in rates charged to unaffiliated fund
investment managers for administrative services.

Net earnings derived from interest spread decreased $1.0 million (or 20%)
during 2002 as compared to 2001. The decrease in interest spread is primarily a
result of the reduction in yields on invested assets resulting from the lower
interest rate environment as compared to 2001.

Net realized investment losses increased $0.7 million during 2002 as compared
to 2001. The increase in net realized investment losses is due to an increase
in credit related losses primarily losses on investments in fixed maturity
securities issued by WorldCom Inc.

Policy benefits increased $1.4 million (or 47%) during 2002 as compared to
2001. During 2002, life insurance mortality expense increased $0.8 million as
compared to 2001 primarily due to an increase in the number of death claims.
In addition, variable annuity mortality expense increased $0.5 million as
compared to 2001 primarily due to increased death benefit payments incurred
under guaranteed minimum death benefit provisions.

Reinsurance premium ceded decreased $0.2 million (or 10%) during 2002 as
compared to 2001. The decrease is attributable to the decrease in life
insurance inforce.

Amortization of deferred policy acquisition costs increased $2.0 million (or
56%) during 2002 as compared to 2001 primarily due to period-to-period
differences in DAC unlocking as noted in the Management Estimatessection
above.

Insurance expenses and taxes decreased $1.5 million (or 31%) during 2002 as
compared to 2001. The decrease in insurance expenses and taxes is primarily due
to i) cost savings resulting from ML of New Yorks consolidation of its life
and annuity policy administration service centers, which was completed during
the third quarter 2001, and ii) reductions in employee compensation expense.

-9-



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##### 



ML of New Yorks effective federal income tax rate decreased to 16% for 2002
from 45% for 2001. The changes in the effective federal income tax rate during
the respective periods are due to certain permanent adjustments recorded in
2002. Also, during 2002, ML of New Yorks current and deferred tax components
have been significantly impacted by fluctuations in tax reserves for guaranteed
minimum death benefits. The reserve fluctuations have resulted in an increased
current tax benefit and an increased deferred tax expense during 2002 as
compared to 2001.

2001 compared to 2000

ML of New York recorded net earnings of $4.3 million and $10.1 million for 2001
and 2000, respectively.

Policy charge revenue decreased $1.5 million (or 7%) during 2001 as compared to
2000. The decrease in policy charge revenue is primarily attributable to the
decrease in average variable account balances. Average variable account
balances decreased $108.3 million (or 10%) during 2001 as compared to 2000.
During the same time period, asset-based policy charges decreased $1.1 million
(or 9%) consistent with the reduction in the separate accounts assets.
Non-asset based charges decreased $0.4 million (or 5%) as compared to 2000
primarily due to a decrease in cost of insurance charges.

Net earnings derived from interest spread decreased $1.8 million during 2001 as
compared to 2000. The decrease in interest spread is primarily a result of ML
of New Yorks $35.0 million dividend payment to MLIG during the fourth quarter
2000, as well as the reduction in invested assets resulting from the decline in
fixed rate contracts inforce.

Net realized investment losses increased $2.4 million during 2001 as compared
to 2000. The increase in net realized investment losses is due to an increase
in credit related losses primarily losses on investments in fixed maturity
securities issued by Enron Corp.

Policy benefits increased $1.3 million (or 71%) during 2001 as compared to
2000. The increase in policy benefits is primarily due to a $1.7 million
increase in variable annuity death benefit payments incurred under guaranteed
minimum death benefit provisions. Partially offsetting this increase is
decreased mortality for variable life insurance products.

Amortization of deferred policy acquisition costs decreased $0.5 million (or
12%) to $3.5 million during 2001.
The decrease in amortization of deferred policy acquisition costs is primarily
due to the decrease in asset-based variable annuity policy charge revenue.

Insurance expenses and taxes increased $0.7 million (or 16%) during 2001 as
compared to 2000. The increase in insurance expenses and taxes is primarily due
to $1.0 million of costs related to the consolidation of ML of New Yorks
policy administration service centers.

ML of New Yorks effective federal income tax rate increased to 45% for 2001
from 32% for 2000. During 2001, ML of New York recorded a $0.8 million (net of
tax) adjustment for interest expense. Excluding this interest expense
adjustment, ML of New Yorks effective federal income tax rate was 34% for
2001.

Segment Information

ML of New Yorks operating results are categorized into two business segments:
Life Insurance and Annuities. ML of New Yorks Life Insurance segment consists
of variable life insurance products and interest-sensitive life products. ML of
New Yorks Annuity segment consists of variable annuities and
interest-sensitive annuities. The Other earnings category represents
earnings on assets that do not support contract owner liabilities. Net
earnings by segment were as follows:

|               |  |      |     |      |  |      |     |  |  |   |     | 
|-------------- |  | ---- | --- | ---- |  | ---- | --- |  |  | - | --- | 
|Segment        |  | 2002 |     | 2001 |  | 2000
|               |  |      |     |      |  |     
|Life Insurance |  | $    | 1.4 |      |  | $    | 1.9 |  |  | $ | 2.8 | 
|Annuities      |  |      | 1.3 |      |  |      | 1.8 |  |  |   | 5.3 | 
|Other          |  |      | 0.5 |      |  |      | 0.6 |  |  |   | 2.0 | 

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.

ML of New York is not dependent upon any single customer, and no single
customer accounted for more than 10% of its revenues during 2002.

Inflation

ML of New Yorks operations have not been materially impacted by inflation and
changing prices during the preceding three years.

-10-



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##### 



Item 7A.  Quantitive 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.

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 Value
|                         |  | (In Millions)       
|                         |  |                     
|Change in Interest Rates |  | 2002                 |  | 2001
|                         |  |                      |  |     
|+ 100 basis points       |  |                      |  |      |  |  | ($2.0 | ) |  |  | ($2.3 | )
|+ 50 basis points        |  |                      |  |      |  |  | ($1.1 | ) |  |  | ($1.1 | )
|- 50 basis points        |  |                      |  |      |  |  | $0.8  |   |  |  | $0.9  |  
|- 100 basis points       |  |                      |  |      |  |  | $1.6  |   |  |  | $1.6  |  

ML of New Yorks model is based on existing business inforce as of year-end
2002 without considering the impact of new life insurance and 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 5%, with the greatest concentration in the 3% to 4% range.

Credit Spread Risk

Credit spread risk arises from the possibility that changes in credit spreads
will affect the value of investments. Credit spreads represent the credit risk
premiums required by market participants for a given credit quality, i.e.,

-11-



---



##### 



the additional yield that a debt instrument issued by a AA-rated entity must
produce over a risk-free alternative (e.g., U.S. Treasury instruments).

The following table presents the estimated net impact on the fair value of
investments resulting from various hypothetical fluctuations in credit spreads,
based on assumptions contained in ML of New Yorks model:

|                         |  |                      |  |      |  |  |       |   |  |  |       |  
|------------------------ |  | -------------------- |  | ---- |  |  | ----- | - |  |  | ----- | -
|                         |  | Change in Fair Value
|                         |  | (In Millions)       
|                         |  |                     
|Change in Credit Spreads |  | 2002                 |  | 2001
|                         |  |                      |  |     
|+ 50 basis points        |  |                      |  |      |  |  | ($2.6 | ) |  |  | ($2.6 | )
|+ 10 basis points        |  |                      |  |      |  |  | ($0.6 | ) |  |  | ($0.6 | )
|- 10 basis points        |  |                      |  |      |  |  | $0.4  |   |  |  | $0.4  |  
|- 50 basis points        |  |                      |  |      |  |  | $2.3  |   |  |  | $2.3  |  

ML of New Yorks model is based on existing business inforce as of year-end
2002 without considering the impact of new life insurance and 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 permanently 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. Due to increasing corporate debt default
rates over the past several years, during 2002 ML of New York reduced its
tolerance for exposure in any one issuer for prospective investments.

Equity Price Risk

Equity price risk arises from the possibility that general reductions in equity
prices will negatively affect the value of assets and liabilities, primarily
separate accounts assets and separate accounts liabilities. General reductions
in equity prices impact ML of New York in the following ways:



| |  | Reductions in separate accounts assets. Asset-based fees collected on separate accounts assets are a primary source of
earnings for ML of New York, thus lower asset balances will result in lower fee income.                                                                                                                      
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Increased exposure to guaranteed minimum death benefits. Decreasing variable contract owner account values increase the
number of contracts, as well as amounts per contract, in which guaranteed minimum death benefits exceed those variable
contract owner account balances. This may result in greater future mortality expense.
| 
| |  | Potential hindrance of sales and marketing efforts for variable products.                                                                                                                                                                                                                                                           

-12-



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##### 



Item 8.  Financial Statements and Supplementary Data.

The financial statements of Registrant are set forth in Part
IV hereof and are incorporated herein by reference.

Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable.

PART III

Information called for by items 10 through 13 of this part is
omitted pursuant to General Instruction I. of Form 10-K.

Item 14.  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 of a date within ninety
days prior to the filing date of this Form 10-K.  Based on this evaluation, Registrants Chief Executive Officer and Chief Financial
Officer have concluded that Registrants disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Securities
Exchange Act of 1934) are effective.  There have been no significant changes in internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and
material weaknesses.

PART IV

Item 15.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)  Financial Statements and Exhibits.

|    |  |                                                                                         
|--- |  | ----------------------------------------------------------------------------------------
|(1) |  | The following financial statements of the
Registrant are filed as part of this report:  
|a.  |  | Independent Auditors Report dated February
24, 2003.                                   
|b.  |  | Balance Sheets at December 31, 2002 and
2001.                                           
|c.  |  | Statements of Earnings for the Years Ended
December 31, 2002, 2001 and 2000.            
|d.  |  | Statements of Comprehensive Income for the
Years Ended December 31, 2002, 2001 and
2000.
|e.  |  | Statements of Stockholders Equity for the
Years Ended December 31, 2002, 2001 and
2000.
|f.  |  | Statements of Cash Flows for the Years Ended
December 31, 2002, 2001 and 2000.          
|g.  |  | Notes to Financial Statements for the Years
Ended December 31, 2002, 2001 and 2000.     
|(2) |  | Not applicable.                                                                         
|(3) |  | The following exhibits are filed as part of
this report as indicated below:             

-13-



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##### 



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

-14-



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##### 



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

-15-



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##### 



|      |  |                                                                                                                                                                                                                                                                                                                                                                       
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.6  |  | Form of Investment Management Agreement by and between
Royal Tandem Life Insurance Company and Merrill Lynch Asset
Management, Inc. (Incorporated by reference to Exhibit
10(f) to Post-Effective Amendment No. 1 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed March 7, 1991.)                                                    
|10.7  |  | Assumption Reinsurance Agreement between Merrill Lynch Life
Insurance Company, Tandem Insurance Group, Inc. and Royal
Tandem Life Insurance Company and Family Life Insurance
Company. (Incorporated by reference to Exhibit 10(g) to
Post-Effective Amendment No. 3 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed March 30, 1992.)
|10.8  |  | Indemnity Agreement between ML Life Insurance Company of
New York and Merrill Lynch Life Agency, Inc. (Incorporated
by reference to Exhibit 10(h) to Post-Effective Amendment
No. 3 to the Registrants registration statement on Form
S-1, File No. 33-34562, filed March 30, 1992.)                                                                                 
|10.9  |  | Amended General Agency Agreement between ML Life Insurance
Company of New York and Merrill Lynch Life Agency, Inc.
(Incorporated by reference to Exhibit 10(i) to
Post-Effective Amendment No. 3 to the Registrants
registration statement on Form S-1, File No. 33-34562,
filed March 30, 1992.)                                                                    
|10.10 |  | Amended Management Agreement between ML Life Insurance
Company of New York and Merrill Lynch Asset Management,
Inc. (Incorporated by reference to Exhibit 10(j) to the
Registrants registration statement on Form S-1, File No.
33-60288, filed March 30, 1993.)                                                                                                     
|10.11 |  | Mortgage Loan Servicing Agreement between ML Life Insurance
Company of New York and Merrill Lynch & Co., Inc.
(Incorporated by reference to Exhibit 10(k) to
Post-Effective Amendment No. 4 to the Registrants
registration statement on Form S-1, File No. 33-60288,
filed March 29, 1995.)                                                                         
|23.1  |  | Written Consent of Deloitte & Touche, LLP, independent
auditors, is filed herewith.                                                                                                                                                                                                                                                                                   
|24.1  |  | Power of attorney of Frederick J. C. Butler. (Incorporated
by reference to Exhibit 24(a) to Post-Effective Amendment
No. 1 to the Registrants registration statement on Form
S-1, File No. 33-60288, filed March 31, 1994.)                                                                                                                                          

-16-



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##### 



|     |  |                                                                                                                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|24.2 |  | Power of attorney of Michael P. Cogswell. (Incorporated by
reference to Exhibit 24(b) 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 David M. Dunford. (Incorporated by
reference to Exhibit 24(e) 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 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.)
|24.5 |  | 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.)    
|24.6 |  | 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.)     
|24.7 |  | 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.)  
|24.8 |  | 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.)  

-17-



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##### 



|      |  |                                                                                                                                                                                                                     
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|24.9  |  | Power of attorney of Gail R. Farkas. (Incorporated by
reference to Exhibit 24(g) to Post-Effective Amendment No.
5 to the Registrants registration statement on Form S-1,
File No. 33-60288, filed March 26, 1996.)
|24.10 |  | 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.)                                
|24.11 |  | Power of attorney of Matthew J. Rider. (Incorporated by
reference to Exhibit 24.11 to Annual Report on Form 10-K,
File Nos. 33-34562, 33-60288, and 333-48983, filed April 2,
2001.)                                
|24.12 |  | 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.)                            
|24.13 |  | 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.)     
|24.14 |  | 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.)          
|24.15 |  | 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.)      
|24.16 |  | 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.)           
|99.1  |  | 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.                         
|99.2  |  | Certification by the Chief Financial Officer of the
Registrant pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
is filed herewith.                         

(b)  Reports on Form 8-K.

No reports on Form 8-K have been filed during the last quarter of
the fiscal year ended December 31, 2002.

-18-



---



##### 



INDEX TO FINANCIAL STATEMENTS

|                                                                                       
|---------------------------------------------------------------------------------------
|Independent Auditors Report                                                           
|Balance Sheets at December 31, 2002 and 2001                                           
|Statements of Earnings for the Years Ended December 31, 2002, 2001 and 2000            
|Statements of Comprehensive Income for the Years Ended December 31, 2002, 2001 and 2000
|Statements of Stockholders Equity for the Years Ended December 31, 2002, 2001 and 2000
|Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and 2000          
|Notes to Financial Statements for the Years Ended December 31, 2002, 2001 and 2000     





---



##### 



INDEPENDENT AUDITORS REPORT

The Board of Directors of
ML Life Insurance Company of New York:

We have audited the accompanying balance sheets of ML Life Insurance Company of
New York (the Company), a wholly owned subsidiary of Merrill Lynch Insurance
Group, Inc., as of December 31, 2002 and 2001, 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, 2002. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2002 and
2001, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2002 in conformity with accounting
principles generally accepted in the United States of America.

Deloitte & Touche, LLP
New York, New York

February 24, 2003





---



##### 



ML LIFE INSURANCE COMPANY OF NEW YORK(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)

BALANCE SHEETS
AS OF DECEMBER 31, 2002 AND 2001
(Dollars in thousands, except common stock par value and shares)

---



|                                  |                                                                                                       |                   |           |         |         |   |           |         |         | 
|--------------------------------- | ----------------------------------------------------------------------------------------------------- | ----------------- | --------- | ------- | ------- | - | --------- | ------- | ------- | 
|ASSETS                            |                                                                                                       | 2002              |           | 2001   
|                                  |                                                                                                       |                   |           |        
|INVESTMENTS:                      |                                                                                                       |                   |           |         |         |   |           |        
|                                  | Fixed maturity securities, at estimated fair value
(amortized cost: 2002 - $161,708; 2001 - $142,945) |                   | $         | 165,467 |         |   | $         | 143,731 |        
|                                  | Equity securities, at estimated fair value
(cost: 2002 - $5,896; 2001 - $11,871)                      |                   |           | 5,625   |         |   |           | 11,650  |        
|                                  | Policy loans on insurance contracts                                                                   |                   |           | 86,603  |         |   |           | 92,967  |        
|                                  |                                                                                                       |                   |           |         |         |   |           |        
|                                  |                                                                                                       | Total Investments |           |         | 257,695 |   |           |         | 248,348 | 
|CASH AND CASH EQUIVALENTS         |                                                                                                       |                   | 23,092    |         |         |   | 20,524    |        
|ACCRUED INVESTMENT INCOME         |                                                                                                       |                   | 4,845     |         |         |   | 4,648     |        
|DEFERRED POLICY ACQUISITION COSTS |                                                                                                       |                   | 27,522    |         |         |   | 30,915    |        
|FEDERAL INCOME TAXES  CURRENT    |                                                                                                       |                   | 1,504     |         |         |   |          |        
|REINSURANCE RECEIVABLES           |                                                                                                       |                   | 649       |         |         |   | 305       |        
|OTHER ASSETS                      |                                                                                                       |                   | 3,494     |         |         |   | 3,844     |        
|SEPARATE ACCOUNTS ASSETS          |                                                                                                       |                   | 810,384   |         |         |   | 993,056   |        
|                                  |                                                                                                       |                   |           |         |         |   |           |        
|TOTAL ASSETS                      |                                                                                                       | $                 | 1,129,185 |         |         | $ | 1,301,640 |        
|                                  |                                                                                                       |                   |           |         |         |   |           |         |        

See accompanying notes to financial statements.



---



##### 



---



|                                           |                                                                                 |                                       |                                             |         |         |           |           |         |         |           | 
|------------------------------------------ | ------------------------------------------------------------------------------- | ------------------------------------- | ------------------------------------------- | ------- | ------- | --------- | --------- | ------- | ------- | --------- | 
|LIABILITIES AND STOCKHOLDER'S EQUITY       |                                                                                 | 2002                                  |                                             | 2001   
|                                           |                                                                                 |                                       |                                             |        
|LIABILITIES:                               |                                                                                 |                                       |                                             |         |         |           |           |        
|                                           | POLICYHOLDER LIABILITIES AND ACCRUALS:                                          |                                       |                                             |         |         |           |           |         |        
|                                           |                                                                                 | Policyholders account balances       |                                             | $       | 232,908 |           |           | $       | 231,016 |          
|                                           |                                                                                 | Claims and claims settlement expenses |                                             |         | 3,289   |           |           |         | 4,109   |          
|                                           |                                                                                 |                                       |                                             |         |         |           |           |        
|                                           |                                                                                 |                                       | Total policyholder liabilities and accruals |         |         | 236,197   |           |         |         | 235,125   | 
|                                           | OTHER POLICYHOLDER FUNDS                                                        |                                       |                                             | 787     |         |           |           | 1,125   |        
|                                           | FEDERAL INCOME TAXES  DEFERRED                                                 |                                       |                                             | 6,890   |         |           |           | 2,752   |        
|                                           | FEDERAL INCOME TAXES  CURRENT                                                  |                                       |                                             |        |         |           |           | 295     |        
|                                           | AFFILIATED PAYABLES  NET                                                       |                                       |                                             | 2,103   |         |           |           | 459     |        
|                                           | OTHER LIABILITIES                                                               |                                       |                                             | 498     |         |           |           | 981     |        
|                                           | SEPARATE ACCOUNTS LIABILITIES                                                   |                                       |                                             | 810,384 |         |           |           | 993,056 |        
|                                           |                                                                                 |                                       |                                             |         |         |           |           |        
|                                           |                                                                                 |                                       | Total Liabilities                           |         |         | 1,056,859 |           |         |         | 1,233,793 | 
|                                           |                                                                                 |                                       |                                             |         |         |           |           |        
|STOCKHOLDERS EQUITY:                      |                                                                                 |                                       |                                             |         |         |           |           |        
|                                           | Common stock, $10 par value - 220,000 shares
authorized, issued and outstanding |                                       |                                             | 2,200   |         |           |           | 2,200   |        
|                                           | Additional paid-in capital                                                      |                                       |                                             | 52,310  |         |           |           | 52,310  |        
|                                           | Retained earnings                                                               |                                       |                                             | 17,627  |         |           |           | 14,476  |        
|                                           | Accumulated other comprehensive income (loss)                                   |                                       |                                             | 189     |         |           |           | (1,139  | )      
|                                           |                                                                                 |                                       |                                             |         |         |           |           |        
|                                           |                                                                                 |                                       | Total Stockholders Equity                  |         |         | 72,326    |           |         |         | 67,847    | 
|                                           |                                                                                 |                                       |                                             |         |         |           |           |        
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                 | $                                     | 1,129,185                                   |         |         | $         | 1,301,640 |        
|                                           |                                                                                 |                                       |                                             |         |         |           |           |         |         |          



---



##### 



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, 2002, 2001 AND 2000
(Dollars in thousands)

---



|                                        |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |        |        | 
|--------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------- | ----- | ------ | ------ | ---- | ----- | ------ | ------ | - | ------ | ------ | ------ | 
|                                        |                                                                                          |                                              |       | 2002   |        | 2001 |       | 2000  
|                                        |                                                                                          |                                              |       |        |        |      |       |       
|REVENUES:                               |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |       
|                                        | Policy charge revenue                                                                    |                                              | $     | 17,963 |        |      | $     | 18,723 |        |   | $      | 20,216 |       
|                                        | Net investment income                                                                    |                                              |       | 14,583 |        |      |       | 15,870 |        |   |        | 18,687 |       
|                                        | Net realized investment losses                                                           |                                              |       | (3,158 | )      |      |       | (2,477 | )      |   |        | (98    | )     
|                                        |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |       
|                                        |                                                                                          | Total Revenues                               |       |        | 29,388 |      |       |        | 32,116 |   |        |        | 38,805 | 
|                                        |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |       
|BENEFITS AND EXPENSES:                  |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |       
|                                        | Interest credited to policyholders account balances                                     |                                              |       | 10,610 |        |      |       | 10,925 |        |   |        | 11,910 |       
|                                        | Policy benefits (net of reinsurance recoveries: 2002 - $959;
2001 - $648; 2000 - $2,419) |                                              |       | 4,486  |        |      |       | 3,050  |        |   |        | 1,787  |       
|                                        | Reinsurance premium ceded                                                                |                                              |       | 1,748  |        |      |       | 1,947  |        |   |        | 2,011  |       
|                                        | Amortization of deferred policy acquisition costs                                        |                                              |       | 5,467  |        |      |       | 3,500  |        |   |        | 3,969  |       
|                                        | Insurance expenses and taxes                                                             |                                              |       | 3,336  |        |      |       | 4,820  |        |   |        | 4,147  |       
|                                        |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |       
|                                        |                                                                                          | Total Benefits and Expenses                  |       |        | 25,647 |      |       |        | 24,242 |   |        |        | 23,824 | 
|                                        |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |       
|                                        |                                                                                          | Earnings Before Federal Income Tax Provision |       |        | 3,741  |      |       |        | 7,874  |   |        |        | 14,981 | 
|                                        |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |       
|FEDERAL INCOME TAX PROVISION (BENEFIT): |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |       
|                                        | Current                                                                                  |                                              |       | (2,833 | )      |      |       | 1,243  |        |   |        | 2,855  |       
|                                        | Deferred                                                                                 |                                              |       | 3,423  |        |      |       | 2,302  |        |   |        | 1,979  |       
|                                        |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |       
|                                        |                                                                                          | Total Federal Income Tax Provision           |       |        | 590    |      |       |        | 3,545  |   |        |        | 4,834  | 
|                                        |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |       
|NET EARNINGS                            |                                                                                          | $                                            | 3,151 |        |        | $    | 4,329 |        |        | $ | 10,147 |       
|                                        |                                                                                          |                                              |       |        |        |      |       |        |        |   |        |       

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, 2002, 2001 AND 2000
(Dollars in thousands)

---



|                            |                                                        |                                                                 |                               |       |       |      |       |       |       |        |        |       |       |        |  
|--------------------------- | ------------------------------------------------------ | --------------------------------------------------------------- | ----------------------------- | ----- | ----- | ---- | ----- | ----- | ----- | ------ | ------ | ----- | ----- | ------ | -
|                            |                                                        |                                                                 |                               |       | 2002  |      | 2001  |       | 2000 
|                            |                                                        |                                                                 |                               |       |       |      |       |       |      
|NET EARNINGS                |                                                        | $                                                               | 3,151                         |       |       | $    | 4,329 |       |       | $      | 10,147 |      
|                            |                                                        |                                                                 |                               |       |       |      |       |       |       |        |        |      
|OTHER COMPREHENSIVE INCOME: |                                                        |                                                                 |                               |       |       |      |       |       |       |        |        |      
|                            | Net unrealized gains on available-for-sale securities: |                                                                 |                               |       |       |      |       |       |       |        |        |       |      
|                            |                                                        | Net unrealized holding gains (losses) arising during the period |                               |       | (237  | )    |       |       | 936   |        |        |       | 5,667 |       
|                            |                                                        | Reclassification adjustment for losses included in net earnings |                               |       | 3,160 |      |       |       | 2,238 |        |        |       | 110   |       
|                            |                                                        |                                                                 |                               |       |       |      |       |       |       |        |        |      
|                            |                                                        | Net unrealized gains on investment securities                   |                               |       | 2,923 |      |       |       | 3,174 |        |        |       | 5,777 |       
|                            |                                                        | Adjustments for:                                                |                               |       |       |      |       |       |       |        |        |       |       |       
|                            |                                                        |                                                                 | Policyholder liabilities      |       |       | (880 | )     |       |       | (228   | )      |       |       | (1,971 | )
|                            |                                                        |                                                                 | Deferred federal income taxes |       |       | (715 | )     |       |       | (1,031 | )      |       |       | (1,332 | )
|                            |                                                        |                                                                 |                               |       |       |      |       |       |       |        |        |      
|                            | Total other comprehensive income, net of tax           |                                                                 |                               | 1,328 |       |      |       | 1,915 |       |        |        | 2,474 |      
|                            |                                                        |                                                                 |                               |       |       |      |       |       |       |        |        |      
|COMPREHENSIVE INCOME        |                                                        | $                                                               | 4,479                         |       |       | $    | 6,244 |       |       | $      | 12,621 |      
|                            |                                                        |                                                                 |                               |       |       |      |       |       |       |        |        |      

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, 2002, 2001 AND 2000
(Dollars in thousands)

---



|                           |                                        |   |        |  |         |   |            |         |               |   |               |         |       |   |             |       |  |   |        |         |  
|-------------------------- | -------------------------------------- | - | ------ |  | ------- | - | ---------- | ------- | ------------- | - | ------------- | ------- | ----- | - | ----------- | ----- |  | - | ------ | ------- | -
|                           |                                        |   |        |  |         |   |            |         |               |   |               |         |       |   | Accumulated |       |  |   |       
|                           |                                        |   |        |  |         |   | Additional |         |               |   |               |         | other |   | Total      
|                           |                                        |   | Common |  | paid-in |   | Retained   |         | comprehensive |   | stockholder's
|                           |                                        |   | stock  |  | capital |   | earnings   |         | income (loss) |   | equity       
|                           |                                        |   |        |  |         |   |            |         |               |   |              
|BALANCE, JANUARY 1, 2000   |                                        | $ | 2,200  |  |         | $ | 66,2590    |         |               | $ | 21,051        |         |       | $ | (5,528      | )     |  | $ | 83,982 |        
|                           | Dividend to parent                     |   |        |  |         |   |            | (13,949 | )             |   |               | (21,051 | )     |   |             |       |  |   |        | (35,000 | )
|                           | Net earnings                           |   |        |  |         |   |            |         |               |   |               | 10,147  |       |   |             |       |  |   |        | 10,147  |  
|                           | Other comprehensive income, net of tax |   |        |  |         |   |            |         |               |   |               |         |       |   |             | 2,474 |  |   |        | 2,474   |  
|                           |                                        |   |        |  |         |   |            |         |               |   |               |         |       |   |             |       |  |   |        |        
|BALANCE, DECEMBER 31, 2000 |                                        |   | 2,200  |  |         |   | 52,310     |         |               |   | 10,147        |         |       |   | (3,054      | )     |  |   | 61,603 |        
|                           | Net earnings                           |   |        |  |         |   |            |         |               |   |               | 4,329   |       |   |             |       |  |   |        | 4,329   |  
|                           | Other comprehensive income, net of tax |   |        |  |         |   |            |         |               |   |               |         |       |   |             | 1,915 |  |   |        | 1,915   |  
|                           |                                        |   |        |  |         |   |            |         |               |   |               |         |       |   |             |       |  |   |        |        
|BALANCE, DECEMBER 31, 2001 |                                        |   | 2,200  |  |         |   | 52,310     |         |               |   | 14,476        |         |       |   | (1,139      | )     |  |   | 67,847 |        
|                           | Net earnings                           |   |        |  |         |   |            |         |               |   |               | 3,151   |       |   |             |       |  |   |        | 3,151   |  
|                           | Other comprehensive income, net of tax |   |        |  |         |   |            |         |               |   |               |         |       |   |             | 1,328 |  |   |        | 1,328   |  
|                           |                                        |   |        |  |         |   |            |         |               |   |               |         |       |   |             |       |  |   |        |        
|BALANCE, DECEMBER 31, 2002 |                                        | $ | 2,200  |  |         | $ | 52,310     |         |               | $ | 17,627        |         |       | $ | 189         |       |  | $ | 72,326 |        
|                           |                                        |   |        |  |         |   |            |         |               |   |               |         |       |   |             |       |  |   |        |        

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, 2002, 2001 AND 2000
(Dollars in thousands)

---



|                                      |                                               |                                                                               |                                                                       |       |         |         |      |       |         |        |   |        |         |        | 
|------------------------------------- | --------------------------------------------- | ----------------------------------------------------------------------------- | --------------------------------------------------------------------- | ----- | ------- | ------- | ---- | ----- | ------- | ------ | - | ------ | ------- | ------ | 
|                                      |                                               |                                                                               |                                                                       |       | 2002    |         | 2001 |       | 2000   
|                                      |                                               |                                                                               |                                                                       |       |         |         |      |       |        
|Cash Flows From Operating Activities: |                                               |                                                                               |                                                                       |       |         |         |      |       |         |        |   |       
|                                      | Net earnings                                  |                                                                               | $                                                                     | 3,151 |         |         | $    | 4,329 |         |        | $ | 10,147 |        
|                                      | Noncash items included in earnings:           |                                                                               |                                                                       |       |         |         |      |       |         |        |   |        |        
|                                      |                                               | Amortization of deferred policy acquisition costs                             |                                                                       |       | 5,467   |         |      |       | 3,500   |        |   |        | 3,969   |       
|                                      |                                               | Capitalization of policy acquisition costs                                    |                                                                       |       | (2,074  | )       |      |       | (4,220  | )      |   |        | (4,461  | )     
|                                      |                                               | Amortization of investments                                                   |                                                                       |       | 837     |         |      |       | 307     |        |   |        | 343     |       
|                                      |                                               | Interest credited to policyholders account balances                          |                                                                       |       | 10,610  |         |      |       | 10,925  |        |   |        | 11,910  |       
|                                      |                                               | Provision for deferred Federal income tax                                     |                                                                       |       | 3,423   |         |      |       | 2,302   |        |   |        | 1,979   |       
|                                      | (Increase) decrease in operating assets:      |                                                                               |                                                                       |       |         |         |      |       |         |        |   |        |        
|                                      |                                               | Accrued investment income                                                     |                                                                       |       | (197    | )       |      |       | (27     | )      |   |        | 369     |       
|                                      |                                               | Federal income taxes  current                                                |                                                                       |       | (1,504  | )       |      |       | 62      |        |   |        | (62     | )     
|                                      |                                               | Reinsurance receivables                                                       |                                                                       |       | (344    | )       |      |       | 1,673   |        |   |        | (1,825  | )     
|                                      |                                               | Other                                                                         |                                                                       |       | 350     |         |      |       | 255     |        |   |        | (790    | )     
|                                      | Increase (decrease) in operating liabilities: |                                                                               |                                                                       |       |         |         |      |       |         |        |   |        |        
|                                      |                                               | Claims and claims settlement expenses                                         |                                                                       |       | (820    | )       |      |       | (829    | )      |   |        | 1,176   |       
|                                      |                                               | Other policyholder funds                                                      |                                                                       |       | (338    | )       |      |       | 139     |        |   |        | (209    | )     
|                                      |                                               | Federal income taxes  current                                                |                                                                       |       | (295    | )       |      |       | 295     |        |   |        | (1,420  | )     
|                                      |                                               | Affiliated payables                                                           |                                                                       |       | 1,644   |         |      |       | (467    | )      |   |        | (104    | )     
|                                      |                                               | Other                                                                         |                                                                       |       | (483    | )       |      |       | (1,198  | )      |   |        | (238    | )     
|                                      | Other operating activities:                   |                                                                               |                                                                       |       |         |         |      |       |         |        |   |        |        
|                                      |                                               | Net realized investment losses (excluding gains on cash and cash
equivalents) |                                                                       |       | 3,158   |         |      |       | 2,478   |        |   |        | 98      |       
|                                      |                                               |                                                                               |                                                                       |       |         |         |      |       |         |        |   |       
|                                      |                                               |                                                                               | Net cash and cash equivalents provided by operating activities        |       |         | 22,585  |      |       |         | 19,524 |   |        |         | 20,882 | 
|                                      |                                               |                                                                               |                                                                       |       |         |         |      |       |         |        |   |       
|Cash Flow From Investing Activities:  |                                               |                                                                               |                                                                       |       |         |         |      |       |         |        |   |       
|                                      | Proceeds from (payments for):                 |                                                                               |                                                                       |       |         |         |      |       |         |        |   |        |        
|                                      |                                               | Sales of available-for-sale securities                                        |                                                                       |       | 32,338  |         |      |       | 24,345  |        |   |        | 9,320   |       
|                                      |                                               | Maturities of available-for-sale securities                                   |                                                                       |       | 24,996  |         |      |       | 31,446  |        |   |        | 27,935  |       
|                                      |                                               | Purchases of available-for-sale securities                                    |                                                                       |       | (74,117 | )       |      |       | (52,428 | )      |   |        | (12,859 | )     
|                                      |                                               | Policy loans on insurance contracts                                           |                                                                       |       | 6,364   |         |      |       | (2,600  | )      |   |        | (2,202  | )     
|                                      |                                               |                                                                               |                                                                       |       |         |         |      |       |         |        |   |       
|                                      |                                               |                                                                               | Net cash and cash equivalents provided (used) by investing activities |       |         | (10,419 | )    |       |         | 763    |   |        |         | 22,194 | 
|                                      |                                               |                                                                               |                                                                       |       |         |         |      |       |         |        |   |       

|                                               |  |            
|---------------------------------------------- |  | -----------
|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
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
(Continued) (Dollars in thousands)

---



|                                                     |                               |                                              |                                                                          |                      |        |         |        |      |        |          |         |   |        |          |       | 
|---------------------------------------------------- | ----------------------------- | -------------------------------------------- | ------------------------------------------------------------------------ | -------------------- | ------ | ------- | ------ | ---- | ------ | -------- | ------- | - | ------ | -------- | ----- | 
|                                                     |                               |                                              |                                                                          |                      |        | 2002    |        | 2001 |        | 2000    
|                                                     |                               |                                              |                                                                          |                      |        |         |        |      |        |         
|Cash Flows from Financing Activities:                |                               |                                              |                                                                          |                      |        |         |        |      |        |          |         |  
|                                                     | Proceeds from (payments for): |                                              |                                                                          |                      |        |         |        |      |        |          |         |   |       
|                                                     |                               |                                              | Dividends paid to parent                                                 |                      | $      |        |        |      | $      |         |         |   | $      | (35,000  | )    
|                                                     |                               |                                              | Policyholder deposits                                                    |                      |        | 62,927  |        |      |        | 107,009  |         |   |        | 77,338   |      
|                                                     |                               |                                              | Policyholder withdrawals (including transfers to/from separate accounts) |                      |        | (72,525 | )      |      |        | (126,286 | )       |   |        | (100,095 | )    
|                                                     |                               |                                              |                                                                          |                      |        |         |        |      |        |          |         |  
|                                                     |                               |                                              | Net cash and cash equivalents used by financing activities               |                      |        | (9,598  | )      |      |        | (19,277  | )       |   |        | (57,757  | )    
|                                                     |                               |                                              |                                                                          |                      |        |         |        |      |        |          |         |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                               |                                              | 2,568                                                                    |                      |        |         | 1,010  |      |        |          | (14,681 | )
|CASH AND CASH EQUIVALENTS:                           |                               |                                              |                                                                          |                      |        |         |        |      |        |          |         |  
|                                                     |                               | Beginning of year                            |                                                                          |                      | 20,524 |         |        |      | 19,514 |          |         |   | 34,195 |         
|                                                     |                               |                                              |                                                                          |                      |        |         |        |      |        |          |         |  
|                                                     |                               | End of year                                  |                                                                          | $                    | 23,092 |         |        | $    | 20,524 |          |         | $ | 19,514 |         
|                                                     |                               |                                              |                                                                          |                      |        |         |        |      |        |          |         |  
|Supplementary Disclosure of Cash Flow Information:   |                               |                                              |                                                                          |                      |        |         |        |      |        |          |         |  
|                                                     |                               | Cash paid to (received from) affiliates for: |                                                                          |                      |        |         |        |      |        |          |         |   |        |         
|                                                     |                               |                                              |                                                                          | Federal income taxes |        | $       | (1,034 | )    |        | $        | 886     |   |        | $        | 4,337 | 
|                                                     |                               |                                              |                                                                          | Interest             |        |         | 11     |      |        |          | 64      |   |        |          | 91    | 

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 life insurance and annuity products
including variable life insurance, variable annuities, market value adjusted
annuities and immediate annuities. The Company is licensed to sell insurance
and annuities in nine states; however, it currently limits its marketing
activities to the State of New York. The Company markets its products solely
through the retail network of Merrill Lynch, Pierce, Fenner & Smith,
Incorporated (MLPF&S), a wholly owned broker-dealer subsidiary of Merrill
Lynch & Co.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | Basis of Reporting: The accompanying financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States of America and prevailing industry practices, both of which
require management to make estimates that affect the reported amounts and
disclosure of contingencies in the financial statements. Actual results could
differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | The significant accounting policies and related judgements underlying the
Companys financial statements are summarized below. In applying these
policies, management makes subjective and complex judgements that frequently
require estimates about matters that are inherently uncertain.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | For the purpose of reporting cashflows, cash and cash equivalents include
cash on hand and on deposit and short-term investments with original
maturities of three months or less.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Revenues for interest-sensitive annuity contracts (market value adjusted
annuities and immediate annuities) and interest-sensitive life insurance
contracts (single premium whole life insurance, which is not currently marketed)
consist of i) investment income and ii) withdrawal charges assessed on
contracts surrendered during the withdrawal charge period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | Investments: The Companys investments in fixed maturity and equity
securities are classified as available-for-sale and are carried at estimated
fair value with unrealized gains and losses included in stockholders equity
as a component of accumulated other comprehensive income (loss), net of tax.
If management determines that a decline in the value of an available-for-sale
security is other-than-temporary, the carrying value is adjusted to estimated
fair value and the decline in value is recorded as a net realized investment
loss. Management makes this determination through a series of discussions
with the Companys portfolio managers and credit analysts, as well as
information obtained from external sources (i.e. company announcements,
ratings agency announcements, or news wire services). The factors that give
rise to potential impairments include, but are not limited to, i) certain
credit-related events such as default of principal or interest payments, ii)
bankruptcy of issuer, and iii) certain



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | security restructurings. The estimated fair value on these securities
represents managements estimate of the securitys ultimate recovery value,
which is based on the most recent information available.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | For fixed maturity securities, premiums are amortized to the earlier of the
call or maturity date, discounts are accreted to the maturity date, and
interest income is accrued daily. For equity securities, dividends are
recognized on the ex-dividend date. Realized gains and losses on the sale or
maturity of investments are determined on the basis of specific
identification. Investment transactions are recorded on the trade date.                                                                                                                                                                                                                                                                                                              
|
| | Certain fixed maturity securities are considered non-investment grade. The
Company defines non-investment grade fixed maturity securities as unsecured
debt obligations that do not have a rating equivalent to Standard and Poors
(or similar rating agency) BBB- or higher.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | Policy loans on insurance contracts are stated at unpaid principal balances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | Deferred Policy Acquisition Costs: Policy acquisition costs for life
and annuity contracts are deferred and amortized based on the estimated
future gross profits for each group of contracts. These future gross profit
estimates are subject to periodic evaluation by the Company, with necessary
revisions applied against amortization to date. The impact of these revisions
on cumulative amortization is recorded as a charge or credit to current
operations. It is reasonably possible that estimates of future gross profits
could be reduced in the future, resulting in a material reduction in the
carrying amount of deferred policy acquisition costs.                                                                                       
|
| | Policy acquisition costs are principally commissions and a portion of certain
other expenses relating to policy acquisition, underwriting and issuance that
are primarily related to and vary with the production of new business.
Insurance expenses and taxes reported in the statements of earnings are net
of amounts deferred. Policy acquisition costs can also arise from the
acquisition or reinsurance of existing inforce policies from other insurers.
These costs include ceding commissions and professional fees related to the
reinsurance assumed. The deferred costs are amortized in proportion to the
estimated future gross profits over the anticipated life of the acquired
insurance contracts utilizing an interest methodology.     
|
| | During 1990, the Company entered into an assumption reinsurance agreement
with an unaffiliated insurer. The acquisition costs relating to this
agreement are being amortized over a twenty-five year period using an
effective interest rate of 7.5%. This reinsurance agreement provided for
payment of contingent ceding commissions, for a ten year period, based upon
the persistency and mortality experience of the insurance contracts assumed.
Any payments made for the 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 the reinsurance agreement for the years ended December 31:

|                    |  |      |        |      |  |      |        |   |  |   |        |  
|------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                    |  | 2002 |        | 2001 |  | 2000
|                    |  |      |        |      |  |     
|Beginning balance   |  | $    | 11,341 |      |  | $    | 12,765 |   |  | $ | 12,396 |  
|Capitalized amounts |  |      |       |      |  |      | 17     |   |  |   | 1,237  |  
|Interest accrued    |  |      | 851    |      |  |      | 957    |   |  |   | 930    |  
|Amortization        |  |      | (2,489 | )    |  |      | (2,398 | ) |  |   | (1,798 | )
|                    |  |      |        |      |  |      |        |   |  |   |        |  
|Ending balance      |  | $    | 9,703  |      |  | $    | 11,341 |   |  | $ | 12,765 |  
|                    |  |      |        |      |  |      |        |   |  |   |        |  



| |                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following table presents the expected amortization, net of interest
accrued, of these deferred acquisition costs over the next five years. The
amortization may be adjusted based on periodic evaluation of the expected
gross profits on the reinsured policies.

|     |  |   |     | 
|---- |  | - | --- | 
|2003 |  | $ | 617 | 
|2004 |  | $ | 632 | 
|2005 |  | $ | 658 | 
|2006 |  | $ | 756 | 
|2007 |  | $ | 753 | 



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Separate Accounts: Separate Accounts are established in conformity
with New York State Insurance Law and are generally not chargeable with
liabilities that arise from any other business of the Company. Separate
Accounts assets may be subject to general claims of the Company only to the
extent the value of such assets exceeds Separate Accounts liabilities.
|
| | Net investment income and net realized and unrealized gains (losses)
attributable to Separate Accounts assets accrue directly to the contract
owner and are not reported as revenue in the Companys statements of
earnings.                                                                                                                                         
|
| | Assets and liabilities of Separate Accounts, representing net deposits and
accumulated net investment earnings less fees, held primarily for the benefit
of contract owners, are shown as separate captions in the balance sheets.                                                                                                                                   
|
| | Policyholders Account Balances: Liabilities for the Companys
universal life type contracts, including its life insurance and annuity
products, are equal to the full accumulation value of such contracts as of
the valuation date plus deficiency reserves for certain products.
Interest-crediting rates for the Companys fixed-rate products are as
follows:   

|                                      |  |  |              |  
|------------------------------------- |  |  | ------------ | -
|Interest-sensitive life products      |  |  | 4.00         | %
|Interest-sensitive deferred annuities |  |  | 3.00% - 7.40 | %
|Immediate annuities                   |  |  | 3.00% - 8.80 | %



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | These rates may be changed at the option of the Company after initial
guaranteed rates expire, unless contracts are subject to minimum interest
rate guarantees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | Claims and Claims Settlement Expenses: Liabilities for claims and
claims settlement expenses equal the death benefit (plus accrued interest)
for claims that have been reported to the Company but have not settled and an
estimate, based upon prior experience, for unreported claims. Additionally,
the Company has established a mortality benefit accrual for its variable
annuity products.                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | Income Taxes: The results of operations of the Company are included in
the consolidated Federal income tax return of Merrill Lynch & Co. The Company
has entered into a tax-sharing agreement with Merrill Lynch & Co. whereby the
Company will calculate its current tax provision based on its operations.
Under the agreement, the Company periodically remits to Merrill Lynch & Co.
its current federal income tax liability.                                                                                                                                                                                                                                                                                                                                                                  
|
| | The Company uses the asset and liability method in providing income taxes on
all transactions that have been recognized in the financial statements. The
asset and liability method requires that deferred taxes be adjusted to
reflect the tax rates at which future taxable amounts will 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 such changes are enacted. Valuation
allowances are established when necessary to reduce deferred tax assets to
the amounts expected to be realized.                                                                                                                                        
|
| | Insurance companies are generally subject to taxes on premiums and in
substantially all states are exempt from state income taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Accounting Pronouncements: On July 31, 2002, the American Institute of
Certified Public Accountants (AICPA) issued Proposed Statement of Position
(SOP) Accounting and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate Accounts. The
proposed SOP would require Companies to establish a liability for contracts
that contain death or other insurance benefits using a specified reserve
methodology that is different from the methodology the Company employs. A
final SOP would be effective for financial statements for the Company
beginning in 2004. Depending on market conditions at the time of adoption
the impact of implementing this reserve methodology may have a material
effect on earnings in the year of adoption.



---



##### 



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:

|                            |                                         |   |           |         |      |   |           |         | 
|--------------------------- | --------------------------------------- | - | --------- | ------- | ---- | - | --------- | ------- | 
|                            |                                         |   | 2002      |         | 2001
|                            |                                         |   |           |         |     
|Assets:                     |                                         |   |           |         |      |   |           |        
|                            | Fixed maturity securities (1)           |   | $         | 165,467 |      |   | $         | 143,731 | 
|                            | Equity securities (1)                   |   |           | 5,625   |      |   |           | 11,650  | 
|                            | Policy loans on insurance contracts (2) |   |           | 86,603  |      |   |           | 92,967  | 
|                            | Cash and cash equivalents (3)           |   |           | 23,092  |      |   |           | 20,524  | 
|                            | Separate Accounts assets (4)            |   |           | 810,384 |      |   |           | 993,056 | 
|                            |                                         |   |           |         |      |   |           |        
|Total financial instruments |                                         | $ | 1,091,171 |         |      | $ | 1,261,928 |        
|                            |                                         |   |           |         |      |   |           |        



|(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, 2002 and 2001, securities without
a readily ascertainable market value, having an amortized cost of
$20,353 and $24,264, had an estimated fair value of $18,844 and $23,902,
respectively.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The Company estimates the fair value of policy loans as equal to the
book value of the loans. Policy loans are fully collateralized by the
account value of the associated insurance contracts, and the spread
between the policy loan interest rate and the interest rate credited to
the account value held as collateral is fixed.                                                                                                                                                                                                                                                     
|   
|(3) |  | The estimated fair value of cash and cash equivalents approximates
the carrying value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(4) |  | Assets held in Separate Accounts are carried at the net asset value
provided by the fund managers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

NOTE 3. INVESTMENTS



| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | The amortized cost and estimated fair value of investments in fixed maturity
securities and equity securities as of December 31 were:

|                           |                                 |                                 |   |           |         |            |   |            |       |           |   |       |       |  |   |         |         | 
|-------------------------- | ------------------------------- | ------------------------------- | - | --------- | ------- | ---------- | - | ---------- | ----- | --------- | - | ----- | ----- |  | - | ------- | ------- | 
|                           |                                 |                                 |   | 2002     
|                           |                                 |                                 |   |          
|                           |                                 |                                 |   | Cost /    |         | Gross      |   | Gross      |       | Estimated
|                           |                                 |                                 |   | Amortized |         | Unrealized |   | Unrealized |       | Fair     
|                           |                                 |                                 |   | Cost      |         | Gains      |   | Losses     |       | Value    
|                           |                                 |                                 |   |           |         |            |   |            |       |          
|Fixed maturity securities: |                                 |                                 |   |           |         |            |   |            |       |           |   |       |       |  |   |        
|                           | Corporate debt securities       |                                 | $ | 137,726   |         |            | $ | 4,582      |       |           | $ | 2,542 |       |  | $ | 139,766 |        
|                           | U.S. government and agencies    |                                 |   | 22,062    |         |            |   | 1,534      |       |           |   |      |       |  |   | 23,596  |        
|                           | Mortgage-backed securities      |                                 |   | 1,920     |         |            |   | 185        |       |           |   |      |       |  |   | 2,105   |        
|                           |                                 |                                 |   |           |         |            |   |            |       |           |   |       |       |  |   |        
|                           |                                 | Total fixed maturity securities |   | $         | 161,708 |            |   | $          | 6,301 |           |   | $     | 2,542 |  |   | $       | 165,467 | 
|                           |                                 |                                 |   |           |         |            |   |            |       |           |   |       |       |  |   |        
|Equity securities:         |                                 |                                 |   |           |         |            |   |            |       |           |   |       |       |  |   |        
|                           | Non-redeemable preferred stocks |                                 | $ | 5,896     |         |            | $ | 35         |       |           | $ | 306   |       |  | $ | 5,625   |        
|                           |                                 |                                 |   |           |         |            |   |            |       |           |   |       |       |  |   |        



---



##### 



|                           |                                 |                                 |                         |         |           |        |            |       |            |   |           |       |       |     |   |         |         |        | 
|-------------------------- | ------------------------------- | ------------------------------- | ----------------------- | ------- | --------- | ------ | ---------- | ----- | ---------- | - | --------- | ----- | ----- | --- | - | ------- | ------- | ------ | 
|                           |                                 |                                 |                         |         | 2001     
|                           |                                 |                                 |                         |         |          
|                           |                                 |                                 |                         |         | Cost /    |        | Gross      |       | Gross      |   | Estimated
|                           |                                 |                                 |                         |         | Amortized |        | Unrealized |       | Unrealized |   | Fair     
|                           |                                 |                                 |                         |         | Cost      |        | Gains      |       | Losses     |   | Value    
|                           |                                 |                                 |                         |         |           |        |            |       |            |   |          
|Fixed maturity securities: |                                 |                                 |                         |         |           |        |            |       |            |   |           |       |       |     |   |        
|                           | Corporate debt securities       |                                 | $                       | 115,846 |           |        | $          | 2,011 |            |   | $         | 2,214 |       |     | $ | 115,643 |        
|                           | U.S. government and agencies    |                                 |                         | 22,433  |           |        |            | 829   |            |   |           | 7     |       |     |   | 23,255  |        
|                           | Mortgage-backed securities      |                                 |                         | 2,668   |           |        |            | 192   |            |   |           |      |       |     |   | 2,860   |        
|                           | Foreign governments             |                                 |                         | 1,998   |           |        |            |      |            |   |           | 25    |       |     |   | 1,973   |        
|                           |                                 |                                 |                         |         |           |        |            |       |            |   |           |       |       |     |   |        
|                           |                                 | Total fixed maturity securities |                         | $       | 142,945   |        |            | $     | 3,032      |   |           | $     | 2,246 |     |   | $       | 143,731 |       
|                           |                                 |                                 |                         |         |           |        |            |       |            |   |           |       |       |     |   |        
|Equity securities:         |                                 |                                 |                         |         |           |        |            |       |            |   |           |       |       |     |   |        
|                           | Non-redeemable preferred stocks |                                 | $                       | 11,699  |           |        | $          |      |            |   | $         | 191   |       |     | $ | 11,508  |        
|                           | Common stocks                   |                                 |                         | 172     |           |        |            |      |            |   |           | 30    |       |     |   | 142     |        
|                           |                                 |                                 |                         |         |           |        |            |       |            |   |           |       |       |     |   |        
|                           |                                 |                                 | Total equity securities |         | $         | 11,871 |            |       | $          |  |           |       | $     | 221 |   |         | $       | 11,650 | 
|                           |                                 |                                 |                         |         |           |        |            |       |            |   |           |       |       |     |   |        



| |                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The amortized cost, gross unrealized losses, and length of time estimated
fair value has remained below amortized cost for investment grade and
non-investment grade fixed maturity and equity securities as of December 31,
2002 were:

|                                           |                            |                                 |        |           |       |          |     |                         |     |           |       |          |       |   |    |   |    |   |   |   |   | 
|------------------------------------------ | -------------------------- | ------------------------------- | ------ | --------- | ----- | -------- | --- | ----------------------- | --- | --------- | ----- | -------- | ----- | - | -- | - | -- | - | - | - | - | 
|                                           |                            |                                 |        |           |       |          |     | Gross Unrealized Losses
|                                           |                            |                                 |        |           |       |          |     |                        
|                                           |                            |                                 |        | Cost /    |       | Less     |     | One                     |     | Five      |       | Greater 
|                                           |                            |                                 |        | Amortized |       | Than One |     | Through                 |     | Through   |       | Than    
|                                           |                            |                                 |        | Cost      |       | Year     |     | Five Years              |     | Ten Years |       | 10 Years
|                                           |                            |                                 |        |           |       |          |     |                         |     |           |       |         
|Investment Grade Securities                |                            |                                 |        |           |       |          |     |                         |     |           |       |          |       |   |    |   |    |   |   |  
|                                           | Fixed maturity securities: |                                 |        |           |       |          |     |                         |     |           |       |          |       |   |    |   |    |   |   |   |  
|                                           |                            | Corporate debt securities       |        | $         | 9,380 |          |     | $                       | 225 |           |       | $        | 647   |   |    | $ |   |   |   | $ |  | 
|                                           | Equity securities:         |                                 |        |           |       |          |     |                         |     |           |       |          |       |   |    |   |    |   |   |   |  
|                                           |                            | Non-redeemable preferred stocks |        |           | 2,278 |          |     |                         |    |           |       |          | 306   |   |    |   |   |   |   |   |  | 
|Non-Investment Grade Securities            |                            |                                 |        |           |       |          |     |                         |     |           |       |          |       |   |    |   |    |   |   |  
|                                           | Fixed maturity securities: |                                 |        |           |       |          |     |                         |     |           |       |          |       |   |    |   |    |   |   |   |  
|                                           |                            | Corporate debt securities       |        |           | 7,080 |          |     |                         | 23  |           |       |          | 1,623 |   |    |   | 24 |   |   |   |  | 
|                                           |                            |                                 |        |           |       |          |     |                         |     |           |       |          |       |   |    |   |    |   |   |  
|Total fixed maturity and equity securities |                            | $                               | 18,738 |           |       | $        | 248 |                         |     | $         | 2,576 |          |       | $ | 24 |   |    | $ |  |  
|                                           |                            |                                 |        |           |       |          |     |                         |     |           |       |          |       |   |    |   |    |   |   |  



---



##### 





| |                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------
| | The amortized cost and estimated fair value of fixed maturity securities at
December 31, 2002 by contractual maturity were:

|                           |                                        |                                 |         |           |         |       |         |           |         | 
|-------------------------- | -------------------------------------- | ------------------------------- | ------- | --------- | ------- | ----- | ------- | --------- | ------- | 
|                           |                                        |                                 |         |           |         |       |         | Estimated
|                           |                                        |                                 |         | Amortized |         | Fair 
|                           |                                        |                                 |         | Cost      |         | Value
|                           |                                        |                                 |         |           |         |      
|Fixed maturity securities: |                                        |                                 |         |           |         |       |         |          
|                           | Due in one year or less                |                                 | $       | 31,890    |         |       | $       | 32,074    |        
|                           | Due after one year through five years  |                                 |         | 77,992    |         |       |         | 80,728    |        
|                           | Due after five years through ten years |                                 |         | 35,685    |         |       |         | 36,912    |        
|                           | Due after ten years                    |                                 |         | 14,221    |         |       |         | 13,648    |        
|                           |                                        |                                 |         |           |         |       |         |          
|                           |                                        |                                 | 159,788 |           |         |       | 163,362 |          
|                           | Mortgage-backed securities             |                                 |         | 1,920     |         |       |         | 2,105     |        
|                           |                                        |                                 |         |           |         |       |         |          
|                           |                                        | Total fixed maturity securities |         | $         | 161,708 |       |         | $         | 165,467 | 
|                           |                                        |                                 |         |           |         |       |         |          



| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, 2002 by rating agency equivalent were:                                                                                                                                                                                 

|                     |                                 |   |           |         |       |   |           |         | 
|-------------------- | ------------------------------- | - | --------- | ------- | ----- | - | --------- | ------- | 
|                     |                                 |   |           |         |       |   | Estimated
|                     |                                 |   | Amortized |         | Fair 
|                     |                                 |   | Cost      |         | Value
|                     |                                 |   |           |         |      
|AAA                  |                                 | $ | 47,228    |         |       | $ | 49,039    |        
|AA                   |                                 |   | 13,291    |         |       |   | 13,275    |        
|A                    |                                 |   | 66,837    |         |       |   | 70,227    |        
|BBB                  |                                 |   | 29,686    |         |       |   | 28,797    |        
|                     |                                 |   |           |         |       |   |           |        
|Non-investment grade |                                 |   | 4,666     |         |       |   | 4,129     |        
|                     |                                 |   |           |         |       |   |           |        
|                     | Total fixed maturity securities |   | $         | 161,708 |       |   | $         | 165,467 | 
|                     |                                 |   |           |         |       |   |           |        



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 (loss), net of taxes. The components of net unrealized
gains (losses) included in accumulated other comprehensive income (loss) as
of December 31 were as follows:

|                      |                                               |  |       |       |      |  |       |        |  
|--------------------- | --------------------------------------------- |  | ----- | ----- | ---- |  | ----- | ------ | -
|                      |                                               |  | 2002  |       | 2001
|                      |                                               |  |       |       |     
|Assets:               |                                               |  |       |       |      |  |       |       
|                      | Fixed maturity securities                     |  | $     | 3,759 |      |  | $     | 786    |  
|                      | Equity securities                             |  |       | (271  | )    |  |       | (221   | )
|                      |                                               |  |       |       |      |  |       |       
|                      |                                               |  | 3,488 |       |      |  | 565   |       
|                      |                                               |  |       |       |      |  |       |       
|Liabilities:          |                                               |  |       |       |      |  |       |       
|                      | Policyholders account balances               |  |       | 3,198 |      |  |       | 2,318  |  
|                      | Federal income taxes  deferred               |  |       | 101   |      |  |       | (614   | )
|                      |                                               |  |       |       |      |  |       |       
|                      |                                               |  | 3,299 |       |      |  | 1,704 |       
|                      |                                               |  |       |       |      |  |       |       
|Stockholders equity: |                                               |  |       |       |      |  |       |       
|                      | Accumulated other comprehensive income (loss) |  | $     | 189   |      |  | $     | (1,139 | )
|                      |                                               |  |       |       |      |  |       |       



---



##### 





| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| | Proceeds and gross realized investment gains and losses from the sale of
available-for-sale securities for the years ended December 31 were:

|                                 |  |      |        |      |  |      |        |  |  |   |       | 
|-------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ----- | 
|                                 |  | 2002 |        | 2001 |  | 2000
|                                 |  |      |        |      |  |     
|Proceeds                         |  | $    | 32,338 |      |  | $    | 24,345 |  |  | $ | 9,320 | 
|Gross realized investment gains  |  |      | 1,259  |      |  |      | 223    |  |  |   | 43    | 
|Gross realized investment losses |  |      | 4,417  |      |  |      | 2,701  |  |  |   | 141   | 



| |                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company considers fair value at the date of sale to be equal to proceeds
received. Proceeds for gross realized investment losses from the sale of
available-for-sale securities were $12,335, $8,739 and $12,718 for the years
ended December 31, 2002, 2001, and 2000, respectively.
|
| | The Company had investment securities with a carrying value of $959 and
$1,017 that were deposited with insurance regulatory authorities at December
31, 2002 and 2001, 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 arose from the following sources for the years ended
December 31:                                                                                                                                                                                                  

|                                    |  |      |        |      |  |      |        |   |  |   |        |  
|----------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                    |  | 2002 |        | 2001 |  | 2000
|                                    |  |      |        |      |  |     
|Fixed maturity securities           |  | $    | 9,104  |      |  | $    | 9,929  |   |  | $ | 10,643 |  
|Equity securities                   |  |      | 882    |      |  |      | 1,104  |   |  |   | 1,429  |  
|Policy loans on insurance contracts |  |      | 4,400  |      |  |      | 4,440  |   |  |   | 4,441  |  
|Cash and cash equivalents           |  |      | 410    |      |  |      | 760    |   |  |   | 2,635  |  
|Other                               |  |      | 72     |      |  |      | 1      |   |  |   | 1      |  
|                                    |  |      |        |      |  |      |        |   |  |   |        |  
|Gross investment income             |  |      | 14,868 |      |  |      | 16,234 |   |  |   | 19,149 |  
|Less investment expenses            |  |      | (285   | )    |  |      | (364   | ) |  |   | (462   | )
|                                    |  |      |        |      |  |      |        |   |  |   |        |  
|Net investment income               |  | $    | 14,583 |      |  | $    | 15,870 |   |  | $ | 18,687 |  
|                                    |  |      |        |      |  |      |        |   |  |   |        |  



| |                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | Net realized investment gains (losses), including other-than-temporary
writedowns in carrying value, for the years ended December 31 were as
follows:

|                               |  |      |        |      |  |      |        |   |  |   |      |  
|------------------------------ |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ---- | -
|                               |  | 2002 |        | 2001 |  | 2000
|                               |  |      |        |      |  |     
|Fixed maturity securities      |  | $    | (3,642 | )    |  | $    | (2,458 | ) |  | $ | (115 | )
|Equity securities              |  |      | 484    |      |  |      | (20    | ) |  |   | 17   |  
|Cash and cash equivalents      |  |      |       |      |  |      | 1      |   |  |   |     |  
|                               |  |      |        |      |  |      |        |   |  |   |      |  
|Net realized investment losses |  | $    | (3,158 | )    |  | $    | (2,477 | ) |  | $ | (98  | )
|                               |  |      |        |      |  |      |        |   |  |   |      |  



| |                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Realized investment losses on securities deemed to have incurred
other-than-temporary declines in fair value were $3,503, $405, and $0 for the
years ended December 31, 2002, 2001, and 2000 respectively.



---



##### 



NOTE 4. FEDERAL INCOME TAXES



| |                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following is a reconciliation of the provision for income taxes based on
earnings before federal income taxes, computed using the Federal statutory
tax rate, versus the reported provision for income taxes for the years ended
December 31:

|                                                              |                             |   |       |      |      |   |       |     |   |   |       |      |  
|------------------------------------------------------------- | --------------------------- | - | ----- | ---- | ---- | - | ----- | --- | - | - | ----- | ---- | -
|                                                              |                             |   | 2002  |      | 2001 |   | 2000 
|                                                              |                             |   |       |      |      |   |      
|Provision for income taxes computed at Federal statutory rate |                             | $ | 1,309 |      |      | $ | 2,756 |     |   | $ | 5,243 |     
|Increase (decrease) in income taxes resulting from:           |                             |   |       |      |      |   |       |     |   |   |       |     
|                                                              | Dividend received deduction |   |       | (707 | )    |   |       | (78 | ) |   |       | (155 | )
|                                                              | Foreign tax credit          |   |       | (12  | )    |   |       | 17  |   |   |       | (254 | )
|                                                              | Interest adjustments        |   |       |     |      |   |       | 832 |   |   |       |     |  
|                                                              | Non-deductible fees         |   |       |     |      |   |       | 18  |   |   |       |     |  
|                                                              |                             |   |       |      |      |   |       |     |   |   |       |     
|Federal income tax provision                                  |                             | $ | 590   |      |      | $ | 3,545 |     |   | $ | 4,834 |     
|                                                              |                             |   |       |      |      |   |       |     |   |   |       |     



| |                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Federal statutory rate for each of the three years in the period ended
December 31, 2002 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:

|                                      |  |      |       |      |  |      |       |  |  |   |       | 
|------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                      |  | 2002 |       | 2001 |  | 2000
|                                      |  |      |       |      |  |     
|Policyholders account balances       |  | $    | 4,335 |      |  | $    | 1,859 |  |  | $ | 1,006 | 
|Investment adjustments                |  |      | (60   | )    |  |      | 3     |  |  |   | 351   | 
|Deferred policy acquisition costs     |  |      | (852  | )    |  |      | 440   |  |  |   | 622   | 
|                                      |  |      |       |      |  |      |       |  |  |   |       | 
|Deferred Federal income tax provision |  | $    | 3,423 |      |  | $    | 2,302 |  |  | $ | 1,979 | 
|                                      |  |      |       |      |  |      |       |  |  |   |       | 



| |                                                                                 
| | --------------------------------------------------------------------------------
| | Deferred tax assets and liabilities as of December 31 are determined as
follows:

|                          |                                                         |                                |   |       |       |      |   |       |       | 
|------------------------- | ------------------------------------------------------- | ------------------------------ | - | ----- | ----- | ---- | - | ----- | ----- | 
|                          |                                                         |                                |   | 2002  |       | 2001
|                          |                                                         |                                |   |       |       |     
|Deferred tax assets:      |                                                         |                                |   |       |       |      |   |      
|                          | Investment adjustments                                  |                                | $ | 1,444 |       |      | $ | 1,384 |      
|                          | Policyholders account balances                         |                                |   |      |       |      |   | 2,951 |      
|                          | Net unrealized investment loss on investment securities |                                |   |      |       |      |   | 614   |      
|                          |                                                         |                                |   |       |       |      |   |      
|                          |                                                         | Total deferred tax assets      |   |       | 1,444 |      |   |       | 4,949 | 
|                          |                                                         |                                |   |       |       |      |   |      
|Deferred tax liabilities: |                                                         |                                |   |       |       |      |   |      
|                          | Deferred policy acquisition costs                       |                                |   | 6,849 |       |      |   | 7,701 |      
|                          | Policyholders account balances                         |                                |   | 1,384 |       |      |   |      |      
|                          | Net unrealized investment gain on investment securities |                                |   | 101   |       |      |   |      |      
|                          |                                                         |                                |   |       |       |      |   |      
|                          |                                                         | Total deferred tax liabilities |   |       | 8,334 |      |   |       | 7,701 | 
|                          |                                                         |                                |   |       |       |      |   |      
|                          |                                                         | Net deferred tax liability     |   | $     | 6,890 |      |   | $     | 2,752 | 
|                          |                                                         |                                |   |       |       |      |   |      



| |                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------
| | The Company anticipates that all deferred tax assets will be realized,
therefore no valuation allowance has been provided.

NOTE 5. REINSURANCE



| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured life and to recover a portion of benefits paid by
ceding reinsurance to other insurance enterprises or reinsurers under



---



##### 





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | indemnity reinsurance agreements, primarily excess coverage and coinsurance
agreements. The maximum amount of mortality risk retained by the Company is
approximately $500 on single life policies and joint life policies.                                                                                                                                                                                                                                                                                                                                         
|
| | Indemnity reinsurance agreements do not relieve the Company from its
obligations to policyholders. Failure of reinsurers to honor their
obligations could result in losses to the Company. The Company regularly
evaluates the financial condition of its reinsurers so as to minimize its
exposure to significant losses from reinsurer insolvencies. The Company holds
collateral under reinsurance agreements in the form of letters of credit,
trust agreements and funds withheld totaling $147 that can be drawn upon for
delinquent reinsurance recoverables.
|
| | As of December 31, 2002, the Company had the following life insurance
inforce:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|                       |  |        |         |           |  |            |         |         |  |            |       |  |  |           |         |  |  |            |     |  
|---------------------- |  | ------ | ------- | --------- |  | ---------- | ------- | ------- |  | ---------- | ----- |  |  | --------- | ------- |  |  | ---------- | --- | -
|                       |  |        |         |           |  |            |         |         |  |            |       |  |  |           |         |  |  | Percentage
|                       |  |        |         |           |  | Ceded to   |         | Assumed |  |            |       |  |  | of amount
|                       |  | Gross  |         | other     |  | from other |         | Net     |  | assumed to
|                       |  | amount |         | companies |  | companies  |         | amount  |  | net       
|                       |  |        |         |           |  |            |         |         |  |           
|Life insurance
inforce |  | $      | 722,216 |           |  | $          | 116,360 |         |  | $          | 2,229 |  |  | $         | 608,085 |  |  |            | 0.4 | %



| |                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company was a party to a reinsurance agreement with an unaffiliated
insurer, whereby the Company assumed mortality risk, within certain limits,
on a block of yearly renewable term life insurance contracts. During 2002,
the unaffiliated insurer recaptured this block of business from the Company.

NOTE 6. RELATED PARTY TRANSACTIONS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company and MLIG are parties to a service agreement whereby MLIG has
agreed to provide certain accounting, data processing, legal, actuarial,
management, advertising and other services to the Company. Expenses incurred
by MLIG, in relation to this service agreement, are reimbursed by the Company
on an allocated cost basis. Charges billed to the Company by MLIG pursuant to
the agreement were $3,412, $4,963 and $4,556 for 2002, 2001 and 2000
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 $11, $53 and $69 for
2002, 2001 and 2000, respectively. Intercompany interest is included in net
investment income. While management believes that these fees 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.
|
| | 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 $150, $145 and $156
for 2002, 2001 and 2000, 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 the variable annuity contracts the Company has inforce.
Under this agreement, Roszel pays compensation to MLIG an amount equal to a
portion of the annual gross investment advisory fees paid by the Trust to
Roszel. During 2002, the Company received from MLIG its allocable share of
such compensation in the amount of $22. Revenue attributable to this
agreement is included in policy charge revenue.                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | 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 $1,902, $3,910 and $2,874 for
2002, 2001 and 2000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



---



##### 





| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Substantially all of these commissions were capitalized as deferred policy
acquisitions costs and are being amortized in accordance with the policy
discussed in Note 1.
|
| | Affiliated agreements generally contain reciprocal indemnity provisions
pertaining to each partys representations and contractual obligations
thereunder.              

NOTE 7. STOCKHOLDERS EQUITY AND STATUTORY REGULATIONS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Notice of intention to declare a dividend must be filed with the New York
Superintendent of Insurance who may disallow the payment. The Company filed
no dividend requests during 2002 and 2001. During 2000, the Company paid a
cash dividend of $35,000. At December 31, 2002 and 2001, approximately
$1,921 and $3,207, respectively, of stockholders equity was available for
distribution to MLIG.                                                                                                                                                                                                                                                                                                                                                                            
|
| | Applicable insurance department regulations require that the Company report
its accounts in accordance with statutory accounting practices. Statutory
accounting practices differ from principles utilized in these financial
statements as follows: policy acquisition costs are expensed as incurred,
future policy benefit reserves are established using different actuarial
assumptions, provisions for deferred income taxes are limited to temporary
differences that will be recognized within one year, and securities are
valued on a different basis.                                                                                                                                                                                                                    
|
| | The Companys statutory financial statements are presented on the basis of
accounting practices prescribed or permitted by the New York Insurance
Department. The State of New York has adopted the National Association of
Insurance Commissioners statutory accounting practices, (NAIC SAP) as a
component of prescribed or permitted practices by the State of New York. The
State of New York has adopted certain prescribed accounting practices, (NY
SAP), which differ from those found in NAIC SAP. Specifically, deferred tax
assets and deferred tax liabilities were not recognized by the State of New
York until December 31, 2002, as described below. Other differences in
accounting practices between NAIC SAP and NY SAP were not applicable to the
Company.
|
| | Statutory capital and surplus at December 31, 2002, was $21,411. At December
31, 2001, statutory capital and surplus on a New York basis and an NAIC SAP
basis were $34,265 and $34,880, respectively. The difference between
statutory capital and surplus on a New York basis versus an NAIC SAP basis is
the recognition of a $615 deferred tax asset in accordance with NAIC SAP.
There was no difference in net income on a New York basis versus an NAIC SAP
basis at December 31, 2001. The Companys statutory net income (loss) for
2002, 2001 and 2000 was ($13,824), $348 and $5,125, respectively. The
statutory net loss incurred during 2002 was primarily due to establishing
additional policy benefit reserves required by state insurance regulation.             
|
| | The National Association of Insurance Commissioners (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, 2002, and 2001, based on
the RBC formula, the Companys total adjusted capital level was in excess of
the minimum amount of capital required to avoid regulatory action.                                                                                                                                                                                                                                                                                                                    

NOTE 8. COMMITMENTS AND CONTINGENCIES



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | State insurance laws generally require that all life insurers who are
licensed to transact business within a state become members of the states
life insurance guaranty association. These associations have been established
for the protection of policyholders from loss (within specified limits) as a
result of the insolvency of an insurer. At the time an insolvency occurs, the
guaranty association assesses the remaining members of the association an
amount sufficient to satisfy the insolvent insurers policyholder obligations
(within specified limits). Based upon the public information available at
this time, management believes the Company has no material financial
obligations to state guaranty associations.



---



##### 





| |                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In the normal course of business, the Company is subject to various claims
and assessments. Management believes the settlement of these matters would
not have a material effect on the financial position or results of operations
of the Company.

NOTE 9. SEGMENT INFORMATION



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In reporting to management, the Companys operating results are categorized
into two business segments: Life Insurance and Annuities. The Companys Life
Insurance segment consists of variable life insurance products and
interest-sensitive life insurance products. The Companys Annuity segment
consists of variable annuities and interest-sensitive annuities. The
accounting policies of the business segments are the same as those described
in the summary of significant accounting policies. All revenue and expense
transactions are recorded at the product level and accumulated at the
business segment level for review by management. The Other category,
presented in the following segment financial information, represents net
revenues and earnings on assets that do not support life or annuity contract
owner liabilities.
|
| | The following table summarizes each business segments contribution to the
consolidated amounts:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|------------------------------------------------- |  | --------- | ------- | --------- |  | ----- | ------- | ----- |  | - | ------ | - |  | - | --------- | 
|                                                  |  | Life      |         |           |  |       |         |       |  |   |        |   |  |  
|2002                                              |  | Insurance |         | Annuities |  | Other |         | Total
|                                                  |  |           |         |           |  |       |         |      
|Net interest spread (a)                           |  | $         | 662     |           |  | $     | 2,503   |       |  | $ | 808    |   |  | $ | 3,973     | 
|Other revenues                                    |  |           | 8,440   |           |  |       | 6,478   |       |  |   | (113   | ) |  |   | 14,805    | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Net revenues                                      |  |           | 9,102   |           |  |       | 8,981   |       |  |   | 695    |   |  |   | 18,778    | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Policy benefits                                   |  |           | 2,216   |           |  |       | 2,270   |       |  |   |       |   |  |   | 4,486     | 
|Reinsurance premium ceded                         |  |           | 1,748   |           |  |       |        |       |  |   |       |   |  |   | 1,748     | 
|Amortization of deferred policy
acquisition costs |  |           | 2,163   |           |  |       | 3,304   |       |  |   |       |   |  |   | 5,467     | 
|Other non-interest expenses                       |  |           | 1,225   |           |  |       | 2,111   |       |  |   |       |   |  |   | 3,336     | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Total non-interest expenses                       |  |           | 7,352   |           |  |       | 7,685   |       |  |   |       |   |  |   | 15,037    | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Net earnings before Federal income
tax provision  |  |           | 1,750   |           |  |       | 1,296   |       |  |   | 695    |   |  |   | 3,741     | 
|Income tax expense (benefit)                      |  |           | 374     |           |  |       | (27     | )     |  |   | 243    |   |  |   | 590       | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Net earnings                                      |  | $         | 1,376   |           |  | $     | 1,323   |       |  | $ | 452    |   |  | $ | 3,151     | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Balance Sheet Information:                        |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Total assets                                      |  | $         | 390,244 |           |  | $     | 725,481 |       |  | $ | 13,460 |   |  | $ | 1,129,185 | 
|Deferred policy acquisition costs                 |  |           | 11,760  |           |  |       | 15,762  |       |  |   |       |   |  |   | 27,522    | 
|Policyholder liabilities and accruals             |  |           | 99,271  |           |  |       | 136,926 |       |  |   |       |   |  |   | 236,197   | 
|Other policyholder funds                          |  |           | 588     |           |  |       | 199     |       |  |   |       |   |  |   | 787       | 



---



##### 



|                                                  |  |           |         |           |  |       |         |       |  |   |        |  |  |   |           | 
|------------------------------------------------- |  | --------- | ------- | --------- |  | ----- | ------- | ----- |  | - | ------ |  |  | - | --------- | 
|                                                  |  | Life      |         |           |  |       |         |       |  |   |        |  |  |  
|2001                                              |  | Insurance |         | Annuities |  | Other |         | Total
|                                                  |  |           |         |           |  |       |         |      
|Net interest spread (a)                           |  | $         | 1,311   |           |  | $     | 2,638   |       |  | $ | 996    |  |  | $ | 4,945     | 
|Other revenues                                    |  |           | 9,028   |           |  |       | 7,210   |       |  |   | 8      |  |  |   | 16,246    | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |  |  |   |           | 
|Net revenues                                      |  |           | 10,339  |           |  |       | 9,848   |       |  |   | 1,004  |  |  |   | 21,191    | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |  |  |   |           | 
|Policy benefits                                   |  |           | 1,322   |           |  |       | 1,728   |       |  |   |       |  |  |   | 3,050     | 
|Reinsurance premium ceded                         |  |           | 1,947   |           |  |       |        |       |  |   |       |  |  |   | 1,947     | 
|Amortization of deferred policy
acquisition costs |  |           | 2,018   |           |  |       | 1,482   |       |  |   |       |  |  |   | 3,500     | 
|Other non-interest expenses                       |  |           | 2,055   |           |  |       | 2,765   |       |  |   |       |  |  |   | 4,820     | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |  |  |   |           | 
|Total non-interest expenses                       |  |           | 7,342   |           |  |       | 5,975   |       |  |   |       |  |  |   | 13,317    | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |  |  |   |           | 
|Net earnings before Federal income
tax provision  |  |           | 2,997   |           |  |       | 3,873   |       |  |   | 1,004  |  |  |   | 7,874     | 
|Income tax expense                                |  |           | 1,134   |           |  |       | 2,060   |       |  |   | 351    |  |  |   | 3,545     | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |  |  |   |           | 
|Net earnings                                      |  | $         | 1,863   |           |  | $     | 1,813   |       |  | $ | 653    |  |  | $ | 4,329     | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |  |  |   |           | 
|Balance Sheet Information:                        |  |           |         |           |  |       |         |       |  |   |        |  |  |   |           | 
|Total assets                                      |  | $         | 452,156 |           |  | $     | 828,087 |       |  | $ | 21,397 |  |  | $ | 1,301,640 | 
|Deferred policy acquisition costs                 |  |           | 13,847  |           |  |       | 17,068  |       |  |   |       |  |  |   | 30,915    | 
|Policyholder liabilities and accruals             |  |           | 107,660 |           |  |       | 127,465 |       |  |   |       |  |  |   | 235,125   | 
|Other policyholder funds                          |  |           | 686     |           |  |       | 439     |       |  |   |       |  |  |   | 1,125     | 



---



##### 



|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|------------------------------------------------- |  | --------- | ------- | --------- |  | ----- | ------- | ----- |  | - | ------ | - |  | - | --------- | 
|                                                  |  | Life      |         |           |  |       |         |       |  |   |        |   |  |  
|2000                                              |  | Insurance |         | Annuities |  | Other |         | Total
|                                                  |  |           |         |           |  |       |         |      
|Net interest spread (a)                           |  | $         | 1,184   |           |  | $     | 2,462   |       |  | $ | 3,131  |   |  | $ | 6,777     | 
|Other revenues                                    |  |           | 9,558   |           |  |       | 10,599  |       |  |   | (39    | ) |  |   | 20,118    | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Net revenues                                      |  |           | 10,742  |           |  |       | 13,061  |       |  |   | 3,092  |   |  |   | 26,895    | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Policy benefits                                   |  |           | 1,727   |           |  |       | 60      |       |  |   |       |   |  |   | 1,787     | 
|Reinsurance premium ceded                         |  |           | 2,011   |           |  |       |        |       |  |   |       |   |  |   | 2,011     | 
|Amortization of deferred policy
acquisition costs |  |           | 1,181   |           |  |       | 2,788   |       |  |   |       |   |  |   | 3,969     | 
|Other non-interest expenses                       |  |           | 1,698   |           |  |       | 2,449   |       |  |   |       |   |  |   | 4,147     | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Total non-interest expenses                       |  |           | 6,617   |           |  |       | 5,297   |       |  |   |       |   |  |   | 11,914    | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Net earnings before Federal income
tax provision  |  |           | 4,125   |           |  |       | 7,764   |       |  |   | 3,092  |   |  |   | 14,981    | 
|Income tax expense                                |  |           | 1,288   |           |  |       | 2,464   |       |  |   | 1,082  |   |  |   | 4,834     | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Net earnings                                      |  | $         | 2,837   |           |  | $     | 5,300   |       |  | $ | 2,010  |   |  | $ | 10,147    | 
|                                                  |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Balance Sheet Information:                        |  |           |         |           |  |       |         |       |  |   |        |   |  |   |           | 
|Total assets                                      |  | $         | 493,569 |           |  | $     | 832,825 |       |  | $ | 19,001 |   |  | $ | 1,345,395 | 
|Deferred policy acquisition costs                 |  |           | 15,528  |           |  |       | 14,667  |       |  |   |       |   |  |   | 30,195    | 
|Policyholder liabilities and accruals             |  |           | 107,236 |           |  |       | 136,842 |       |  |   |       |   |  |   | 244,078   | 
|Other policyholder funds                          |  |           | 598     |           |  |       | 388     |       |  |   |       |   |  |   | 986       | 



|(a) |  | Management considers investment income net of interest credited to
policyholders account balances in evaluating results.
|--- |  | -------------------------------------------------------------------------------------------------------------------------



| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | The table below summarizes the Companys net revenues by product for 2002,
2001 and 2000:

|               |                               |   |        |       |      |   |        |        |   |   |        |        | 
|-------------- | ----------------------------- | - | ------ | ----- | ---- | - | ------ | ------ | - | - | ------ | ------ | 
|               |                               |   | 2002   |       | 2001 |   | 2000  
|               |                               |   |        |       |      |   |       
|Life Insurance |                               |   |        |       |      |   |        |        |   |   |        |       
|               | Variable life                 |   | $      | 8,919 |      |   | $      | 9,989  |   |   | $      | 10,393 | 
|               | Interest-sensitive whole life |   |        | 183   |      |   |        | 350    |   |   |        | 349    | 
|               |                               |   |        |       |      |   |        |        |   |   |        |       
|               | Total Life Insurance          |   |        | 9,102 |      |   |        | 10,339 |   |   |        | 10,742 | 
|               |                               |   |        |       |      |   |        |        |   |   |        |       
|Annuities      |                               |   |        |       |      |   |        |        |   |   |        |       
|               | Variable annuities            |   |        | 9,782 |      |   |        | 9,853  |   |   |        | 10,221 | 
|               | Interest-sensitive annuities  |   |        | (801  | )    |   |        | (5     | ) |   |        | 2,840  | 
|               |                               |   |        |       |      |   |        |        |   |   |        |       
|               | Total Annuities               |   |        | 8,981 |      |   |        | 9,848  |   |   |        | 13,061 | 
|               |                               |   |        |       |      |   |        |        |   |   |        |       
|Other          |                               |   | 695    |       |      |   | 1,004  |        |   |   | 3,092  |       
|               |                               |   |        |       |      |   |        |        |   |   |        |       
|Total          |                               | $ | 18,778 |       |      | $ | 21,191 |        |   | $ | 26,895 |       
|               |                               |   |        |       |      |   |        |        |   |   |        |       

******



---



##### 



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 27, 2003 |  | By:                                               | /s/ Matthew J. RiderMatthew J. Rider
Chief Financial Officer

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

|                                       |  |                                                                         |  |               
|-------------------------------------- |  | ----------------------------------------------------------------------- |  | --------------
|Signature                              |  | Title                                                                   |  | Date          
|                                      
|/s/ Barry G. SkolnickBarry G. Skolnick |  | Director, Senior Vice President,
and General Counsel*                   |  | March 27, 2003
|                                      
|/s/ Matthew J. RiderMatthew J. Rider   |  | Director, Senior Vice President,
Chief Financial Officer, and
Treasurer |  | March 27, 2003
|                                      
|*H. McIntyre Gardner                   |  | Director and Chairman of the Board                                      |  | March 27, 2003
|                                      
|*Nikos K. Kardassis                    |  | Director, President, and Chief
Executive Officer                        |  | March 27, 2003





---



##### 



|                        |  |                                                                                 |  |               
|----------------------- |  | ------------------------------------------------------------------------------- |  | --------------
|*Michael P. Cogswell    |  | Director and Senior Vice President                                              |  | March 27, 2003
|                       
|*Frederick J. C. Butler |  | Director                                                                        |  | March 27, 2003
|                       
|*Richard M. Drew        |  | Director                                                                        |  | March 27, 2003
|                       
|                       
|*Christopher J. Grady   |  | Director and Senior Vice President                                              |  | March 27, 2003
|                       
|*Robert L. Israeloff    |  | Director                                                                        |  | March 27, 2003
|                       
|*Joseph Justice         |  | Director, Vice President, and
Controller                                        |  | March 27, 2003
|                       
|*Robert A. King         |  | Director                                                                        |  | March 27, 2003
|                       
|*Irving M. Pollack      |  | Director                                                                        |  | March 27, 2003
|                       
|*Lori M. Salvo          |  | Director, Vice President,
Senior Counsel, Director of Compliance, and Secretary |  | March 27, 2003
|                       
|*Cynthia Kahn Sherman   |  | Director                                                                        |  | March 27, 2003

*Signing in his own capacity and as Attorney-in-Fact.





---



##### 



Certification of Chief Executive Officer

I, Nikos K. Kardassis, certify that:

1.     I have reviewed this annual report on Form 10-K of ML Life Insurance Company
of New York;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)     designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b)     evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and

c)     presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a)     all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b)     any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



| | /s/ NIKOS K. KARDASSIS
Nikos K. Kardassis
President and Chief Executive Officer
| | -------------------------------------------------------------------------------

Dated: March 27, 2003





---



##### 



Certification of Chief Financial Officer

I, Matthew J. Rider, certify that:

1.     I have reviewed this annual report on Form 10-K of ML Life Insurance Company
of New York;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)     designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b)     evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and

c)     presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a)     all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b)     any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



| | /s/ MATTHEW J. RIDER
Matthew J. Rider
Senior Vice President and Chief Financial Officer
| | ---------------------------------------------------------------------------------------

Dated: March 27, 2003





---



##### 



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 auditors                                                |  | 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 Michael P. Cogswell                                                                      |  | Incorporated by reference to Exhibit 24(b)
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 David M. Dunford                                                                         |  | Incorporated by reference to Exhibit 24(e)
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 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



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##### 



|      |  |                                                                                                                                                                          |  |                                                                                                                                                                              
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|24.5  |  | 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.
|24.6  |  | 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.   
|24.7  |  | 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.
|24.8  |  | 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.
|24.9  |  | Power of attorney of Gail R. Farkas                                                                                                                                      |  | Incorporated by reference to Exhibit 24(g)
to Post-Effective Amendment No. 5 to the
Registrants registration statement on
Form S-1, File No. 33-60288, filed March
26, 1996.
|24.10 |  | 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.                                 
|24.11 |  | Power of attorney of Matthew J. Rider                                                                                                                                    |  | Incorporated by reference to Exhibit 24.11
to Annual Report on Form 10-K, File Nos.
33-34562, 33-60288, and 333-48983,
filed April 2, 2001.                                  
|24.12 |  | 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.                                  
|24.13 |  | 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.          
|24.14 |  | 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.          
|24.15 |  | 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.          
|24.16 |  | 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.          
|99.1  |  | 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 99.1                                                                                                                                                                 
|99.2  |  | 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 99.2                                                                                                                                                                 

E-5