UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

                                   Form 10-K

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


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

For fiscal year ended December 31, 1998       Commission file number 33-47245
                                                                     33-65355
                                                                     033-65381
                                                                     033-35445
                                                                     033-24228


                  Allstate Life Insurance Company of New York
            (Exact name of registrant as specified in its charter)


       New York                                        36-2608394
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                      Identification No.)


                              One Allstate Drive
                                 P.O. Box 9095
                         Farmingville, New York  11738
              (Address of Principal executive offices)(Zip Code)

                                 516/451-5300
             (Registrant's telephone number, including area code)


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

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

              Yes         X                  No
                     ------------                  -----------

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

    As of December  31, 1998 there were 80,000  shares of common  capital  stock
outstanding, par value $25 per share all of which shares are held by ALIC.

<PAGE>

               ALLSTATE  LIFE  INSURANCE  COMPANY  OF NEW YORK
        (A wholly owned subsidiary of Allstate Life Insurance Company)

                  Annual Report for 1998 On Form 10-K

                          TABLE OF CONTENTS


                                                                PAGE
                                                                ----

PART I

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

PART II

ITEM 5.    Market for Registrant's Common Equity and
           Related Stockholder Matters.......................... 5
ITEM 6.    Selected Financial Data*.............................N/A
ITEM 7.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations.................. 6
ITEM 7A.   Quantitiative and Qualitative Disclosures About
           Market Risk..........................................16
ITEM 8.    Financial Statements and Supplementary Data..........16
ITEM 9.    Changes in and Disagreements with Accountants on 
           Accounting and Financial Disclosure..................16

PART III

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

PART IV

ITEM 14.  Exhibits, Financial Statement Schedules, and
          Reports on Form 8-K...................................17

Index to Financial Statement Schedules..........................18
Signatures......................................................19
Exhibit Index...................................................E-1

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



<PAGE>

                               PART I

ITEM 1.  BUSINESS

     Allstate Life Insurance Company of New York (hereinafter  "Allstate Life of
New York" or the "Company") was  incorporated  in 1967 as a stock life insurance
company under the laws of the State of New York and was known as "Financial Life
Insurance  Company" from 1967 to 1978.  From 1978 to 1984, the Company was known
as "PM Life  Insurance  Company."  Since 1984,  the Company has done business as
"Allstate  Life  Insurance  Company  of New York."  Allstate  Life of New York's
products,  individual  annuities and life  insurance,  have been approved by the
State of New York.

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

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

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

        Allstate  Life of New  York is  engaged  in a  business  that is  highly
competitive  because  of the large  number of stock and  mutual  life  insurance
companies and other  entities  competing in the sale of insurance and annuities.
There are  approximately  1,700  stock,  mutual and other  types of  insurers in
business in the United States.  A.M. Best Company  assigns  Allstate Life of New
York the rating of A+(g). Under Best's rating policy and procedure,  the Company
is  assigned  the  Best's  rating  of its  parent  company,  and is based on the
consolidated  performance  of the parent and its  subsidiary.  Standard & Poor's
Insurance  Rating  Services  assigns an AA+  (Excellent) to the Company's  claim
paying ability.  Moody's Investors Service assigns an Aa2 (Excellent)  financial
strength  rating to the  Company.  The  Company  shares the same  ratings of its
parent, ALIC.

     Although the federal  government  generally does not directly  regulate the
business of insurance,  federal initiatives often have an impact on the business
in a variety of ways.  Current and  proposed  measures  which may  significantly
affect the  Company's  insurance  business  relate to the  taxation of insurance
companies  and the tax  treatment  of  insurance  products  and the  removal  of
barriers  preventing  banks  from  engaging  in  the  securities  and  insurance
business.


                                       3
<PAGE>

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

ITEM 2.  PROPERTIES

     Allstate Life of New York occupies office space in  Farmingville,  New York
and Northbrook, Illinois.

ITEM 3.  LEGAL PROCEEDINGS

     The  Company  and  its  Board  of  Directors  know  of  no  material  legal
proceedings  pending to which the Company is a party or which  would  materially
affect the Company. The Company is involved in pending and threatened litigation
in the normal  course of its business in which  claims for monetary  damages are
asserted. Management, after consultation with legal counsel, does not anticipate
the ultimate  liability  arising from such pending or  threatened  litigation to
have a material effect on the position or results of operations of the Company.





                                       4
<PAGE>



                                    PART II


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

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



                                       5
<PAGE>


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

                                        
       The  following  discussion  highlights  significant  factors  influencing
results of  operations  and  changes in  financial  position  of  Allstate  Life
Insurance Company of New York (the "Company").  It should be read in conjunction
with the financial statements and related notes.

       The Company, a wholly owned subsidiary of Allstate Life Insurance Company
("ALIC"),  which is a wholly  owned  subsidiary  of Allstate  Insurance  Company
("AIC"), a wholly owned subsidiary of The Allstate Corporation  ("Corporation"),
markets a broad line of life insurance and savings  products in the State of New
York. Life insurance includes  traditional  products such as whole life and term
life  insurance,  as well as universal  life and other  interest-sensitive  life
products.   Savings  products  include  deferred  annuities,  such  as  variable
annuities and fixed rate single and flexible  premium  annuities,  and immediate
annuities such as structured settlement  annuities.  The Company distributes its
products   using  a  combination   of  Allstate   agents  (which   include  life
specialists), banks, independent insurance agents, brokers and direct marketing.
The Company has identified itself as a single segment entity.

<TABLE>
<CAPTION>

FINANCIAL HIGHLIGHTS
($ in thousands)
                                                        1998          1997          1996
                                                   -----------   -----------   -----------
<S>                                                <C>           <C>           <C>   

Statutory premiums and deposits                    $   266,950   $   208,090   $   235,634
                                                   ===========   ===========   ===========                                          
Investments                                        $ 2,216,909   $ 1,907,997   $ 1,636,654

Separate Account assets                                366,247       308,595       260,668
                                                   -----------   -----------   -----------

Investments, including Separate Account assets     $ 2,583,156   $ 2,216,592   $ 1,897,322
                                                   ===========   ===========   ===========                         

Premiums and contract charges                      $   119,052   $   118,963   $   117,106

Net investment income                                  134,413       124,887       112,862

Life and annuity contract benefits                     183,839       179,872       172,772

Operating costs and expenses                            31,100        28,667        23,386
                                                   -----------   -----------   -----------

Income from operations                                  38,526        35,311        33,810

Income tax expense on operations                        13,511        13,051        12,221
                                                   -----------   -----------   -----------

Operating income                                        25,015        22,260        21,589

Realized capital gains and losses, after-tax (1)         2,642           456        (1,028)
                                                   -----------   -----------   -----------

Net income                                         $    27,657   $    22,716   $    20,561
                                                   ===========   ===========   ===========
<FN>
(1) Net of the effect of related  amortization of deferred  acquisition costs in
    1998.
</FN>
</TABLE>

                                       6
<PAGE>


PREMIUMS, DEPOSITS, CONTRACT CHARGES AND CONTRACT BENEFITS

       Statutory  premiums  and deposits  include  premiums and deposits for all
products. In 1998, total statutory premiums and deposits increased $58.9 million
or 28.3%.  The increase was due primarily to increased  sales of fixed annuities
in the banking  distribution  channel.  Total  statutory  premiums  and deposits
decreased  $27.5  million,  or 11.7%,  in 1997 from 1996 as  increased  sales of
variable  annuities  and life  insurance  policies  were more  than  offset by a
reduction in deposits  relating to funding  agreements,  a type of fixed annuity
product. Funding agreements, first sold by the Company in 1996, are entered into
based on the Company's assessment of market opportunities.

       Under generally accepted accounting principles ("GAAP"), revenues exclude
deposits on most annuity  contracts  and premiums on  universal  life  insurance
policies,  and will  vary  with the mix of  business  sold  during  the  period.
Premiums and contract  charges  were $119.1  million in 1998  compared to $119.0
million in 1997.  In both  years  higher  universal  life and  variable  annuity
contract charges were partially  offset by lower sales of structured  settlement
annuities with life contingencies.  In 1998, higher traditional life, health and
credit premiums also contributed to the increase. The increase in universal life
contract  charges was due  primarily  to growth in  universal  life  policies in
force.  Variable annuity  contract  charges  increased due to growth in variable
annuity  deposits as well as strong  performance in the underlying  funds of the
Separate Accounts.

OPERATING INCOME

       Pretax net investment  income  increased 7.6% and 10.7% in 1998 and 1997,
respectively.  Higher investment  balances in each period more than offset lower
portfolio yields. Investments,  excluding Separate Account assets and unrealized
gains  on fixed  income  securities,  grew  14.3%  and  9.8% in 1998  and  1997,
respectively.  In the declining  interest rate  environments  of 1998,  1997 and
1996, funds from maturing  investments were generally reinvested at lower yields
resulting in reduced investment income.

       Operating  costs and expenses  increased  $2.4 million,  or 8.5% and $5.3
million, or 22.6%, for the years ended December 31, 1998 and 1997, respectively.
For the year ended  December 31, 1998, the increase in expenses is primarily due
to growth in  business.  For the year ended  December  31, 1997 the  increase is
related  to growth in  business  and the  recognition  of costs  related  to the
relocation  of the policy  administration  function,  offset by a  reduction  in
amortization of deferred  acquisition  costs due to revised  estimates of future
gross profits on interest-sensitive life products.

         Operating income increased 12.4% in 1998 and 3.1% in 1997. The increase
in 1998  resulted  from  favorable  mortality  margins  and  increased  contract
charges, primarily from variable annuities, partially offset by higher expenses.
The increase in 1997 is  primarily  due to favorable  mortality  experience  and
higher investment margins on the structured settlement annuity business.

REALIZED CAPITAL GAINS AND LOSSES

       Realized  capital  gains and losses  increased  in 1998 due  primarily to
higher levels of sales and  pre-payments  of fixed income  securities.  In 1997,
increased  realized capital gains on fixed income  securities and reduced losses
on other  investments were partially offset by increased  writedowns on mortgage
loans.  Year to year  fluctuations  in  realized  capital  gains are largely the
result  of the  timing  of  sales  decisions  reflecting  management's  view  of
individual securities and overall market conditions. 

                                       7
<PAGE>


INVESTMENTS

       The  composition  of the  investment  portfolio  at December  31, 1998 is
presented in the table below (see Notes 2 and 4 to the financial  statements for
investment accounting policies and additional information).
                                                             PERCENT
($ in thousands)                                             TO TOTAL
                                                             --------

Fixed income securities (1)                     $1,966,067    88.7%
Mortgage loans                                     145,095     6.6
Short-term                                          76,127     3.4
Policy loans                                        29,620     1.3
                                                ----------   -------

    Total                                       $2,216,909    100.0%
                                                ==========   =======


(1)Fixed income  securities are carried at fair value.  Amortized cost for these
   securities was $1,648,972 at December 31, 1998.

       Total  investments  increased to $2.22 billion at December 31, 1998, from
$1.91  billion at December 31, 1997.  The increase was  primarily due to amounts
invested from positive cash flows generated from operations and increases in the
market values of fixed income securities.

       Short-term investments increased,  in part, at December 31, 1998 by $10.0
million due to a change in accounting  treatment for collateral  received by the
securities  lending program and by approximately  $34 million in anticipation of
an inter-company settlement.

FIXED INCOME SECURITIES

       The  Company's  fixed  income  securities   portfolio  consists  of  U.S.
government bonds, privately-placed securities,  publicly traded corporate bonds,
mortgage-backed  securities,  asset-backed  securities and tax-exempt  municipal
bonds.  The Company  generally  holds its fixed income  securities  for the long
term, but has classified all of these  securities as available for sale to allow
maximum flexibility in portfolio  management.  At December 31, 1998,  unrealized
net capital gains on the fixed income  securities  portfolio were $317.1 million
compared  to $246.1  million  as of  December  31,  1997.  The  increase  in the
unrealized gain position is primarily attributable to lower interest rates.

                                       8
<PAGE>

       At December 31, 1998,  substantially  all of the  Company's  fixed income
securities portfolio was rated investment grade, which is defined by the Company
as a security having a National Association of Insurance  Commissioners ("NAIC")
rating of 1 or 2, a Moody's rating of Aaa, Aa, A or Baa, or a comparable Company
internal  rating.  The  quality mix of the  Company's  fixed  income  securities
portfolio at December 31, 1998 is presented below:

     NAIC
   RATINGS   MOODY'S EQUIVALENT DESCRIPTION   FAIR VALUE   PERCENT TO TOTAL
   -------   ------------------------------   ----------   ----------------

      1      Aaa/Aa/A                         $1,565,538         79.6%
      2      Baa                                 387,948         19.7
      3      Ba                                   10,617           .6
      4      B                                     1,964           .1
                                              ----------      --------
                                              $1,966,067        100.0%
                                              ==========      ========

       As of December 31, 1998, the fixed income securities  portfolio contained
$555.9 million of privately-placed  corporate obligations,  compared with $540.9
million at December 31, 1997.  The benefits of  privately-placed  securities  as
compared to public  securities are generally  higher yields,  improved cash flow
predictability  through  pro-rata sinking funds on many bonds, and a combination
of covenant and call protection  features  designed to better protect the holder
against  losses  resulting  from  credit  deterioration,  reinvestment  risk and
fluctuations  in interest  rates. A relative  disadvantage  of  privately-placed
securities as compared to public  securities is reduced  liquidity.  At December
31, 1998,  substantially  all of the  privately-placed  securities were rated as
investment  grade by either  the NAIC or the  Company's  internal  ratings.  The
Company  determines the fair value of  privately-placed  fixed income securities
based on  discounted  cash  flows  using  current  interest  rates  for  similar
securities.

       At  December  31,  1998 and 1997,  $305.1  million  and  $228.7  million,
respectively,  of  the  fixed  income  securities  portfolio  were  invested  in
mortgage-backed  securities  ("MBS").  At December 31, 1998, all of the MBS were
investment  grade  and  substantially  all have  underlying  collateral  that is
guaranteed by U.S. government entities, thus credit risk is minimal.

       MBS,  however,  are subject to  interest  rate risk as the  duration  and
ultimate  realized yield are affected by the rate of repayment of the underlying
mortgages.  The Company  attempts to limit  interest rate risk by purchasing MBS
where  cost  does  not  significantly  exceed  par  value,  and  with  repayment
protection  to provide a more certain cash flow to the Company.  At December 31,
1998,  the  amortized  cost of the MBS  portfolio  was  below  par value by $6.9
million and over 42% of the MBS portfolio  was invested in planned  amortization
class  bonds.  This type of MBS is purchased  to provide  additional  protection
against declining interest rates.

         The fixed income securities portfolio contained $34.5 million and $39.7
million of  asset-backed  securities  ("ABS")  at  December  31,  1998 and 1997,
respectively.  ABS are subject to credit and interest rate risk.  Credit risk is
mitigated by monitoring the performance of the collateral.  Approximately 50% of
all securities  are rated in the highest  rating  category by one or more credit
rating agencies. Interest rate risk is similar to the risk posed by MBS, however
to a lesser degree because of the nature of the underlying  assets.  At December
31, 1998,  the  amortized  cost of the ABS portfolio was below par value by $230
million.  Over 65% of the Company's ABS are invested in securitized  credit card
receivables.  The remainder of the portfolio is backed  primarily by securitized
home equity, manufactured housing, and auto loans.

       The Company closely  monitors its fixed income  securities  portfolio for
declines  in value  that are other  than  temporary.  Securities  are  placed on
non-accrual  status  when they are in  default or when the  receipt of  interest
payments is in doubt.

                                       9
<PAGE>

MORTGAGE LOANS

       The Company's $145.1 million investment in mortgage loans at December 31,
1998 is  comprised  primarily of loans  secured by first  mortgages on developed
commercial real estate.  Geographical and property type  diversification are key
considerations used to manage the Company's mortgage loan risk.

       The Company closely monitors its commercial  mortgage loan portfolio on a
loan-by-loan basis. Loans with an estimated  collateral value less than the loan
balance, as well as loans with other  characteristics  indicative of higher than
normal credit risk, are reviewed by financial and investment management at least
quarterly for purposes of establishing valuation allowances and placing loans on
non-accrual  status. The underlying  collateral values are based upon discounted
property cash flow  projections,  which are updated as  conditions  change or at
least annually.

SHORT-TERM INVESTMENTS

       The Company's short-term  investment portfolio was $76.1 million and $9.5
million  at  December  31,  1998 and 1997,  respectively.  The  Company  invests
available  cash balances  primarily in taxable  short-term  securities  having a
final  maturity  date or  redemption  date of one year or less.  The  short-term
investment portfolio  increased,  in part, at December 31, 1998 by $10.0 million
due to a change in the  accounting  treatment  for  collateral  received  by the
securities  lending program and by approximately  $34 million in anticipation of
an inter-company settlement.


SEPARATE ACCOUNTS

       Separate Account assets and liabilities increased 18.7% to $366.2 million
at December 31, 1998.  The increases  were  primarily  attributable  to sales of
flexible premium deferred  variable annuity  contracts and favorable  investment
performance of the Separate Accounts investment portfolios,  partially offset by
variable annuity surrenders and withdrawals.


MARKET RISK

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

       The  active  management  of  market  risk is  integral  to the  Company's
operations.  The Company may use the following approaches to manage its exposure
to market risk within defined  tolerance ranges: 1) rebalance its existing asset
or liability portfolios, 2) change the character of future investments purchased
or 3) use derivative  instruments to modify the market risk  characteristics  of
existing assets and  liabilities or assets  expected to be purchased.  Note 5 to
the  financial   statements   provides  a  more  detailed  discussion  of  these
instruments.

                                       10
<PAGE>

CORPORATE OVERSIGHT

       The Company  administers  and oversees  its  investment  risk  management
processes primarily through two oversight bodies: the Board of Directors and the
Credit and Risk Management  Committee ("CRMC") of the Corporation.  The Board of
Directors   provide   executive   oversight  of   investment   activities.   The
Corporation's  CRMC is a senior  management  committee  consisting  of the Chief
Investment Officer,  the Investment Risk Manager,  and other investment officers
who are responsible for the day-to-day management of market risk. The CRMC meets
at least monthly to provide  detailed  oversight of investment  risk,  including
market risk.

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

       The Company manages its exposure to market risk through asset  allocation
limits,  duration limits and, as  appropriate,  stress tests.  Asset  allocation
limits  place  restrictions  on the  aggregate  fair value which may be invested
within an asset class. The Company has duration limits on investment portfolios,
and,  as  appropriate,  on  individual  components  of these  portfolios.  These
duration limits place restrictions on the amount of interest rate risk which may
be taken.  Stress tests  measure  downside  risk to fair value and earnings over
longer time intervals and/or for adverse market scenarios.

       The day-to-day  management of market risk within defined tolerance ranges
occurs as portfolio  managers buy and sell within their respective markets based
upon the acceptable  boundaries  established by asset  allocation,  duration and
other limits, including but not limited to credit and liquidity.

INTEREST RATE RISK

       Interest  rate  risk is the risk that the  Company  will  incur  economic
losses due to adverse  changes in  interest  rates.  This risk  arises  from the
Company's  primary  activities,  as the  Company  invests  substantial  funds in
interest-sensitive assets and also has certain interest-sensitive liabilities.

       The  Company  manages  the  interest  rate risk  inherent  in its  assets
relative  to the  interest  rate risk  inherent in its  liabilities.  One of the
measures  the Company  uses to quantify  this  exposure  is  duration.  Duration
measures the  sensitivity of the fair value of assets and liabilities to changes
in interest rates. For example, if interest rates increase 1%, the fair value of
an  asset  with a  duration  of 5 years  is  expected  to  decrease  in value by
approximately  5%. At December 31, 1998,  the  difference  between the Company's
liability and asset duration was approximately  3.4 years,  which is larger than
the 2.8 gap reported for December 31, 1997. This duration gap indicates that the
fair value of the  Company's  liabilities  is more  sensitive  to interest  rate
movements than the fair value of its assets.

       The Company  seeks to invest  premiums and deposits to create future cash
flows that will fund  future  claims,  benefits  and  expenses,  and earn stable
margins across a wide variety of interest rate and economic scenarios.  In order
to achieve  this  objective  and limit its exposure to interest  rate risk,  the
Company  adheres to a philosophy  of managing the duration of assets and related
liabilities.  The Company uses financial futures to hedge the interest rate risk
related to anticipatory  purchases and sales of investments and product sales to
customers.

                                       11
<PAGE>
 
       To calculate  duration,  the Company  projects  asset and liability  cash
flows,  and discounts them to a net present value basis using a risk-free market
rate  adjusted  for  credit  quality,  sector  attributes,  liquidity  and other
specific  risks.  Duration is  calculated  by  revaluing  these cash flows at an
alternative  level of interest rates,  and determining the percentage  change in
fair  value from the base case.  The cash  flows used in the model  reflect  the
expected  maturity and repricing  characteristics  of the  Company's  derivative
financial instruments, all other financial instruments (as depicted in Note 5 to
the  financial  statements),  and certain  non-financial  instruments  including
interest-sensitive  annuity  liabilities.  The projections  include  assumptions
(based upon historical  market and Company specific  experience)  reflecting the
impact of changing  interest rates on the  prepayment,  lapse,  leverage  and/or
option  features of  instruments,  where  applicable.  Such  assumptions  relate
primarily to mortgage-backed  securities,  collateralized  mortgage obligations,
municipal housing bonds, callable municipal and corporate obligations, and fixed
rate single and flexible premium deferred annuities.

       Based  upon the  information  and  assumptions  the  Company  uses in its
duration  calculation  and  interest  rates in  effect  at  December  31,  1998,
management  estimates  that a 100 basis point  immediate,  parallel  increase in
interest  rates ("rate  shock") would  decrease the net fair value of its assets
and liabilities identified above by approximately $3.8 million. The selection of
a 100 basis point  immediate  rate shock should not be construed as a prediction
by the Company's  management of future market events;  but rather, to illustrate
the potential impact of such an event.

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

EQUITY PRICE RISK

       Equity price risk is the risk that the Company will incur economic losses
due to adverse  changes in equity prices.  At December 31, 1998, the Company had
variable annuity funds with balances totaling $366.2 million.  The Company earns
mortality and expense fees as a percentage  of fund balance.  In the event of an
immediate decline of 10% in the fund balances due to equity market declines, the
Company would earn approximately $500 thousand less in annualized fee income.


LIQUIDITY AND CAPITAL RESOURCES

       The Company's  principal  sources of funds are  collections of principal,
interest and dividends from the investment portfolio and the receipt of premiums
and deposits.  The primary uses of these funds are to purchase  investments  and
pay policyholder claims, benefits, contract maturities,  contract surrenders and
withdrawals, and operating costs.

       The maturity  structure of the Company's fixed income  securities,  which
represent  88.7% of the  Company's  total  investments,  is  managed to meet the
anticipated cash flow requirements of the underlying  liabilities.  A portion of
the Company's  diversified  product portfolio,  primarily fixed deferred annuity
and universal life insurance products, is subject to discretionary surrender and
withdrawal by  contractholders.  Management believes its assets are sufficiently
liquid to meet future obligations to its life and annuity  contractholders under
various interest rate scenarios.

                                       12
<PAGE>

       At December  31,  1998,  the Moody's and  Standard  and Poor's  financial
strength ratings for the Company were Aa2 and AA+, respectively.

       The  NAIC  has  a  standard  for  assessing  the  solvency  of  insurance
companies,  which is referred to as risk-based capital ("RBC").  The requirement
consists  of a  formula  for  determining  each  insurer's  RBC and a model  law
specifying  regulatory actions if an insurer's RBC falls below specified levels.
The RBC formula for life insurance companies  establishes  capital  requirements
relating to insurance,  business, asset and interest rate risks. At December 31,
1998,  RBC for the Company was  significantly  above a level that would  require
regulatory action.

YEAR 2000

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

      The Corporation is heavily dependent upon complex computer systems for all
phases of its operations,  including  customer  service,  insurance  processing,
underwriting,  loss reserving,  investments and other enterprise systems.  Since
many of the Corporation's  older computer  software programs  recognize only the
last two  digits  of the year in any date,  some  software  may fail to  operate
properly  in or after  the  year  1999,  if the  software  is not  reprogrammed,
remediated,  or replaced,  ("Year 2000").  Also,  non-IT often contains embedded
hardware  or  software  that  may  have a Year  2000  sensitive  component.  The
Corporation  believes that many of its  counterparties  and suppliers  also have
Year 2000 issues and non-IT issues which could affect the Corporation.

      In 1995, the Corporation  commenced a plan consisting of four phases which
are intended to mitigate  and/or prevent the adverse effects of Year 2000 issues
on its systems:  1) inventory and assessment of affected  systems and equipment,
2) remediation and compliance of systems and equipment  through  strategies that
include  the  replacement  or  enhancement  of  existing  systems,  upgrades  to
operating systems already covered by maintenance agreements and modifications to
existing  systems to make them Year 2000 compliant,  3) testing of systems using
clock-forward  testing  for both  current  and future  dates and for dates which
trigger  specific  processing,  and 4)  contingency  planning which will address
possible   adverse   scenarios  and  the  potential   financial  impact  to  the
Corporation's results of operations, liquidity or financial position.

      The  Corporation  believes  that  the  first  three  steps  of this  plan,
assessment,  remediation and testing,  including  clock-forward testing which is
being performed on the Corporation's systems and non-IT, are mostly complete for
the Corporation's critical systems. In April 1998, the Corporation announced its
main premium application system,  ALERT, which manages more than 20 million auto
and homeowners policies,  is Year 2000 compliant.  The Corporation is relying on
other   remediation   techniques   for  its  midrange   and  personal   computer
environments, and certain mainframe applications.

      Certain  investment  processing  systems,  midrange computers and personal
computer  environments  are planned to be remediated by the middle of 1999,  and
some systems and non-IT related to discontinued or non-critical functions of the
Corporation are planned to be abandoned by the end of 1999.

                                       13
<PAGE>

      The  Corporation is currently in the process of identifying  key processes
and developing  contingency plans in the event that the systems supporting these
processes are not Year 2000  compliant at the end of 1999.  Management  believes
these contingency  plans should be completed by mid-1999.  Until these plans are
complete,  management is unable to determine an estimate of the most  reasonably
possible worst case scenario due to issues relating to the Year 2000.

      In addition,  the Corporation is actively  working with its major external
counterparties  and  suppliers  to  assess  their  compliance  efforts  and  the
Corporation's  exposure to both their Year 2000 issues and non-IT  issues.  This
assessment  has  included  the  solicitation  of  external   counterparties  and
suppliers,  evaluating responses received and testing third party interfaces and
interactions to determine compliance.  Currently,  the Corporation has solicited
approximately  1,500, and has received  responses from  approximately 75% of its
counterparties  and  suppliers.  The  Corporation  will  continue its efforts to
solicit  responses on Year 2000 compliance  from these parties.  The majority of
these responses have stated that the  counterparties  and suppliers believe that
they will be Year 2000  compliant  and that no  transactions  will be  affected.
However,  some key vendors have not provided affirmative  responses to date. The
Corporation has also decided to test certain interfaces and interactions to gain
additional assurance on third party compliance. If key vendors are determined to
be  unable to meet the Year  2000  requirement,  the  Corporation  is  preparing
contingency  plans  that will  allow the  Corporation  to  continue  to sell its
products and to service its customers.  Management  believes  these  contingency
plans should be completed by mid-1999.  The Corporation  currently does not have
sufficient  information to determine whether or not its external  counterparties
and suppliers will be Year 2000 ready.

     The  Corporation  is  currently  assessing  the  level  of Year  2000  risk
associated with certain personal lines policies that have been issued.  To date,
no  changes  have  been  made in the  coverages  provided  by the  Corporation's
personal auto and homeowners lines policies to specifically exclude coverage for
Year 2000 related claims.  This does not mean that all losses, or any particular
type of loss,  that might be related to Year 2000 will be covered.  Rather,  all
claims will  continue  to be  evaluated  on a  case-by-case  basis to  determine
whether  coverage is available  for a  particular  loss in  accordance  with the
applicable terms and conditions of the policy in force.

      The Corporation also has investments which have been publicly or privately
placed.  The  Corporation  may be exposed to the risk that the  issuers of these
investments will be adversely impacted by Year 2000 issues. The Company assesses
the impact which Year 2000 issues have on the Corporation's  investments as part
of due diligence for proposed new investments,  and in its ongoing review of all
current portfolio  holdings.  Any recommended actions with respect to individual
investments  are determined by taking into account the potential  impact of Year
2000 on the issuer.  Contingency plans are being created for any securities held
whose issuer is determined to not be Year 2000 compliant.

      The  Corporation  presently  believes  that it will  resolve the Year 2000
issue in a timely  manner.  Year 2000 costs are expensed as incurred,  therefore
the  majority  of  expenses  related to this  project  have been  incurred as of
December 31, 1998. The Corporation  estimates that a total of approximately $125
million in expenses will be incurred  between the years of 1995 and 2000.  These
amounts  include  costs  directly  related to fixing Year 2000  issues,  such as
modifying software and hiring Year 2000 solution  providers.  These amounts also
include costs to replace certain non-compliant systems which would not have been
otherwise replaced.  A portion of these costs will be incurred by the Company on
a pro rata  basis  of  usage of the  computer-related  systems  and  non-IT,  as
compared  to the usage of all  entities  which  share  these  services  with the
Corporation.  These  amounts  are not  expected to be material to the results of
operations of the Company.

                                       14
<PAGE>

PENDING ACCOUNTING STANDARDS

      In December  1997,  the Accounting  Standards  Executive  Committee of the
American Institute of Certified Public Accountants ("AICPA") issued Statement of
Position  ("SOP")  97-3,  "Accounting  by Insurance  and Other  Enterprises  for
Insurance-related  Assessments."  The SOP is required to be adopted in 1999. The
SOP  provides   guidance   concerning   when  to   recognize  a  liability   for
insurance-related  assessments  and how those  liabilities  should be  measured.
Specifically,  insurance-related assessments should be recognized as liabilities
when all of the  following  criteria  have been met: 1) an  assessment  has been
imposed or it is  probable  that an  assessment  will be  imposed,  2) the event
obligating an entity to pay an assessment  has occurred and 3) the amount of the
assessment can be reasonably estimated.  The Company is currently evaluating the
effects of this SOP on its accounting for insurance-related assessments. Certain
information required for compliance is not currently available and therefore the
Company is studying  alternatives  for  estimating  the  accrual.  In  addition,
industry  groups are working to improve the information  available.  Adoption of
this  standard is not  expected to be material to the results of  operations  or
financial position of the Company.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities."  SFAS  133
replaces  existing  pronouncements  and  practices  with  a  single,  integrated
accounting  framework for derivatives and hedging  activities.  The requirements
are  effective  for  fiscal  years  beginning  after  June  15,  1999.   Earlier
application  is  encouraged  but is only  permitted  as of the  beginning of any
fiscal quarter after issuance.  This statement  requires that all derivatives be
recognized on the balance sheet at fair value.  Derivatives  that are not hedges
must be adjusted to fair value  through  income.  If the  derivative is a hedge,
depending on the nature of the hedge,  changes in the fair value of  derivatives
will  either be offset  against  the change in fair value of the hedged  assets,
liabilities,  or firm  commitments  through  earnings  or  recognized  in  other
comprehensive   income  until  the  hedged  item  is   recognized  in  earnings.
Additionally, the change in fair value of a derivative which is not effective as
a hedge will be immediately recognized in earnings. The Company expects to adopt
SFAS No. 133 as of January 1, 2000.  Based on  existing  interpretations  of the
requirements  of SFAS No.  133,  the impact of  adoption  is not  expected to be
material to the results of operations or financial position of the Company.


FORWARD-LOOKING STATEMENTS

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







                                       15
<PAGE>


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The pertinent  provisions of  Management's  Discussion and Analysis of Financial
Condition and Results of Operations on pages 10 to 12 are herein incorporated by
reference.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Statements filed with this Report.

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

No disclosure required by this Item.


                                       16
<PAGE>

                                         PART IV

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

     (a) DOCUMENTS FILED AS PART OF THIS REPORT

     1. FINANCIAL STATEMENTS. The Registrants financial statements, for the year
ended December 31, 1998, together with the Report of Independent Accountants are
set forth on pages F-1 - F-21 of this report.

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

     Schedule IV - Reinsurance page F-22

     Schedule V - Valuation and Qualifying Accounts page F-23

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

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

     (b) REPORTS ON FORM 8-K

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

     (c) EXHIBITS

Exhibit No.                Description

3(i)               Restated Certificate of Incorporation, as amended, of 
                   Allstate Life Insurance Company of New York (filed herewith)

3(ii)              Amended By-laws of Allstate Life Insurance Company of New 
                   York (filed herewith)

27                 Financial Data Schedule (filed herewith)



                                       17
<PAGE>



                             Financial Statements

                                     Index
                                     -----

                                                                            Page
                                                                            ----

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

Financial Statements:

         Statements of Financial Position,
                  December 31, 1998 and 1997...............................F-2


         Statements of Operations and Comprehensive Income for the Years Ended
                  December 31, 1998, 1997 and 1996.........................F-3

         Statements of Shareholder's Equity for the Years Ended
                  December 31, 1998, 1997 and 1996.........................F-4

         Statements of Cash Flows for the Years Ended
                  December 31, 1998, 1997 and 1996.........................F-5

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

         Schedule IV - Reinsurance for the Years Ended
                  December 31, 1998, 1997 and 1996.........................F-22

         Schedule V - Valuation and Qualifying Accounts
                  December 31, 1998, 1997 and 1996.........................F-23





                                       18
<PAGE>











INDEPENDENT AUDITORS' REPORT


TO THE BOARD OF DIRECTORS AND SHAREHOLDER OF ALLSTATE LIFE INSURANCE  COMPANY OF
NEW YORK:

We have audited the  accompanying  Statements of Financial  Position of Allstate
Life Insurance Company of New York (the "Company",  an affiliate of The Allstate
Corporation)  as of December 31, 1998 and 1997,  and the related  Statements  of
Operations and  Comprehensive  Income,  Shareholder's  Equity and Cash Flows for
each of the three years in the period ended  December 31, 1998.  Our audits also
included  Schedule IV -  Reinsurance  and  Schedule V Valuation  and  Qualifying
Accounts.  These financial  statements and financial statement schedules are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits.

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

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position of the  Company as of December  31, 1998 and
1997, and the results of its operations and its cash flows for each of the three
years in the  period  ended  December  31,  1998 in  conformity  with  generally
accepted accounting principles. Also, in our opinion, Schedule IV - Reinsurance,
and Schedule V - Valuation and Qualifying Accounts,  when considered in relation
to the basic  financial  statements  taken as a whole,  present  fairly,  in all
material respects, the information set forth therein.


/s/ Deloitte & Touche LLP

Chicago, Illinois
February 19, 1999



                                      F-1
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                        STATEMENTS OF FINANCIAL POSITION



                                                              December 31,
                                                              ------------
($ in thousands)                                            1998        1997
                                                            ----        ----

ASSETS
Investments
    Fixed income securities, at fair value
       (amortized cost $1,648,972 and $1,510,110)        $1,966,067   $1,756,257
    Mortgage loans                                          145,095      114,627
    Short-term                                               76,127        9,513
    Policy loans                                             29,620       27,600
                                                         ----------   ----------
    Total investments                                     2,216,909    1,907,997

Deferred acquisition costs                                   87,830       71,946
Accrued investment income                                    22,685       21,725
Reinsurance recoverables                                      2,210        1,726
Cash                                                          3,117          393
Other assets                                                  9,887        6,167
Separate Accounts                                           366,247      308,595
                                                         ----------   ----------
        TOTAL ASSETS                                     $2,708,885   $2,318,549
                                                         ==========   ==========

LIABILITIES
Reserve for life-contingent contract benefits            $1,208,104   $1,084,409
Contractholder funds                                        703,264      607,474
Current income taxes payable                                 14,029        1,419
Deferred income taxes                                        25,449       16,990
Other liabilities and accrued expenses                       23,463       10,985
Payable to affiliates, net                                   38,835        5,267
Separate Accounts                                           366,247      308,595
                                                         ----------   ----------
        TOTAL LIABILITIES                                 2,379,391    2,035,139
                                                         ----------   ----------

COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 10)

SHAREHOLDER'S EQUITY
Common stock, $25 par value, 80,000 shares
     authorized, issued and outstanding                       2,000        2,000
Additional capital paid-in                                   45,787       45,787
Retained income                                             198,801      171,144

Accumulated other comprehensive income:
   Unrealized net capital gains                              82,906       64,479
                                                         ----------   ----------
        Total accumulated other comprehensive income         82,906       64,479
                                                         ----------   ----------
        TOTAL SHAREHOLDER'S EQUITY                          329,494      283,410
                                                         ----------   ----------
        TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY       $2,708,885   $2,318,549
                                                         ==========   ==========

See notes to financial statements.

                                      F-2
<PAGE>

<TABLE>
<CAPTION>


                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME



                                                           Year Ended December 31,
                                                           -----------------------
($ in thousands)                                        1998         1997         1996
                                                        ----         ----         ----
<S>                                                    <C>        <C>         <C>    

REVENUES
Premiums and contract charges (net of reinsurance
    ceded of $3,204, $3,087 and $2,273)               $ 119,052   $ 118,963   $ 117,106
Net investment income                                   134,413     124,887     112,862
Realized capital gains and losses                         4,697         701      (1,581)
                                                      ---------   ---------   ---------
                                                        258,162     244,551     228,387
                                                      ---------   ---------   ---------
COSTS AND EXPENSES
Contract benefits (net of reinsurance recoveries
    of $997, $1,985 and $2,827)                         183,839     179,872     172,772
Amortization of deferred acquisition costs                7,029       5,023       6,512
Operating costs and expenses                             24,703      23,644      16,874
                                                      ---------   ---------   ---------
                                                        215,571     208,539     196,158
                                                      ---------   ---------   ---------

INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE         42,591      36,012      32,229
Income tax expense                                       14,934      13,296      11,668
                                                      ---------   ---------   ---------

NET INCOME                                               27,657      22,716      20,561
                                                      ---------   ---------   ---------

OTHER COMPREHENSIVE INCOME
  Change in unrealized net capital gains and losses      18,427      27,627     (37,561)
                                                      ---------   ---------   ---------

COMPREHENSIVE INCOME                                  $  46,084   $  50,343   $ (17,000)
                                                      =========   =========   =========



<FN>

See notes to financial statements.
</FN>
</TABLE>

                                      F-3
<PAGE>
 

<TABLE>
<CAPTION>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                       STATEMENTS OF SHAREHOLDER'S EQUITY



                                                             December 31,
                                                             ------------
($ in thousands)                                       1998       1997        1996
                                                       ----       ----        ----
<S>                                                 <C>         <C>         <C>    

COMMON STOCK                                        $   2,000   $   2,000   $   2,000
                                                    ---------   ---------   ---------

ADDITIONAL CAPITAL PAID-IN                             45,787      45,787      45,787
                                                    ---------   ---------   ---------

RETAINED INCOME
Balance, beginning of year                            171,144     148,428     127,867
Net income                                             27,657      22,716      20,561
                                                    ---------   ---------   ---------
Balance, end of year                                  198,801     171,144     148,428
                                                    ---------   ---------   ---------

ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of year                             64,479      36,852      74,413
Change in unrealized net capital gains and losses      18,427      27,627     (37,561)
                                                    ---------   ---------   ---------
Balance, end of year                                   82,906      64,479      36,852
                                                    ---------   ---------   ---------

     Total shareholder's equity                     $ 329,494   $ 283,410   $ 233,067
                                                    =========   =========   =========

<FN>

See notes to financial statements.
</FN>
</TABLE>

                                      F-4
<PAGE>

<TABLE>
<CAPTION>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                            STATEMENTS OF CASH FLOWS


                                                        Year Ended December 31,
                                                        -----------------------
($ in thousands)                                    1998         1997         1996
                                                    ----         ----         ----
<S>                                               <C>          <C>          <C>    

CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                        $  27,657    $  22,716    $  20,561
Adjustments to reconcile net income to net
  cash provided by operating activities
   Amortization and other non-cash items            (34,890)     (31,112)     (26,172)
   Realized capital gains and losses                 (4,697)        (701)       1,581
   Interest credited to contractholder funds         41,200       31,667       25,817
   Changes in:
      Life-contingent contract benefits
       and contractholder funds                      53,343       68,114       75,217
      Deferred acquisition costs                    (16,693)     (10,781)      (6,859)
      Accrued investment income                        (960)      (1,404)      (1,493)
      Income taxes payable                           13,865         (158)       1,986
      Other operating assets and liabilities        (15,014)       9,949       (5,963)
                                                  ---------    ---------    ---------
      Net cash provided by operating activities      63,811       88,290       84,675
                                                  ---------    ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of fixed income securities       65,281       15,723       28,454
Investment collections
    Fixed income securities                         159,648      120,061       72,751
    Mortgage loans                                    5,855        5,365       12,508
Investment purchases
   Fixed income securities                         (292,444)    (236,984)    (236,252)
   Mortgage loans                                   (24,252)     (35,200)     (10,325)
Change in short-term investments, net               (55,846)      16,342      (18,598)
Change in policy loans, net                          (2,020)      (2,241)      (2,574)
                                                  ---------    ---------    ---------
       Net cash used in investing activities       (143,778)    (116,934)    (154,036)
                                                  ---------    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Contractholder fund deposits                        137,473       79,384      115,420
Contractholder fund withdrawals                     (54,782)     (51,374)     (46,504)
                                                  ---------    ---------    ---------
      Net cash provided by financing activities      82,691       28,010       68,916
                                                  ---------    ---------    ---------

NET INCREASE (DECREASE) IN CASH                       2,724         (634)        (445)
CASH AT BEGINNING OF YEAR                               393        1,027        1,472
                                                  ---------    ---------    ---------
CASH AT END OF YEAR                               $   3,117    $     393    $   1,027
                                                  =========    =========    =========


<FN>

See notes to financial statements.
</FN>
</TABLE>

                                      F-5
<PAGE>
 
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)


1.    GENERAL

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

To conform  with the 1998  presentation,  certain  amounts  in the prior  years'
financial statements and notes have been reclassified.

NATURE OF OPERATIONS
The Company  markets a broad line of life insurance and savings  products in the
State of New York. Life insurance  includes  traditional  products such as whole
life  and  term  life   insurance,   as  well  as   universal   life  and  other
interest-sensitive  life products.  Savings products include deferred annuities,
such as variable annuities and fixed rate single and flexible premium annuities,
and immediate  annuities such as structured  settlement  annuities.  The Company
distributes its products using a combination of Allstate  agents,  which include
life specialists as well as banks,  independent  insurance  agents,  brokers and
direct marketing.

Structured  settlement  annuity contracts issued by the Company are long-term in
nature and involve fixed guarantees relating to the amount and timing of benefit
payments.  Annuity  contracts and life insurance  policies issued by the Company
are subject to  discretionary  withdrawal or surrender by customers,  subject to
applicable  surrender  charges.  In low interest rate  environments,  funds from
maturing   investments,   particularly  those  supporting  long-term  structured
settlement  annuity  obligations,  may  be  reinvested  at  substantially  lower
interest  rates  than  those  which  prevailed  when the funds  were  previously
invested.

The  Company  monitors  economic  and  regulatory  developments  which  have the
potential to impact its  business.  There  continues to be proposed  federal and
state  regulation  and  legislation  that, if passed,  would allow banks greater
participation  in the  securities  and insurance  businesses.  Such events would
present an increased level of competition  for sales of the Company's  products.
Furthermore,  the market for  deferred  annuities  and  interest-sensitive  life
insurance is enhanced by the tax  incentives  available  under  current law. Any
legislative  changes  which lessen  these  incentives  are likely to  negatively
impact the demand for these products.

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

Although the Company currently  benefits from agreements with financial services
entities  who market and  distribute  its  products,  change in control of these
non-affliliated  entities  with which the  Company  has  alliances  could have a
detrimental effect on the Company's sales.



                                      F-6
<PAGE>


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Mortgage loans are carried at outstanding  principal balance, net of unamortized
premium  or  discount  and  valuation   allowances.   Valuation  allowances  are
established  for impaired loans when it is probable that  contractual  principal
and interest  will not be collected.  Valuation  allowances  for impaired  loans
reduce the  carrying  value to the fair value of the  collateral  or the present
value of the loan's  expected  future  repayment  cash flows  discounted  at the
loan's  original  effective  interest  rate.  Valuation  allowances on loans not
considered  to be  impaired  are  established  based  on  consideration  of  the
underlying collateral,  borrower financial strength, current and expected market
conditions, and other factors.

Short-term  investments are carried at cost or amortized cost which approximates
fair value,  and includes  collateral  received in  connection  with  securities
lending activities. Policy loans are carried at the unpaid principal balances.

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

DERIVATIVE FINANCIAL INSTRUMENTS
The  Company   utilizes  futures   contracts  which  are  derivative   financial
instruments.   When  futures  contracts  meet  specific  criteria  they  may  be
designated  as  accounting  hedges and  accounted  for on either a fair value or
deferral  basis,  depending upon the nature of the hedge strategy and the method
used to account for the hedged  item.  Derivatives  that are not  designated  as
accounting hedges are accounted for on a fair value basis.

If,  subsequent  to entering  into a hedge  transaction,  the  futures  contract
becomes  ineffective  (including if the the occurrence of a hedged  anticipatory
transaction  is no longer  probable),  the  Company  terminates  the  derivative
position.  Gains and  losses on these  terminations  are  reported  in  realized
capital  gains  and  losses in the  period  they  occur.  The  Company  may also
terminate  derivatives as a result of other events or  circumstances.  Gains and
losses  on  these  terminations  are  either  deferred  and  amortized  over the
remaining life of either the hedge or the hedged item,  whichever is shorter, or
are reported in  shareholder's  equity,  consistent  with the accounting for the
hedged item.  Futures  contracts must reduce the primary market risk exposure on
an enterprise or transaction  basis in conjunction  with the hedge strategy;  be
designated  as a  hedge  at the  inception  of the  transaction;  and be  highly
correlated  with the fair value of, or  interest  income or  expense  associated
with, the hedged item at inception and throughout the hedge period.

DEFERRAL  ACCOUNTING  Under  deferral  accounting,  gains and  losses on futures
contracts are deferred on the statement of financial  position and recognized in
earnings in conjunction  with earnings on the hedged item. The Company  accounts
for interest  rate futures  contracts as hedges using  deferral  accounting  for
anticipatory  investment  purchases  and sales  when the  criteria  for  futures
(discussed  above)  are  met.  In  addition,  anticipated  transactions  must be
probable  of  occurrence  and  their  significant   terms  and   characteristics
identified.

                                      F-7
<PAGE>

Changes in fair values of these types of derivatives  are initially  deferred as
other liabilities and accrued expenses. Once the anticipated transaction occurs,
the deferred gains or losses are considered  part of the cost basis of the asset
and reported net of tax in shareholder's  equity or recognized as a gain or loss
from  disposition of the asset,  as  appropriate.  The Company  reports  initial
margin deposits on futures in short-term investments.  Fees and commissions paid
on these derivatives are also deferred as an adjustment to the carrying value of
the hedged item.

RECOGNITION OF PREMIUM REVENUES AND CONTRACT CHARGES
Premiums for traditional  life insurance and certain  life-contingent  annuities
are recognized as revenue when due. Accident and disability  premiums are earned
on a pro rata basis over the policy  period.  Revenues  on  universal  life-type
insurance  policies  are  comprised  of  contract  charges  and  fees,  and  are
recognized when assessed against the policyholder  account balance.  Revenues on
investment   contracts   include   contract   charges  and  fees  for   contract
administration and surrenders. These revenues are recognized when levied against
the  contract  balance.  Gross  premium in excess of the net  premium on limited
payment contracts are deferred and recognized over the contract period.

REINSURANCE
The Company has reinsurance  agreements  whereby  certain  premiums and contract
benefits are ceded and reflected net of such  reinsurance  in the  statements of
operations and  comprehensive  income.  Reinsurance  recoverable and the related
reserves for  life-contingent  contract  benefits and  contractholder  funds are
reported  separately  in the  statements  of  financial  position.  The  Company
continues to have primary liability as the direct insurer for risks reinsured.

DEFERRED ACQUISITION COSTS
Certain  costs of  acquiring  life and  annuity  business,  principally  agents'
remuneration,   premium  taxes,  certain  underwriting  costs  and  direct  mail
solicitation expenses are deferred and amortized to income. For traditional life
insurance,  limited  payment  contracts and accident and  disability  insurance,
these  costs are  amortized  in  proportion  to the  estimated  revenues on such
business.  For universal life-type policies and investment contracts,  the costs
are  amortized in relation to the present  value of estimated  gross  profits on
such business.  Changes in the amount or timing of estimated  gross profits will
result in  adjustments  in the cumulative  amortization  of these costs.  To the
extent that  unrealized  gains or losses on fixed income  securities  carried at
fair value would result in an adjustment of deferred acquisition costs had those
gains or  losses  actually  been  realized,  the  related  unamortized  deferred
acquisition  costs are recorded as a reduction of the unrealized gains or losses
included in shareholder's equity.

INCOME TAXES
The income tax provision is calculated  under the liability method and presented
net of  reinsurance.  Deferred tax assets and  liabilities are recorded based on
the  difference  between  the  financial  statement  and tax bases of assets and
liabilities  at the  enacted tax rates.  The  principal  assets and  liabilities
giving rise to such differences are insurance reserves and deferred  acquisition
costs. Deferred income taxes also arise from unrealized capital gains and losses
on fixed income securities carried at fair value.

SEPARATE ACCOUNTS
The Company issues flexible premium deferred variable annuities,  the assets and
liabilities of which are legally  segregated  and reflected in the  accompanying
statements  of  financial  position as assets and  liabilities  of the  Separate
Accounts.  The Company's Separate Accounts consist of: Allstate Life of New York
Variable Annuity Account,  Allstate Life of New York Variable Annuity Account II
and Allstate Life of New York Separate Account A. Each of the Separate  Accounts
are  unit  investment   trusts  registered  with  the  Securities  and  Exchange
Commission.

                                      F-8
<PAGE>

Assets of the Separate Accounts are carried at fair value. Investment income and
realized  capital gains and losses of the Separate  Accounts  accrue directly to
the contractholders and, therefore, are not included in the Company's statements
of  operations  and  comprehensive  income.  Revenues  to the  Company  from the
Separate Accounts consist of contract maintenance fees,  administration fees and
mortality and expense risk charges.

RESERVES FOR LIFE-CONTINGENT CONTRACT BENEFITS
The reserve for life-contingent  contract benefits, which relates to traditional
life insurance,  group retirement annuities and structured  settlement annuities
with  life  contingencies,  disability  insurance  and  accident  insurance,  is
computed on the basis of assumptions as to future investment yields,  mortality,
morbidity,  terminations and expenses. These assumptions,  which for traditional
life  insurance  are  applied  using  the  net  level  premium  method,  include
provisions for adverse deviation and generally vary by such  characteristics  as
type of coverage,  year of issue and policy  duration.  Reserve  interest  rates
ranged from 4.0% to 11.0% during 1998.  To the extent that  unrealized  gains on
fixed income  securities  would result in a premium  deficiency  had those gains
actually  been  realized,  the  related  increase  in  reserves is recorded as a
reduction of the unrealized gains included in shareholder's equity.

CONTRACTHOLDER FUNDS
Contractholder funds arise from the issuance of individual or group policies and
contracts that include an investment  component,  including most fixed annuities
and universal life policies.  Payments received are recorded as interest-bearing
liabilities.  Contractholder  funds are equal to deposits  received and interest
credited  to the  benefit  of the  contractholder  less  withdrawals,  mortality
charges and  administrative  expenses.  During 1998,  credited interest rates on
contractholder  funds ranged from 3.46% to 11.00% for those contracts with fixed
interest rates and from 3.50% to 7.75% for those with flexible rates.

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
Commitments to extend  mortgage loans have only  off-balance-sheet  risk because
their  contractual  amounts are not  recorded  in the  Company's  statements  of
financial position.

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

NEW ACCOUNTING STANDARDS
In 1998,  the  Company  adopted  Statement  of  Financial  Accounting  Standards
("SFAS") No. 125,  "Accounting  for Transfers and Servicing of Financial  Assets
and  Extinguishment of Liabilities" under the guidance of SFAS No. 127 "Deferral
of the Effective  Date of Certain  Provisions  of FASB  Statement No. 125". As a
result,   the  Company  has  recorded  an  asset  and  corresponding   liability
representing the collateral received in connection with the Company's securities
lending program.

In 1998, the Company  adopted SFAS No. 130,  "Reporting  Comprehensive  Income."
Comprehensive income is a measurement of certain changes in shareholder's equity
that result from  transactions and other economic events other than transactions
with shareholders. For the Company, these consist of changes in unrealized gains
and losses on the investment portfolio (See Note 9).

In 1998,  the Company  adopted SFAS No. 131,  "Disclosures  about Segments of an
Enterprise  and  Related  Information."  SFAS 131  redefines  how  segments  are
determined  and  requires  additional  segment  disclosures  for both annual and
interim  financial  reporting.  The  Company has  identified  itself as a single
operating segment.

                                      F-9
<PAGE>

PENDING ACCOUNTING STANDARDS
In December 1997, the Accounting  Standards  Executive Committee of the American
Institute of Certified Public  Accountants  issued Statement of Position ("SOP")
97-3,  "Accounting  by Insurance  and Other  Enterprises  for  Insurance-related
Assessments."  The SOP is  required  to be  adopted  in 1999.  The SOP  provides
guidance  concerning  when  to  recognize  a  liability  for   insurance-related
assessments  and  how  those  liabilities  should  be  measured.   Specifically,
insurance-related  assessments  should be recognized as liabilities  when all of
the following criteria have been met: 1) an assessment has been imposed or it is
probable that an assessment will be imposed,  2) the event  obligating an entity
to pay an  assessment  has occurred and 3) the amount of the  assessment  can be
reasonably  estimated.  The Company is currently  evaluating the effects of this
SOP on its accounting for  insurance-related  assessments.  Certain  information
required for compliance is not currently  available and therefore the Company is
studying  alternatives for estimating the accrual. In addition,  industry groups
are working to improve the information  available.  Adoption of this standard is
not expected to be material to the results of operations  or financial  position
of the Company.

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting  for Derivative  Instruments and Hedging  Activities."  SFAS No. 133
replaces  existing  pronouncements  and  practices  with  a  single,  integrated
accounting  framework for derivatives and hedging  activities.  The requirements
are  effective  for  fiscal  years  beginning  after  June  15,  1999.   Earlier
application  is  encouraged  but is only  permitted  as of the  beginning of any
fiscal quarter after issuance.  This statement  requires that all derivatives be
recognized on the balance sheet at fair value.  Derivatives  that are not hedges
must be adjusted to fair value  through  income.  If the  derivative is a hedge,
depending on the nature of the hedge,  changes in the fair value of  derivatives
will  either be offset  against  the change in fair value of the hedged  assets,
liabilities,  or firm  commitments  through  earnings  or  recognized  in  other
comprehensive   income  until  the  hedged  item  is   recognized  in  earnings.
Additionally, the change in fair value of a derivative which is not effective as
a hedge will be immediately recognized in earnings. The Company expects to adopt
SFAS No. 133 as of January 1, 2000.  Based on  existing  interpretations  of the
requirements  of SFAS No.  133,  the impact of  adoption  is not  expected to be
material to the results of operations or financial position of the Company.


3.   RELATED PARTY TRANSACTIONS

REINSURANCE
The Company has reinsurance agreements with ALIC in order to limit aggregate and
single  exposure on large risks. A portion of the Company's  premiums and policy
benefits  are  ceded  to  ALIC  and  reflected  net of such  reinsurance  in the
statements of operations and comprehensive income.  Reinsurance  recoverable and
the related reserve for  life-contingent  contract  benefits and  contractholder
funds are reported  separately  in the  statements  of financial  position.  The
Company  continues  to have primary  liability  as the direct  insurer for risks
reinsured.

                                      F-10
<PAGE>

The following amounts were ceded to the ALIC under reinsurance agreements.

                                              YEAR ENDED DECEMBER 31,
                                              -----------------------
      ($ in thousands)                      1998          1997       1996
                                            ----          ----       ----

      Premiums                           $  2,519        2,171     $  1,383
      Policy benefits                         315          327        1,662

Included  in the  reinsurance  recoverable  at  December  31,  1998 and 1997 are
amounts due from the ALIC of $532 and $342, respectively.

STRUCTURED SETTLEMENT ANNUITIES
AIC, through an affiliate,  purchased $12,747, $12,766 and $15,610 of structured
settlement annuities from the Company in 1998, 1997 and 1996,  respectively.  Of
these  amounts,  $5,152,  $3,468  and  $8,517  relate to  structured  settlement
annuities  with life  contingencies  and are included in premium income in 1998,
1997 and 1996,  respectively.  Additionally,  the  reserve  for  life-contingent
contract benefits was increased by approximately 94% of such premium received in
each of these years.

BUSINESS OPERATIONS
The Company utilizes services performed by AIC and ALIC and business  facilities
owned or leased, and operated by AIC in conducting its business activities.  The
Company reimburses AIC and ALIC for the operating expenses incurred on behalf of
the Company. The cost to the Company is determined by various allocation methods
and is primarily related to the level of services provided.  Operating expenses,
including  compensation and retirement and other benefit programs,  allocated to
the  Company  were  $32,326,  $27,632  and  $23,134  in  1998,  1997  and  1996,
respectively.  A portion of these expenses relate to the acquisition of life and
annuity business which are deferred and amortized over the contract period.


4.   INVESTMENTS

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

<TABLE>
<CAPTION>

                                   AMORTIZED        GROSS UNREALIZED         FAIR
                                     COST        GAINS         LOSSES        VALUE
                                     ----        -----         ------        -----
<S>                               <C>          <C>          <C>           <C>    

AT DECEMBER 31, 1998
U.S. government and agencies      $  443,930   $  179,455   $       (1)   $  623,384
Municipal                             31,617        2,922          (19)       34,520
Corporate                            848,289      121,202         (899)      968,592
Mortgage-backed securities           291,520       14,294         (700)      305,114
Asset-backed securities               33,616          869          (28)       34,457
                                  ----------   ----------    ----------   ----------
  Total fixed income securities   $1,648,972   $  318,742   $   (1,647)   $1,966,067
                                  ==========   ==========    ==========   ==========

AT DECEMBER 31, 1997
U.S. government and agencies      $  416,203   $  126,824   $     (212)   $  542,815
Municipal                             35,382        2,449          (22)       37,809
Corporate                            803,935      103,700         (479)      907,156
Mortgage-backed securities           215,465       13,442         (166)      228,741
Asset-backed securities               39,125          642          (31)       39,736
                                  ----------   ----------    ----------   ----------
  Total fixed income securities   $1,510,110   $  247,057   $     (910)   $1,756,257
                                  ==========   ==========    ==========   ==========
</TABLE>

                                      F-11
<PAGE>

SCHEDULED MATURITIES
The scheduled  maturities for fixed income securities are as follows at December
31, 1998:

                                          AMORTIZED      FAIR
                                            COST         VALUE
                                            ----         -----

Due in one year or less                  $   14,903   $   15,087
Due after one year through five years        79,333       84,372
Due after five years through ten years      227,770      250,208
Due after ten years                       1,001,830    1,276,829
                                         ----------   ----------
                                          1,323,836    1,626,496
Mortgage- and asset-backed securities       325,136      339,571
                                         ----------   ----------
  Total                                  $1,648,972   $1,966,067
                                         ==========   ==========

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

NET INVESTMENT INCOME
YEAR ENDED DECEMBER, 31                 1998       1997       1996
                                        ----       ----       ----

Fixed income securities               $124,100   $116,763   $104,583
Mortgage loans                          10,309      7,896      7,113
Other                                    2,940      2,200      2,942
                                      --------   --------   --------
  Investment income, before expense    137,349    126,859    114,638
  Investment expense                     2,936      1,972      1,776
                                      --------   --------   --------
  Net investment income               $134,413   $124,887   $112,862
                                      ========   ========   ========


REALIZED CAPITAL GAINS AND LOSSES
YEAR ENDED DECEMBER 31,                             1998      1997       1996
                                                    ----      ----       ----

Fixed income securities                           $ 4,755    $   955    $(1,522)
Mortgage loans                                        (65)      (221)       (59)
Other                                                   7        (33)        --
                                                  -------    -------    -------
   Realized capital gains and losses                4,697        701     (1,581)
   Income tax                                       1,644        245       (553)
                                                  -------    -------    -------
   Realized capital gains and losses, after tax   $ 3,053    $   456    $(1,028)
                                                  =======    =======    =======

Excluding calls and prepayments,  gross gains of $2,905, $471 and $480 and gross
losses  of $164,  $105  and  $2,308  were  realized  on  sales  of fixed  income
securities during 1998, 1997 and 1996, respectively.

                                      F-12
<PAGE>


UNREALIZED NET CAPITAL GAINS
Unrealized   net  capital   gains  on  fixed  income   securities   included  in
shareholder's equity at December 31, 1998 are as follows:

<TABLE>
<CAPTION>

                                  COST/                         GROSS UNREALIZED          UNREALIZED
                              AMORTIZED COST   FAIR VALUE      GAINS         LOSSES        NET GAINS
                              --------------   ----------      -----         ------        ---------
<S>                            <C>            <C>           <C>           <C>            <C>    

Fixed income securities        $ 1,648,972    $ 1,966,067   $   318,742   $    (1,647)   $   317,095
                               ===========   ===========   ===========    ===========    
Reserve for life-contingent
   contract benefits                                                                        (187,706)
Deferred income taxes                                                                        (44,642)
Deferred acquisition costs
    and other                                                                                 (1,841)
                                                                                         -----------
Unrealized net capital gains                                                             $    82,906
                                                                                         ===========
</TABLE>

<TABLE>
<CAPTION>

CHANGE IN UNREALIZED NET CAPITAL GAINS
YEAR ENDED DECEMBER 31,                             1998         1997        1996
                                                    ----         ----         ----
<S>                                              <C>          <C>          <C>    

Fixed income securities                          $  70,948    $ 123,519    $ (82,847)
Reserves for life contingent-contract benefits     (42,251)     (80,155)      24,300
Deferred income taxes                               (9,922)     (14,876)      20,224
Deferred acquisition costs and other                  (348)        (861)         762
                                                 ---------    ---------    ---------
Increase (decrease)  in unrealized net
  capital gains                                  $  18,427    $  27,627    $ (37,561)
                                                 =========    =========    =========

</TABLE>

INVESTMENT LOSS PROVISIONS AND VALUATION ALLOWANCES
Pretax  provisions for  investment  losses,  principally  relating to other than
temporary declines in value of fixed income securities and valuation  allowances
on mortgage loans were $114, $261 and $208 in 1998, 1997 and 1996, respectively.

MORTGAGE LOAN IMPAIRMENT
A mortgage  loan is impaired when it is probable that the Company will be unable
to collect  all  amounts  due  according  to the  contractual  terms of the loan
agreement.

The Company had no impaired loans at December 31, 1998, 1997 and 1996.

Interest  income is recognized on a cash basis for impaired loans carried at the
fair value of the  collateral,  beginning at the time of  impairment.  For other
impaired loans,  interest is accrued based on the net carrying value. There were
no impaired loans during 1998 and 1997. In 1996, the Company recognized interest
income of $281 on impaired  loans,  which was  received in cash during the year.
The average recorded investment in impaired loans was $5,154 during 1996.

Valuation allowances for mortgage loans at December 31, 1998, 1997 and 1996 were
$600, $486 and $225, respectively.  There were no direct write-downs of mortgage
loan  valuation  allowances  for the years ended December 31, 1998 and 1997. For
the year ended December 31, 1996, direct  write-downs of mortgage loan valuation
allowances  were  $1,431.  Net  (reductions)  additions  to  the  mortgage  loan
valuation allowances were $114, $261 and $(296) for the years ended December 31,
1998, 1997 and 1996, respectively.

                                      F-13
<PAGE>

INVESTMENT  CONCENTRATION FOR MUNICIPAL BOND AND COMMERCIAL  MORTGAGE PORTFOLIOS
AND OTHER INVESTMENT  INFORMATION 

The Company  maintains a diversified  portfolio of municipal  bonds. The largest
concentrations  in the portfolio are presented below.  Except for the following,
holdings in no other state exceeded 5% of the portfolio at December 31, 1998 and
1997:

(% of municipal bond portfolio carrying value)      1998        1997
                                                    ----        ----

           Ohio                                     30.2%       28.4%
           Illinois                                 21.1        19.8
           California                               17.4        22.7
           Maryland                                  8.2         8.0
           Minnesota                                 5.9         5.5
           New York                                  5.7         5.4
           Maine                                     5.3         5.6

The Company's  mortgage loans are collateralized by a variety of commercial real
estate property types located throughout the United States. Substantially all of
the commercial mortgage loans are non-recourse to the borrower.  The states with
the largest portion of the commercial  mortgage loan portfolio are listed below.
Except  for  the  following,  holdings  in no  other  state  exceeded  5% of the
portfolio at December 31, 1998 and 1997:

(% of commercial mortgage portfolio carrying value) 1998         1997
                                                    ----         ----

           California                               41.9%        47.7%
           New York                                 26.3         30.5
           Illinois                                 15.8         15.3
           New Jersey                                6.9           -
           Pennsylvania                              6.2          3.3

The  types  of  properties  collateralizing  the  commercial  mortgage  loans at
December 31, are as follows:


(% of commercial mortgage portfolio carrying value) 1998         1997
                                                    ----         ----

           Retail                                  39.5%         38.8%
           Warehouse                               19.2          25.4
           Apartment complex                       18.5          14.9
           Office buildings                        11.7          15.3
           Industrial                               5.5           4.9
           Other                                    5.6            .7
                                                 ------        ------
                                                  100.0%        100.0%
                                                  =====         ===== 



                                      F-14
<PAGE>

The  contractual  maturities of the  commercial  mortgage  loan  portfolio as of
December 31, 1998, for loans that were not in foreclosure are as follows:

                        NUMBER OF LOANS  CARRYING VALUE      PERCENT
                        ---------------  --------------      -------

1999                               1       $  2,832             2.0%
2000                               4          7,762             5.3
2001                               5          7,066             4.9
2002                               2          6,154             4.2
Thereafter                        31        121,281            83.6
                            --------       --------        --------
   Total                          43       $145,095           100.0%
                            ========       ========        ========

In 1998, there were no commercial mortgage loans which were contractually due.

SECURITIES ON DEPOSIT
At December 31, 1998,  fixed income  securities  with a carrying value of $2,109
were on deposit with regulatory authorities as required by law.


5.   FINANCIAL INSTRUMENTS

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

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

                                  1998                      1997
                                  ----                      ----
                           CARRYING       FAIR       CARRYING       FAIR
                            VALUE         VALUE       VALUE         VALUE
                            -----         -----       -----         -----

Fixed income securities   $1,966,067   $1,966,067   $1,756,257   $1,756,257
Mortgage loans               145,095      154,872      114,627      120,849
Short-term investments        76,127       76,127        9,513        9,513
Policy loans                  29,620       29,620       27,600       27,600
Separate Accounts            366,247      366,247      308,595      308,595

Carrying  value and fair  value  include  the  effects of  derivative  financial
instruments where applicable.

                                      F-15
<PAGE>

Fair values for fixed income  securities are based on quoted market prices where
available. Non-quoted securities are valued based on discounted cash flows using
current interest rates for similar  securities.  Mortgage loans are valued based
on discounted  contractual cash flows. Discount rates are selected using current
rates  at  which  similar  loans  would  be  made  to  borrowers   with  similar
characteristics,  using similar properties as collateral. Loans that exceed 100%
loan-to-value  are  valued  at  the  estimated  fair  value  of  the  underlying
collateral. Short-term investments are highly liquid investments with maturities
of less than one year whose carrying value approximates fair value.

The  carrying  value of  policy  loans  approximates  its fair  value.  Separate
Accounts  assets are carried in the  statements  of  financial  position at fair
value based on quoted market prices.

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

                                1998                  1997
                                ----                  ----
                          CARRYING    FAIR      CARRYING    FAIR
                           VALUE      VALUE      VALUE      VALUE
                           -----      -----      -----      -----
Contractholder funds on
   investment contracts   $512,239   $518,448   $437,449   $466,136
Separate Accounts          366,247    366,247    308,595    308,595

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

DERIVATIVE FINANCIAL INSTRUMENTS
The only derivative financial  instruments used by the Company are interest rate
futures  contracts.   The  Company  primarily  uses  this  derivative  financial
instrument  to reduce its exposure to market risk,  specifically  interest  rate
risk, in conjunction with asset/liability  management. The Company does not hold
or issue these instruments for trading purposes.

The following table summarizes the contract amount, credit exposure,  fair value
and carrying value of the Company's derivative financial instruments:

                                                                   CARRYING 
                                                                    VALUE
                             CONTRACT       CREDIT       FAIR       ASSETS/
                              AMOUNT        EXPOSURE     VALUE   (LIABILITIES)
                              ------        --------     -----   -------------

AT DECEMBER 31, 1998
--------------------
Financial futures contracts   $15,000   $        --     $   (15)   $  (223)

AT DECEMBER 31, 1997
--------------------
Financial futures contracts   $29,800   $        --     $  (153)   $  (810)

Carrying value is representative of deferred gains and losses.

                                      F-16
<PAGE>

The contract amounts are used to calculate the exchange of contractual  payments
under the  agreements  and are not  representative  of the potential for gain or
loss on these agreements.

Credit  exposure   represents  the  Company's  potential  loss  if  all  of  the
counterparties  failed to perform under the  contractual  terms of the contracts
and all collateral,  if any, became worthless.  This exposure is measured by the
fair value of contracts  with a positive fair value at the reporting  date.  The
Company  manages its  exposure to credit risk  primarily  by  establishing  risk
control  limits.  To date, the Company has not incurred any losses on derivative
financial instruments due to counterparty nonperformance.

Fair value is the  estimated  amount that the  Company  would  receive  (pay) to
terminate or assign the contracts at the  reporting  date,  thereby  taking into
account the current  unrealized  gains or losses of open  contracts.  Dealer and
exchange quotes are used to value the Company's derivatives.

Financial  futures  are  commitments  to  either  purchase  or  sell  designated
financial  instruments at a future date for a specified price or yield. They may
be  settled  in  cash  or  through  delivery.  As  part  of its  asset/liability
management,  the Company  generally  utilizes  futures  contracts  to manage its
market risk related to anticipatory  investment  purchases and sales, as well as
other  risk  management  purposes.   Futures  used  as  hedges  of  anticipatory
transactions pertain to identified  transactions which are probable to occur and
are  generally   completed  within  90  days.  Futures  contracts  have  limited
off-balance-sheet  credit risk as they are executed on organized  exchanges  and
require security deposits, as well as the daily cash settlement of margins.

Market  risk is the risk that the  Company  will  incur  losses  due to  adverse
changes in market rates and prices. Market risk exists for all of the derivative
financial instruments that the Company currently holds, as these instruments may
become less valuable due to adverse  changes in market  conditions.  The Company
mitigates  this risk  through  established  risk  control  limits  set by senior
management.  In addition,  the change in the value of the  Company's  derivative
financial instruments designated as hedges are generally offset by the change in
the value of the related assets and liabilities.

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
Commitments  to extend  mortgage  loans  are  agreements  to lend to a  borrower
provided there is no violation of any condition established in the contract. The
Company  enters  these  agreements  to  commit  to  future  loan  fundings  at a
predetermined  interest rate.  Commitments generally have fixed expiration dates
or other termination  clauses.  Commitments to extend mortgage loans,  which are
secured by the  underlying  properties,  are valued  based on  estimates of fees
charged by other institutions to make similar  commitments to similar borrowers.
The Company had no mortgage loan  commitments  at December 31, 1998. At December
31, 1997 the Company had $18,000 in mortgage loan  commitments  which had a fair
value of $180.

                                      F-17
<PAGE>

6.   INCOME TAXES

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

Prior to Sears, Roebuck and Co.'s ("Sears")  distribution ("Sears distribution")
on  June  30,  1995  of  its  80.3%   ownership  in  the  Corporation  to  Sears
shareholders,  the Allstate  Group  joined with Sears and its domestic  business
units (the "Sears  Group") in the filing of a  consolidated  federal  income tax
return  (the  "Sears  Tax  Group")  and were  parties  to a federal  income  tax
allocation  agreement  (the "Tax  Sharing  Agreement").  Under  the Tax  Sharing
Agreement,  the Company,  through the Corporation,  paid to or received from the
Sears Group the amount,  if any, by which the Sears Tax Group's  federal  income
tax  liability  was  affected  by  virtue of  inclusion  of the  Company  in the
consolidated federal income tax return.

As a result of the Sears distribution, the Allstate Group was no longer included
in  the  Sears  Tax  Group,  and  the  Tax  Sharing  Agreement  was  terminated.
Accordingly,  the Allstate  Group and Sears Group entered into a new tax sharing
agreement,  which adopts many of the principles of the Tax Sharing Agreement and
governs their  respective  rights and obligations with respect to federal income
taxes for all periods prior to the Sears  distribution,  including the treatment
of audits of tax returns for such periods.

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

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

                                           1998        1997
                                           ----        ----
DEFERRED ASSETS

Life and annuity reserves                $ 41,073    $ 34,084
Difference in tax bases of investments       --           742
Discontinued operations                       364         364
Other postretirement benefits                 328         352
Other assets                                2,023         255
                                         --------    --------
      Total deferred assets                43,788      35,797
                                         --------    --------

DEFERRED LIABILITIES
Unrealized net capital gains              (44,642)    (34,720)
Deferred acquisition costs                (20,573)    (15,821)
Difference in tax bases of investments     (1,784)         --
Prepaid commission expense                   (790)       (792)
Other liabilities                          (1,448)     (1,454)
                                         --------    --------
      Total deferred liabilities          (69,237)    (52,787)
                                         --------    --------
      Net deferred liability             $(25,449)   $(16,990)
                                         ========    ========

                                      F-18
<PAGE>

Although realization is not assured,  management believes it is more likely than
not that the deferred tax assets will be realized based on the assumptions  that
certain levels of income will be achieved.

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

                                   1998       1997        1996
                                 --------   --------    --------

Current                          $ 13,679   $ 14,874    $ 11,411
Deferred                            1,255     (1,578)        257
                                 --------   --------    --------
      Total income tax expense   $ 14,934   $ 13,296    $ 11,668
                                 ========   ========    ========

The Company paid income taxes of $3,788,  $13,350 and $11,968 in 1998,  1997 and
1996,  respectively.  The Company had a current  income tax liability of $14,029
and $1,419 at December 31, 1998 and 1997, respectively.

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

                                     1998       1997       1996
                                    ------     ------     ------

Statutory federal income tax rate    35.0%      35.0%      35.0%
State income tax expense              1.6        2.2        2.4
Other                                (1.5)       (.3)      (1.2)
                                    ------     ------     ------
Effective income tax rate            35.1%      36.9%      36.2%
                                    ======     ======     ======

Prior to January 1, 1984,  the Company was entitled to exclude  certain  amounts
from taxable  income and  accumulate  such amounts in a  "policyholder  surplus"
account.  The balance in this account at December 31, 1998,  approximately $389,
will  result in  federal  income  taxes  payable of $136 if  distributed  by the
Company.  No  provision  for taxes has been made as the  Company  has no plan to
distribute  amounts from this account.  No further additions to the account have
been permitted since the Tax Reform Act of 1984.


7.   STATUTORY FINANCIAL INFORMATION

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

The NAIC's codification initiative has produced a comprehensive guide of revised
statutory accounting  principles.  While the NAIC has approved a January 1, 2001
implementation date for the newly developed  guidance,  companies must adhere to
the implementation date adopted by their state of domicile.  The Company's state
of domicile,  New York, is continuing its comparison of codification and current
statutory  accounting  requirements to determine necessary revisions to existing
state laws and regulations. The requirements are not expected to have a material
impact on the statutory surplus of the Company.

                                      F-19
<PAGE>

DIVIDENDS
The ability of the Company to pay dividends is dependent on business conditions,
income,  cash requirements of the Company and other relevant factors.  Under New
York  Insurance  Law, a notice of intention to  distribute  any dividend must be
filed with the New York  Superintendent of Insurance not less than 30 days prior
to  the   distribution.   Such   proposed   declaration   is   subject   to  the
Superintendent's disapproval.


8.  BENEFIT PLANS

PENSION PLANS
Defined  benefit  pension plans,  sponsored by the  Corporation,  cover domestic
full-time employees and certain part-time employees.  Benefits under the pension
plans  are  based  upon  the  employee's  length  of  service,   average  annual
compensation   and  estimated   social   security   retirement   benefits.   The
Corporation's   funding   policy  for  the  pension  plans  is  to  make  annual
contributions in accordance with accepted  actuarial cost methods.  The costs to
the  Company  included  in net income  were $382,  $597 and $490 for the pension
plans in 1998, 1997 and 1996, respectively.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Corporation  also provides  certain health care and life insurance  benefits
for  retired  employees.  Qualified  employees  may  become  eligible  for these
benefits  if they  retire  in  accordance  with  the  Corporation's  established
retirement  policy and are continuously  insured under the  Corporation's  group
plans or other  approved  plans for ten or more years prior to  retirement.  The
Corporation  shares the cost of the retiree medical benefits with retirees based
on years of service, with the Corporation's share being subject to a 5% limit on
annual medical cost inflation after retirement. The Corporation's postretirement
benefit plans currently are not funded.  The Corporation has the right to modify
or terminate these plans.

PROFIT SHARING FUND
Employees of the Corporation and its domestic  subsidiaries are also eligible to
become  members of The Savings  and Profit  Sharing  Fund of Allstate  Employees
("Allstate   Plan").   The   Corporation's   contributions   are  based  on  the
Corporation's matching obligation and performance.

The Company's contribution to the Allstate Plan was $567, $164 and $111 in 1998,
1997 and 1996, respectively.

                                      F-20
<PAGE>

9.    OTHER COMPREHENSIVE INCOME

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

<TABLE>

                                         1998                             1997                             1996
                                ------------------------------- ------------------------------------------------------------------
                                                        After-                           After-                           After-
                                   Pretax      Tax       tax      Pretax       Tax        tax       Pretax      Tax        tax
                                   ------      ---       ---      ------       ---        ---       ------      ---        ---
Unrealized capital gains
 and losses:
--------------------------------
<S>                              <C>        <C>       <C>        <C>        <C>        <C>         <C>        <C>        <C>      

Unrealized holding gains
 (losses) arising during
 the period                       $75,817   $(26,536)  $49,281   $ 124,702   $(43,645)  $ 81,057   $(86,096)  $ 30,133   $(55,963)
Adjustments to unrealized
 capital gains and losses
 arising during the period:
    Deferred acquisition costs       (348)       122      (226)       (861)       301       (560)       762       (267)       495
    Reserve for life insurance
      policy benefits             (42,251)    14,788   (27,463)    (80,155)    28,054    (52,101)    24,300     (8,505)    15,795
                                  -------   --------   -------   ---------   --------   --------   --------   --------   -------- 
      Net unrealized holding
        gains arising during the
        period                     33,218    (11,626)   21,592      43,686    (15,290)    28,396    (61,034)    21,361    (39,673)
                                  -------   --------   -------   ---------   --------   --------   --------   --------   --------   
  Less: reclassification
     adjustment for realized
     net capital gains included
     in net income                  4,869     (1,704)    3,165       1,183       (414)       769     (3,249)     1,137     (2,112)
                                  -------   --------   -------   ---------   --------   --------   --------   --------   --------
Unrealized net capital
 gains (losses)                    28,349     (9,922)   18,427      42,503    (14,876)    27,627    (57,785)    20,224    (37,561)
                                  -------   --------   -------   ---------   --------   --------   --------   --------   --------
OTHER COMPREHENSIVE
 INCOME                           $28,349   $ (9,922)  $18,427   $  42,503   $(14,876)  $ 27,627   $(57,785)  $ 20,224   $(37,561)
                                  =======   ========   =======   =========   ========   ========   ========   ========   ========

</TABLE>

10.      COMMITMENTS AND CONTINGENT LIABILITIES

REGULATIONS AND LEGAL PROCEEDINGS
The Company's  business is subject to the effect of a changing social,  economic
and regulatory  environment.  Public and regulatory  initiatives have varied and
have  included  employee  benefit  regulation,  controls on medical  care costs,
removal  of  barriers  preventing  banks from  engaging  in the  securities  and
insurance  business,  tax  law  changes  affecting  the  taxation  of  insurance
companies,  the tax  treatment  of  insurance  products  and its  impact  on the
relative  desirability of various  personal  investment  vehicles,  and proposed
legislation  to prohibit the use of gender in  determining  insurance  rates and
benefits.   The  ultimate  changes  and  eventual  effects,  if  any,  of  these
initiatives are uncertain.

From time to time the Company is involved in pending and  threatened  litigation
in the normal  course of its business in which  claims for monetary  damages are
asserted. In the opinion of management,  the ultimate liability, if any, arising
from such pending or  threatened  litigation  is not expected to have a material
effect on the results of  operations,  liquidity  or  financial  position of the
Company.

                                      F-21
<PAGE>


                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                            SCHEDULE IV--REINSURANCE



($ in thousands)
                                    GROSS                      NET
YEAR ENDED DECEMBER 31, 1998        AMOUNT        CEDED       AMOUNT
----------------------------        ------        -----       ------

Life insurance in force          $12,656,826  $   857,500  $11,799,326
                                 ===========  ===========  ===========

Premiums and contract charges:
    Life and annuities           $   116,678  $     2,541  $   114,137
    Accident and health                5,578          663        4,915
                                 -----------  -----------  -----------
                                 $   122,256  $     3,204  $   119,052
                                 ===========  ===========  ===========


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

Life insurance in force          $11,339,990  $   721,040  $10,618,950
                                 ===========  ===========  ===========

Premiums and contract charges:
    Life and annuities           $   116,167  $     2,185  $   113,982
    Accident and health                5,883          902        4,981
                                 -----------  -----------  -----------
                                 $   122,050  $     3,087  $   118,963
                                 ===========  ===========  ===========


                                    GROSS                      NET
YEAR ENDED DECEMBER 31, 1996        AMOUNT        CEDED       AMOUNT
----------------------------        ------        -----       ------

Life insurance in force          $ 9,962,300  $   553,628  $ 9,408,672
                                 ===========  ===========  ===========

Premiums and contract charges:
    Life and annuities           $   114,296  $     1,398  $   112,898
    Accident and health                5,083          875        4,208
                                 -----------  -----------  -----------
                                 $   119,379  $     2,273  $   117,106
                                 ===========  ===========  ===========


                                      F-22
<PAGE>


<TABLE>
<CAPTION>


                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                  SCHEDULE V--VALUATION AND QUALIFYING ACCOUNTS


($ in thousands)
                                   BALANCE AT       CHARGED TO                         BALANCE AT
                                   BEGINNING         COSTS AND                           END OF
                                   OF PERIOD         EXPENSES         DEDUCTIONS         PERIOD
                                   ---------         --------         ----------         ------
<S>                              <C>              <C>              <C>                <C>    

YEAR ENDED DECEMBER 31, 1998
----------------------------

Allowance for estimated losses
   on mortgage loans             $        486      $        114     $          -      $        600
                                 ============      ============     ============      ============


YEAR ENDED DECEMBER 31, 1997
----------------------------

Allowance for estimated losses
   on mortgage loans             $        225      $        261     $          -      $        486
                                 ============      ============     ============      ============


YEAR ENDED DECEMBER 31, 1996
----------------------------

Allowance for estimated losses
   on mortgage loans             $      1,952      $       (296)    $      1,431      $        225
                                 ============      ============     ============      ============
</TABLE>



                                      F-23
<PAGE>

                                  SIGNATURES

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

                  ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK

By       /s/ LOUIS G. LOWER, II
         ----------------------
         Louis G. Lower, II
         Chairman of the Board of Directors and Director
         (Principal Executive Officer)

Date     March 2, 1999
         --------------

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


By      /s/ LOUIS G. LOWER, II
        ----------------------
        Louis G. Lower, II
        Chairman of the Board of Directors and Director
        (Principal Executive Officer)

Date    March 2, 1999
        --------------

By      /s/ MICHAEL J. VELOTTA
        ----------------------
        Michael J. Velotta
        Vice President, Secretary, General Counsel and Director

Date    March 19, 1999
        --------------

By      /s/ MARLA G. FRIEDMAN
        ----------------------
        Marla G. Friedman
        Vice President and Director

Date    March  2, 1999
        --------------

By      /s/VINCENT A. FUSCO
        ---------------------
        Vincent A. Fusco
        Chief Operations Officer and Director

Date    March  8, 1999
        ---------------

By      /s/ GERARD F. McDERMOTT
        -------------------------
        Gerard F. McDermott
        Director

Date    March 8, 1999
        ----------------

By      /s/ TIMOTHY H. PLOHG
        ----------------------
        Timothy H. Plohg
        Vice President and Director

Date    March 15, 1999
        -----------------

                                       19
<PAGE>


By      
        ----------------------
        Kevin R. Slawin
        Vice President and Director

Date    March  , 1999
        -----------------

By      
        -----------------------
        Patricia A. Wilson
        Assistant Vice President and Director

Date    March  , 1999
        -----------------

By      /s/ KEITH A. HAUSCHILDT
        ------------------------
        Keith A. Hauschildt
        Assistant Vice President and Controller
        (Chief Accounting Officer)

Date    March 18, 1999
        ------------------

By      /s/MARCIA D. ALAZRAKI
        ---------------------
        Marcia D. Alazraki
        Director

Date    March 10, 1999
        -----------------

By      /s/CLEVELAND JOHNSON, JR.
        -------------------------
        Cleveland Johnson, Jr. 
        Director

Date    March 1, 1999
        -----------------


By      /s/KENNETH R. O'BRIEN
        ---------------------
        Kenneth R. O'Brien
        Director

Date    March 2, 1999
        -----------------

By      /s/JOHN R. RABEN, JR.
        ---------------------
        John R. Raben, Jr.
        Director

Date    March 1, 1999
        -----------------


By      /s/ SALLY A. SLACKE
        -------------------
        Sally A. Slacke
        Director

Date    March 1, 1999
        -----------------

By      /s/ THOMAS J. WILSON, II
        ------------------------
        Thomas J. Wilson, II
        President and Director

Date    March 15, 1999
        -----------------

                                       20

<PAGE>
                                      EXHIBIT INDEX

                 The Allstate Life Insurance Company of New York
                 Form 10-K for the year ended December 31, 1998

Exhibit No.                Description

3(i)        Restated Certificate of Incorporation, as amended, of Allstate Life
            Insurance Company of New York 
            (filed herewith)

3(ii)       Amended  By-laws of Allstate Life Insurance Company of New York 
            (filed herewith)

27          Financial Data Schedule (filed herewith)



                                      E-1