UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

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.



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

                   For the fiscal year ended December 31, 2000

                                       OR

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


                       Commission file number: 333-44630


                  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
                              Attn: Anthony Poole
              (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 March 29, 2001 there were 100,000 shares of common capital stock
outstanding, par value $25 per share, all of which shares are held by Allstate
Life Insurance Company.




<PAGE>


                          TABLE OF CONTENTS


                                                                PAGE
                                                                ----

PART I

Item 1.    Business*............................................2
Item 2.    Properties*..........................................2
Item 3.    Legal Proceedings....................................2
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..........................4
Item 6.    Selected Financial Data**.............................N/A
Item 7.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations..................4
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

Signatures......................................................18
Index to Financial Statement Schedules..........................20

*Item prepared in accordance with General Instruction I(2) of Form 10-K.
**Omitted pursuant to 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"), a Delaware corporation which has
several different classes of securities, including common stock, registered with
the Securities and Exchange Commission.

     Allstate Life of New York, a single segment entity, markets life insurance
and investment products in the state of New York through a combination of
exclusive and independent agencies, securities firms, banks, specialized brokers
and direct response marketing. Allstate Life of New York currently offers single
premium variable life insurance. Allstate Life of New York's life products
include traditional products, including term and whole life, interest-sensitive
life, and immediate annuities with life contingencies. Investment products
include deferred annuities and immediate annuities without life contingencies.
Deferred annuities include fixed rate, market value adjusted and variable
annuities. ALFS, Inc. ("ALFS") is the principal underwriter for certain Allstate
Life of New York investment products, such as variable annuities and market
value adjusted annuities. ALFS is a wholly owned subsidiary of ALIC and is a
registered broker-dealer under the Securities Exchange Act of 1934. Also,
beginning May 1, 2000, Allstate Distributors, L.L.C. ("ADLLC") provided
underwriting and distribution services for variable annuities sold pursuant to a
joint venture agreement between Allstate Life of New York and Putnam
Investments, Inc. ("Putnam"). ADLLC is owned equally by ALIC and Putnam and is a
registered broker-dealer under the Securities Act of 1934.

     The assets and liabilities of the variable annuity contracts are held in
legally-segregated, unitized Separate Accounts.

     Allstate Life of New York'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.
As of December 1999, the last year for which current information is available,
there were approximately 1,400 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.

                                        2

<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.

                                       3
<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.



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

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      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. TO CONFORM WITH THE 2000 PRESENTATION, CERTAIN
PRIOR YEAR AMOUNTS HAVE BEEN RECLASSIFIED.

OVERVIEW

     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 life and investment products in the state of New York through a
combination of exclusive and independent agencies, securities firms, banks,
specialized brokers and direct response marketing. Life products consist of
traditional products, including term and whole life, interest-sensitive life and
immediate annuities with life contingencies. Investment products include
deferred annuities and immediate annuities without life contingencies. Deferred
annuities include fixed rate, market value adjusted and variable annuities.

     The Company has identified itself as a single segment entity.

     The assets and liabilities related to variable annuity contracts are
legally segregated and reflected as Separate Accounts. The assets of the
Separate Accounts are carried at fair value. Separate Accounts liabilities
represent the contractholders' claims to the related assets and are carried at
the fair value of the assets. In the event that the asset value of certain
contractholder accounts are projected to be below the value guaranteed by the
Company, a liability is established through a charge to earnings. 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.

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
($ in thousands)
                                                                     2000               1999               1998
                                                                     ----               ----               ----
<S>                                                            <C>                <C>                <C>
Statutory premiums and deposits                                $       668,966    $       304,535    $       264,362
                                                               ===============    ===============    ===============

Investments                                                    $     2,773,985    $     2,156,688    $     2,216,909
Separate Accounts assets                                               560,089            443,705            366,247
                                                               ---------------    ---------------    ---------------
Investments, including Separate Accounts assets                $     3,334,074    $     2,600,393    $     2,583,156
                                                               ===============    ===============    ===============

GAAP premiums                                                  $       104,316    $        63,748    $        85,771
Contract charges                                                        41,885             38,626             33,281
Net investment income                                                  176,539            148,331            134,413
Contract benefits                                                      233,299            178,267            183,839
Operating costs and expenses                                            37,729             29,134             31,100
                                                               ---------------    ---------------    ---------------
Operating income before tax                                             51,712             43,304             38,526
Income tax expense                                                      17,481             15,406             13,511
                                                               ---------------    ---------------    ---------------
Operating income (1)                                                    34,231             27,898             25,015
Realized capital gains and losses, after-tax (2)                        (3,316)            (1,332)             2,642
                                                               ---------------    ---------------    ---------------
Net income                                                     $        30,915    $        26,566    $        27,657
                                                               ===============    ===============    ===============
</TABLE>
                                       4
<PAGE>
(1) The supplemental operating information presented above allows for a more
complete analysis of results of operations. The net effects of gains and losses
have been excluded due to its volatility between periods and because such data
is often excluded when evaluating the overall financial performance of insurers.
Operating income should not be considered as a substitute for any generally
accepted accounting principle ("GAAP") measure of performance. The method of
calculating operating income presented above may be different from the method
used by other companies and therefore comparability may be limited.

(2) Realized capital gains and losses, after-tax is presented net of the effects
of the Company's deferred policy acquisition cost amortization and additional
future policy benefits to the extent that such effects resulted from the
recognition of realized capital gains and losses.


                                       5
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


STATUTORY PREMIUMS AND DEPOSITS

     Statutory premiums and deposits, which include premiums and deposits for
all products, are used to analyze sales trends. The following table summarizes
statutory premiums and deposits by product line.

<TABLE>
<CAPTION>
   ($ in thousands)                                  2000                   1999                  1998
                                                     ----                   ----                  ----
   <S>                                           <C>                    <C>                   <C>
   LIFE PRODUCTS
        Interest-sensitive                       $     50,726           $     49,588          $     45,320
        Traditional                                    20,220                 16,842                16,181
        Other                                           7,416                  6,080                 4,840
                                                 ------------           ------------          ------------
              Total life products                      78,362                 72,510                66,341

   INVESTMENT PRODUCTS
         Fixed                                        306,294                165,925               149,209
         Variable                                     284,310                 66,100                48,812
                                                 ------------           ------------          ------------
              Total investment products               590,604                232,025               198,021
                                                 ------------           ------------          ------------
   Total                                         $    668,966           $    304,535          $    264,362
                                                 ============           ============          ============
</TABLE>

     Statutory premiums and deposits increased $364.4 million or 119.7% in 2000
as compared to 1999. The increase was primarily due to higher variable and fixed
annuity sales. Increased variable annuity sales in 2000 were primarily driven by
$185.4 million of sales from the Putnam Allstate Advisor variable annuity
product that was launched in January 2000 pursuant to an alliance between the
Company, ALIC and Putnam Investments, Inc. The large increase in fixed annuity
sales resulted from new distribution outlets in the banking channel. In 1999,
total statutory premiums and deposits increased $40.2 million or 15.2%. The
increase was primarily due to higher fixed and variable annuity sales, partially
offset by lower sales of immediate annuities.

GAAP PREMIUMS AND CONTRACT CHARGES

     Under GAAP, premiums represent revenue generated from life products with
significant mortality or morbidity risks. Revenues for interest-sensitive life
insurance and other products which are largely investment- related, for which
deposits are treated as liabilities, are reflected as contract charges.
Immediate annuities may be purchased with a life contingency whereby mortality
risk is a significant factor. For this reason the GAAP revenues generated on
these contracts are recognized as premiums. The following table summarizes GAAP
premiums and contract charges.

<TABLE>
<CAPTION>
   ($ in thousands)                                       2000                   1999                   1998
                                                          ----                   ----                   ----
   <S>                                                <C>                    <C>                   <C>
   PREMIUMS
        Traditional life                              $     17,983           $     16,844          $     16,181
        Immediate annuities with life contingencies         78,958                 40,067                64,585
        Other                                                7,375                  6,837                 5,005
                                                      ------------           ------------          ------------
            Total premiums                                 104,316                 63,748                85,771
                                                      ------------           ------------          ------------

   CONTRACT CHARGES
         Interest-sensitive life                      $     30,366           $     29,850          $     26,204
         Variable annuities                                  8,656                  6,930                 5,452

         Other                                               2,863                  1,846                 1,625
                                                      ------------           ------------          ------------
            Total contract charges                          41,885                 38,626                33,281
                                                      ------------           ------------          ------------
            TOTAL PREMIUMS AND CONTRACT CHARGES       $    146,201           $    102,374          $    119,052
                                                      ============           ============          ============
</TABLE>
                                       6

<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Total  premiums  were $104.3  million in 2000  compared to $63.7 million in
1999 with the increase driven  primarily by higher sales of immediate  annuities
with life contingencies.  Immediate annuities with life contingencies  increased
due  to  higher  sales  resulting  from  a more  competitive  pricing  strategy,
introduced  in late 1999,  and  enhanced  wholesaling  efforts.  In 1999,  total
premiums decreased to $63.7 million compared to $85.8 million in 1998, primarily
due to lower sales of immediate annuities with life contingencies.  The types of
immediate  annuities sold may fluctuate  significantly  from year to year, which
impacts premiums reported.

     Total contract charges  increased 8.4% during 2000 as compared to 1999, and
16.1% as compared to 1998. In both periods,  variable  annuity  contract charges
increased primarily due to increases in account value in force. Variable annuity
account  values  increased in 2000 due to sales,  partially  offset by decreased
market performance and benefit payments and fees. During 1999,  variable annuity
account values increased due to sales and market  performance,  partially offset
by benefit  payments and fees.  Variable  annuity  contract  charges,  which are
calculated  as a percentage of each annuity  account  value,  will  fluctuate as
variable account values are impacted directly by market  performance.  For 2000,
contract charges from immediate  annuities without life contingencies  increased
as  a  result  of  increased  sales  during  the  year.   Contract   charges  on
interest-sensitive  life  products  increase  primarily as a result of increased
mortality charges as policyholders age during both periods.

NET INVESTMENT INCOME

     Net  investment  income  increased  19.0%  and  10.4%  in  2000  and  1999,
respectively.  Increases in both years were due to higher  investment  balances,
lower expenses and increased investment yields. Investments,  excluding Separate
Accounts assets and unrealized gains on fixed income securities,  grew 21.7% and
10.7% in 2000  and  1999,  respectively.  The  increase  in both  years  was due
primarily to positive cash flows from operations.

REALIZED CAPITAL GAINS AND LOSSES, AFTER-TAX

     Realized capital losses,  after-tax,  were $3.3 million in 2000 compared to
$1.3  million in 1999.  In both years,  realized  capital  gains and losses were
generated primarily from the sale of publicly traded corporate  securities.  The
sales were made to better  manage asset and  liability  duration and  facilitate
investing  in higher  yielding  securities.  Period to  period  fluctuations  in
realized  capital gains and losses are largely the result of the timing of sales
decisions  reflecting  management's  view of individual  securities  and overall
market conditions.

OPERATING INCOME

     Operating  income increased 22.7% or $6.3 million in 2000 to $34.3 million.
The  increase  was due to  increased  net  investment  income and  premiums  and
contract charges partially offset by higher contract benefits.  Mortality margin
was  impacted  favorably  by $1.7  million as  mortality  results  on  immediate
annuities  with life  contingencies  were positive in 2000 compared to a loss in
1999. Increased expenses during 2000 are due primarily to additional investments
in technology,  distribution and marketing.  Net investment  margin increased by
$700 thousand primarily due to lower investment expenses and a larger asset base
coupled with slightly higher yielding  assets.  Operating income increased 11.5%
or $2.9 million in 1999 to $27.9 million as favorable  mortality  experience and
increased contract charges were partially offset by higher expenses.

COMPANY OUTLOOK

 -       The Company's contract charge revenue is dependent upon sustaining
         balances in assets of the Separate Accounts supporting its variable
         annuity products. These balances may increase in 2001 with sales volume
         increases, but such increases may be offset by fluctuating stock
         performance during the year. Sales could also be adversely impacted by
         declines in market conditions.

 -       Consistent with the marketplace, the Company's sales continued to move
         towards lower profit margin products, such as term life and variable
         annuities. These lower profit margin products require a higher volume
         of sales to increase the Company's operating results. The Company
         achieved this increased volume

                                       7

<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


         in 2000 and expects product growth to continue partially due to new
         product offerings, as well as increases in wholesaling activities.

 -       Investments in technology distribution and marketing are expected to
         impact profitability.

 -       The Company is experiencing increased competition. In order to compete
         with larger traditional insurance companies, as well as non-traditional
         competitors, such as banks and securities firms, the Company will have
         to reduce distribution costs and increase economies of scale.

 -       As the Company completes the current program to transition its life
         specialist agents to an exclusive financial specialist independent
         contractor status, adverse impacts to premiums could be experienced due
         to a decline in these agents' productivity. The Company currently
         expects approximately half of the exclusive agents to become licensed
         as Personal Financial Representatives ("PFRs") by 2002. PFRs are
         licensed to sell additional products such as variable annuities and
         mutual funds. As these agents become licensed to sell additional
         products, the sales trends and mix of products sold could fluctuate.

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  results
of  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.  The  derivative  financial  instruments  section  in  Note  5 to the
financial statements provides a more detailed discussion of these instruments.

CORPORATE OVERSIGHT

     The  Company  administers  and  oversees  its  investment  risk  management
processes primarily through its Board of Directors, Investment Committee and the
Credit  and Risk  Management  Committee  ("CRMC").  The Board of  Directors  and
Investment Committee provide executive oversight of investment  activities.  The
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 investment 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 Board of
Directors-approved  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 that may be  invested
within an asset  class.  Duration  limits  place  restrictions  on the amount of
interest rate risk that may be taken. Stress tests measure downside risk to fair
value and  earnings  over  longer  time  intervals  and/or  for  adverse  market
scenarios.

                                       8

<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     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 the investment guidelines and
investment policies. The Company implemented a comprehensive daily measurement
process, administered by the Investment Risk Manager, for monitoring compliance
to limits established by these governance documents.

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.

     In a falling interest rate environment, the risk of pre-payment of some
fixed income securities increases, causing funds to be reinvested at lower
yields. The Company limits this risk by concentrating the fixed income portfolio
on non-callable securities, through careful selection of mortgage-backed
securities that are structured to minimize cash volatility and by purchasing
securities that provide for make-whole type pre-payment fees. Falling interest
rates can also impact demand for the Company's products, as bank certificates of
deposits with no surrender charges and higher average returns from equity
markets may become more attractive to new and existing customers. Conversely, in
a rising interest rate environment, competitive pressures may make it difficult
for the Company to sustain spreads between rates credited on fixed rate deferred
annuities and interest-sensitive life products and portfolio earnings rates,
thereby prompting withdrawals by contractholders. The Company manages this risk
by adjusting interest crediting rates, at least on an annual basis, with due
regard to the yield of its investment portfolio and pricing assumptions and by
prudently managing interest rate risk of assets and 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 is expected to decrease in value by approximately 5%. At
December 31, 2000, the difference between the Company's liability and asset
duration was approximately 1.5 versus a 1.4 gap at December 31, 1999. 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.

     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 experience 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, callable corporate and municipal obligations, and fixed
rate single and flexible premium deferred annuities.


                                       9
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


     Based upon the information and assumptions the Company uses in its duration
calculation and interest rates in effect at December 31, 2000, 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 $25.2 million, versus a decrease of $31.9
million at December 31, 1999. The selection of a 100 basis point immediate
parallel increase in interest rates should not be construed as a prediction by
the Company's management of future market events, but only as an illustration of
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 a particular stock, stock fund or stock index. At
December 31, 2000, the Company had Separate Accounts assets with account values
totaling $560.1 million. This is an increase over the $443.7 million of Separate
Accounts assets at December 31, 1999. The Company earns mortality and expense
fees as a percentage of account value. In the event of an immediate decline of
10% in the account values due to equity market declines, the Company would earn
approximately $700 thousand less in annualized fee income. This is a slight
increase over the $555 thousand amount determined at December 31, 1999 in the
Separate Accounts assets. The contractholder of a variable annuity product may
elect to purchase a minimum death benefit guarantee, generally at the time of
purchase. This guarantee may subject the Company to additional equity price
risk, as the beneficiary may receive his benefit for an amount greater than the
fund balance under contractually defined circumstances and terms. The Company
recorded actuarially determined reserves as of December 31, 2000 for this
exposure. In addition, for certain exposures the Company purchases third party
reinsurance. The Company expects growth in its variable annuity products in the
future, stemming from both new sales as well as market value appreciation, which
will increase its exposure to equity price risk.

CAPITAL RESOURCES AND LIQUIDITY

CAPITAL RESOURCES

     The Company's principal sources of funds are premiums and contract charges;
deposits; receipts of principal, interest from the investment portfolio; and
capital contributions from ALIC, its parent. 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 89.3% 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 interest-sensitive life insurance products, is subject to discretionary
surrender and withdrawal by contractholders. Total surrenders and withdrawal
amounts were $99.2 million, $62.1 million, and $56.5 million in 2000, 1999, and
1998, respectively. As the Company's interest-sensitive life policies and
annuity contracts in force grow and age, the dollar amount of surrenders and
withdrawals will likely increase. While the overall amount of surrenders may
increase in the future, a significant increase in the level of surrenders
relative to total contractholder account balances is not anticipated.

FINANCIAL RATINGS AND STRENGTHS

     At December 31, 2000, the Moody's, Standard and Poor's and A.M. Best's
claims-paying ratings for the Company were Aa2, AA+ and A+, respectively.
Additionally A.M. Best affirmed its December 31, 2000 rating in the first
quarter of 2001.

                                       10

<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


LIQUIDITY

     The NAIC has a standard for assessing the solvency of insurance companies,
which is referred to as risk-based capital ("RBC"). The standard is based on a
formula for determining each insurer's RBC and a model law specifying the
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, 2000, RBC
for the Company was significantly above a level that would require regulatory
action.

INVESTMENTS

     The composition of the investment portfolio at December 31, 2000 is
presented in the table below (see Notes 2 and 4 to the financial statements for
investment accounting policies and additional information).

<TABLE>
<CAPTION>
                                                                                  PERCENT
($ in thousands)                                                FAIR VALUE        TO TOTAL
                                                                ----------        --------
<S>                                                           <C>              <C>
Fixed income securities (1)                                   $   2,476,132             89.3%
Mortgage loans                                                      207,857              7.5
Short-term                                                           58,224              2.1
Policy loans                                                         31,772              1.1
                                                              -------------    -------------
    Total                                                     $   2,773,985            100.0%
                                                              =============    =============
</TABLE>

(1) Fixed income securities are carried at fair value. Amortized cost for these
securities was $2,260,087 at December 31, 2000.

     Total investments were $2.8 billion at December 31, 2000 compared to $2.2
billion at December 31, 1999. The increase was due to positive cash flows
generated from operations and increases in unrealized gains on fixed income
securities.

FIXED INCOME SECURITIES

     The Company's fixed income securities portfolio consists of
privately-placed securities, U.S. government bonds, publicly traded corporate
bonds, , mortgage-backed securities, municipal bonds, foreign government bonds,
and asset-backed securities. The Company generally holds its fixed income
securities to maturity, but has classified all of these securities as available
for sale to allow maximum flexibility in portfolio management. At December 31,
2000, unrealized net capital gains on the fixed income securities portfolio
totaled $216.0 million compared to $54.3 million at December 31, 1999. The
increase in the unrealized gain position is primarily attributable to interest
rate fluctuations from year to year.

                                       11

<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


     At December 31, 2000, 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, 2000 is presented in the following table:

<TABLE>
<CAPTION>
            NAIC
          RATINGS       MOODY'S EQUIVALENT DESCRIPTION             FAIR VALUE     PERCENT TO TOTAL
          -------       ------------------------------             ----------     ----------------
          <S>           <C>                                      <C>              <C>
             1          Aaa/Aa/A                                 $   1,947,206              78.6%
             2          Baa                                            469,000              18.9
             3          Ba                                              44,595               1.8
             4          B                                                7,142               0.3
             5          Caa or lower                                     6,939               0.3
             6          In or near default                               1,250               0.1
                                                                 -------------     -------------
                                                                 $   2,476,132             100.0%
                                                                 =============     =============
</TABLE>

     As of December 31, 2000, the fixed income securities portfolio contained
$712.0 million of privately-placed corporate obligations compared to $529.8
million at December 31, 1999. 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, 2000, 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, 2000 and 1999, $381.0 million and $288.7 million,
respectively, of the fixed income securities portfolio were invested in
mortgage-backed securities ("MBS"). The MBS portfolio consists primarily of
securities which were issued by or have underlying collateral that is guaranteed
by U.S. government agencies or sponsored entities. Therefore the MBS portfolio
has relatively low credit risk.

     The MBS portfolio is subject to interest rate risk since the price
volatility and ultimate realized yield are affected by the rate of repayment of
the underlying mortgages. The Company attempts to limit interest rate risk on
these securities by investing a portion of the portfolio in securities that
provide prepayment protection. At December 31, 2000, approximately 30.9% of the
MBS portfolio was invested in planned amortization class bonds.

     The fixed income securities portfolio contained $39.4 million and $34.2
million of asset-backed securities ("ABS") at December 31, 2000 and 1999,
respectively. The ABS portfolio is subject to credit and interest rate risk.
Credit risk is mitigated by monitoring the performance of the collateral.
Approximately 13.4% of all securities are rated in the highest rating category
by one or more credit rating agencies. The ABS portfolio is subject to interest
rate risk since the price volatility and ultimate realized yield area affected
by the rate of repayment of the underlying assets. Over 34.5% 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.


                                       12
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


MORTGAGE LOANS

     The Company's $207.9 million investment in mortgage loans at December 31,
2000 was 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

     The Company's short-term investment portfolio was $58.2 million and $46.0
million at December 31, 2000 and 1999, 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.

REGULATIONS AND LEGAL PROCEEDINGS

     The Company's business is subject to the effects of a changing social,
economic and regulatory environment. Public and regulatory initiatives have
varied and have included employee benefit regulations, removal of barriers
preventing banks from engaging in the securities and insurance business, tax law
changes affecting the taxation of insurance companies and the tax treatment of
insurance products and its impact on the relative desirability of various
personal investment vehicles. The ultimate changes and eventual effects, if any,
of these initiatives are uncertain.

     In the normal course of its business, the Company is involved in pending
and threatened litigation and regulatory actions in which claims for monetary
damages are asserted. At this time, based on their present status, it is in the
opinion of management, that the ultimate liability, if any, in one or more of
these actions in excess of amounts currently reserved is not expected to have a
material effect on the results of operations, liquidity or financial position of
the Company.

OTHER DEVELOPMENTS

     The NAIC has approved a January 1, 2001 implementation date for newly
developed statutory accounting principles ("codification"). The Company's state
of domicile, New York, has rejected certain accounting principles, specifically
Statement of Statutory Accounting Principle ("SSAP") No. 10 Accounting for Taxes
and continues to review codification and existing statutory accounting
requirements to align existing state laws and regulations as necessary. The
Company currently estimates it will record an increase to surplus of
approximately $4.5 million at implementation. The increase to surplus is
primarily due to favorable treatment investment write-downs receive within the
asset valuation reserve and the reclassification of private placement prepayment
penalties and mortgage loan make-whole fees from the interest maintenance
reserve to investment income. The NAIC has installed a formal maintenance
process to develop and propose new guidance, as well as on-going clarification
and interpretation of issues. The impact of any future changes will be recorded
as they are approved.

PENDING ACCOUNTING STANDARDS

     In June 1999, the Financial Accounting Standards Board ("FASB") delayed the
effective date of Statement of Financial Accounting Standards ("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 delay in
implementation was effected through the issuance of SFAS No. 137, which extends
the SFAS No. 133 requirements to fiscal years beginning after June 15, 2000. In
June 2000, the FASB issued SFAS No. 138, which amends the accounting and
reporting standards of SFAS 133 for certain derivative instruments and certain
hedging activities. As required, the Company has prospectively adopted the
provisions of SFAS No. 133 and SFAS No. 138 ("statements") as of January 1,
2001. The cumulative impact of adoption is not material to either the financial
position or results of operations of the Company.


                                       13
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


     Upon adoption, assets and liabilities pertaining to derivatives (some
previously off balance sheet), certain embedded derivatives and hedged risks are
carried at fair value. In connection with adopting the statements, all hedging
relationships were designated anew. The Company's economic hedging strategies
did not change as a result of adopting the statements, however, the accounting
for most strategies did change. The fair value of the derivative and the hedged
risk in economic hedging strategies which qualify for hedge accounting will be
matched together in Net income. For derivatives in economic hedging strategies
which do not qualify as accounting hedges, the current settlement portion of the
derivative will be classified in Net income together with the risk being
economically hedged while the change in value of the final settlement portion of
the derivative will be classified as a component of Realized capital gains and
losses.

     Hedge ineffectiveness for open accounting hedges will be reported in
realized capital gains and losses. Additionally, the market value changes of
embedded derivatives reported separately will be classified in realized capital
gains and losses, provided the item is not economically hedged. Separation of
the convertible feature from fixed maturity securities results in a discounted
security and a new basis for accretion of discount.





                                       14
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


FORWARD-LOOKING STATEMENTS

     This document contains "forward-looking statements" that anticipate results
based on management's plans are subject to uncertainty. These statements are
made subject to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995.

     Forward-looking statements do not relate strictly to historical or current
facts and may be identified by their use of words like "plans," "expects,"
"will," "anticipates," "estimates," "intends," "believes," "likely," and other
words with similar meanings. These statements may address, among other things,
our strategy for growth, product development, regulatory approvals, market
position, expenses, financial results and reserves. Forward-looking statements
are based on management's current expectations of future events. We cannot
guarantee that any forward-looking statement will be accurate. However, we
believe that our forward-looking statements are based on reasonable, current
expectations and assumptions. We assume no obligation to update any
forward-looking statements as a result of new information or future events or
developments.

     If the expectations or assumptions underlying our forward-looking
statements prove inaccurate or if risks or uncertainties arise, actual results
could differ materially from those communicated in our forward-looking
statements. In addition to the normal risks of business, the Company is subject
to significant risk factors, including those listed below which apply to it as
an insurance business.

-  Changes in market interest rates can have adverse effects on the Company's
   investment portfolio, investment income, product sales and results of
   operations. Increases in market interest rates have an adverse impact on the
   value of the investment portfolio by decreasing unrealized capital gains on
   fixed income securities. Declining market interest rates could have an
   adverse impact on the Company's investment income as the Company invests
   proceeds from positive cash flows from operations and reinvests proceeds from
   maturing and called investments into new investments that could be yielding
   less than the portfolio's average rate. Changes in market rates of interest,
   as compared to rates offered on some of the Company's products, could make
   those products less attractive if competitive investment margins are not
   maintained. This could lead to lower sales and/or changes in the level of
   surrenders on these products. The Company seeks to limit its exposure in this
   area by offering a diverse group of products, periodically reviewing and
   revising crediting rates and providing for surrender charge in the event of
   early withdrawal.

-  The impact of decreasing Separate Accounts balances as a result of
   fluctuating market conditions could cause contract charges realized by the
   Company to decrease.

-  In order to meet the anticipated cash flow requirements of its obligations to
   policyholders, from time to time the Company adjusts the effective duration
   of the assets and liabilities of the Company's investment portfolio. Those
   adjustments may have an impact on the value of the investment portfolio and
   on investment income.

-  The Company's policy acquisition costs related to contractholder funds are
   amortized in proportion to gross profits over the estimated lives of the
   contract periods. Assumptions underlying the gross profits, which include
   estimated fees, investment and expense margins, are periodically updated to
   reflect actual experience resulting in adjustments to the cumulative
   amortization of these costs. These adjustments may have a material effect on
   results of operations.

-  Management believes the reserves for life-contingent contract benefits are
   adequate to cover ultimate policy benefits, despite the underlying risks and
   uncertainties associated with their determination when payments will not
   occur until well into the future. The Company periodically reviews and
   revises its estimates. If future experience differs from assumptions, it may
   have a material impact on results of operations.

-  State insurance regulatory authorities require insurance companies to
   maintain specified levels of statutory capital and surplus. In addition,
   competitive pressures require the Company to maintain financial strength or
   claims-paying ability ratings. These restrictions affect the Company's
   ability to use its capital in other ways.
                                       15
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


-  The Company distributes some of its products under agreements with other
   members of the financial services industry that are not affiliated with the
   Company. Termination of one or more these agreements due to changes in
   control of any of these entities or other factors could have a detrimental
   effect on the Company's sales. This risk may be exacerbated due to the
   enactment of the Gramm-Leach-Bliley Act of 1999, which eliminates many
   federal and state law barriers to affiliations among banks, securities firms,
   insurers and other financial service providers.

-  A number of enacted and pending legislative measures could lead to increased
   consolidation and increased competition for business and for capital in the
   financial services industry.

     -    At the federal level, these measures include the Gramm-Leach-Bliley
          Act of 1999, which eliminates many federal and state law barriers to
          affiliations among banks, securities firms, insurers and other
          financial service providers.

     -    At the state level, these measures include legislation to permit
          mutual insurance companies to convert to a hybrid structure known as a
          mutual holding company, thereby allowing insurance companies owned by
          their policyholders to become stock insurance companies owned (through
          one or more intermediate holding companies) more than 50% by their
          policyholders and potentially up to 49% by stockholders. Also several
          large mutual life insurers have used or are expected to use existing
          state laws and regulations governing the conversion of mutual
          insurance companies into stock insurance companies (demutualization).

     -    In addition, state insurance regulators are reexamining the regulatory
          framework that currently governs the United States insurance business.
          They are engaged in an effort to determine the proper role of state
          insurance regulation in the United States financial services industry
          following the enactment of the Gramm-Leach-Bliley Act. The Company
          cannot predict whether any state or federal measures will be adopted
          to change the nature or scope of the regulation of the insurance
          business or what affect any such measures would have on the Company.

-  Deferred annuities and interest-sensitive life insurance products receive
   favorable policyholder taxation under current tax laws and regulations. Any
   legislative or regulatory changes that adversely alter this treatment are
   likely to negatively affect the demand for these products. Additionally, the
   demand for life insurance products that are used to address a customer's
   estate planning needs may be impacted to the extent any legislative changes
   to the current estate tax laws occur.

-    Financial strength ratings have become an increasingly important factor in
     establishing the competitive position of insurance companies and,
     generally, may be expected to have an effect on an insurance company's
     sales. On an ongoing basis, rating agencies review the financial
     performance and condition of insurers. A downgrade, while not expected,
     could have a material adverse effect on the Company's business, financial
     condition and results of operations.

-  Additional risk factors regarding market risk are incorporated by reference
   to the discussion of "Market Risk" beginning on page 8.

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 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 Registrant's  financial  statements,  for the
year  ended  December  31,  2000,   together  with  the  Report  of  Independent
Accountants are set forth on pages F-1 to F-25 of this report.

     2. Financial Statement Schedules.  The following are included in Part IV of
this report:

     Schedule IV - Reinsurance page F-24

     Schedule V - Valuation and Qualifying Accounts page F-25

     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, 1999.

     (c) Exhibits

Exhibit No.                Description

3(i)               Restated   Certificate  of  Incorporation,   as  amended,  of
                   Allstate Life Insurance Company of New York (previously filed
                   in Form 10K dated March 30, 1999)

3(ii)              Amended  By-laws of Allstate  Life  Insurance  Company of New
                   York (previously filed in Form 10K dated March 30, 1999)


                                       17
<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/ THOMAS J. WILSON, II
                                  -------------------------
                                  Thomas J. Wilson, II
                                  President, Director and Chairman of the Board
                                  (Principal Executive Officer)

                                  Date:     March 26, 2001
                                  -------------------------

        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/THOMAS J. WILSON, II               President, Director and
     ------------------------               Chairman of the Board
     Thomas J. Wilson, II                   (Principal Executive Officer)

Date: March 26, 2001
     ---------------

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

Date: March 26, 2001
     ---------------


By:   /s/SAMUEL H. PILCH                     Controller
     -------------------                     (Principal Accounting Officer)
     Samuel H. Pilch

Date: March 26, 2001
     ---------------

By:   /s/STEVEN C. VERNEY                    Director and Vice President
     --------------------                    (Principal Financial Officer)
     Steven C. Verney

Date: March 26, 2001
     ---------------

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

Date: March 26, 2001
     ---------------

By:   /s/MARGARET G. DYER                     Director
     --------------------
     Margaret G. Dyer

Date: March 26, 2001
     ---------------

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

Date: March 26, 2001
     ---------------

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

Date: March 26, 2001
     ---------------

                                       18
<PAGE>


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

Date: March 26, 2001
     ---------------

By:   /s/JOHN C. LOUNDS                        Director
     ------------------
     John C. Lounds

Date: March 26, 2001
     ---------------

By:   /s/J. KEVIN MCCARTHY                     Director
     ---------------------
     J. Kevin McCarthy

Date: March 26, 2001
     ---------------

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

Date: March 26, 2001
     ---------------

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

Date: March 26, 2001
     ---------------

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

Date: March 26, 2001
     ---------------

By:   /s/PATRICIA W. WILSON                    Director and Vice President
     ----------------------
     Patricia W. Wilson

Date: March 26, 2001
     ---------------

                                       19
<PAGE>






                              Financial Statements

                                      Index
                                     -----

                                                                            Page
                                                                            ----

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

Financial Statements:

    Statements of Operations and Comprehensive Income for the Years Ended
             December 31, 2000, 1999 and 1998.........................F-2

    Statements of Financial Position
             December 31, 2000 and 1999...............................F-3

    Statements of Shareholder's Equity for the Years Ended
             December 31, 2000, 1999 and 1998.........................F-4

    Statements of Cash Flows for the Years Ended
             December 31, 2000, 1999 and 1998.........................F-5

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

    Schedule IV - Reinsurance for the Years Ended
             December 31, 2000, 1999 and 1998.........................F-24

    Schedule V - Valuation and Qualifying Accounts
                  December 31, 2000, 1999 and 1998....................F-25



                                      20

<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, 2000 and 1999, 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, 2000. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2000 and
1999, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America. 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 23, 2001


                                      F-1
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                            STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                                     YEAR ENDED DECEMBER 31,
                                                           ------------------------------------------------------------------------
($ in thousands)                                                  2000                        1999                       1998
                                                           -----------------           -----------------          -----------------
<S>                                                        <C>                         <C>                        <C>
REVENUES

Premiums (net of reinsurance ceded
   of $5,491, $4,253, and $3,204)                          $         104,316           $          63,748          $          85,771
Contract charges                                                      41,885                      38,626                     33,281
Net investment income                                                176,539                     148,331                    134,413
Realized capital gains and losses                                     (5,181)                     (2,096)                     4,697
                                                           -----------------           -----------------          -----------------
                                                                     317,559                     248,609                    258,162
                                                           -----------------           -----------------          -----------------

COSTS AND EXPENSES

Contract benefits (net of reinsurance receoverable
   of $715, $1,166, and $797)                                        233,299                     178,267                    183,839
Amortization of deferred policy acquisition costs                     13,744                       8,985                      7,029
Operating costs and expenses                                          23,985                      20,151                     24,703
                                                           -----------------           -----------------          -----------------
                                                                     271,028                     207,403                    215,571
                                                           -----------------           -----------------          -----------------

INCOME FROM OPERATIONS
   BEFORE INCOME TAX EXPENSE                                          46,531                      41,206                     42,591
Income tax expense                                                    15,616                      14,640                     14,934
                                                           -----------------           -----------------          -----------------

NET INCOME                                                            30,915                      26,566                     27,657
                                                           -----------------           -----------------          -----------------

OTHER COMPREHENSIVE INCOME (LOSS), AFTER TAX
Change in unrealized net capital gains and losses                     88,008                     (52,672)                    18,427
                                                           -----------------           -----------------          -----------------

COMPREHENSIVE INCOME (LOSS)                                $         118,923           $         (26,106)         $          46,084
                                                           =================           =================          =================
</TABLE>







                       See notes to financial statements.

                                        F-2
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                        STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,
                                                                         -------------------------------------
                                                                               2000                 1999
                                                                         ----------------     ----------------
($ in thousands, except par value data)
<S>                                                                      <C>                  <C>
ASSETS
Investments
  Fixed income securities, at fair value
   (amortized cost $2,260,087 and $1,858,216)                            $      2,476,132     $      1,912,545
  Mortgage loans                                                                  207,857              166,997
  Short-term                                                                       58,224               46,037
  Policy loans                                                                     31,772               31,109
                                                                         ----------------     ----------------
     Total investments                                                          2,773,985            2,156,688

Cash                                                                                2,162                1,135
Deferred policy acquisition costs                                                 124,601              106,932
Accrued investment income                                                          32,422               25,712
Reinsurance recoverables, net                                                       1,269                1,949
Other assets                                                                        7,980                7,803
Separate Accounts                                                                 560,089              443,705
                                                                         ----------------     ----------------
     TOTAL ASSETS                                                        $      3,502,508     $      2,743,924
                                                                         ================     ================

LIABILITIES
Reserve for life-contingent contract benefits                            $      1,226,349     $      1,098,016
Contractholder funds                                                            1,107,495              839,157
Current income taxes payable                                                       11,723               10,132
Deferred income taxes                                                              53,181                3,077
Other liabilities and accrued expenses                                            117,304               41,218
Payable to affiliates, net                                                          3,556                4,731
Separate Accounts                                                                 560,089              443,705
                                                                         ----------------     ----------------
     TOTAL LIABILITIES                                                          3,079,697            2,440,036
                                                                         ----------------     ----------------

COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 9)

SHAREHOLDER'S EQUITY
Common stock, $25 par value, 100,000
   shares authorized, issued and outstanding                                        2,500                2,500
Additional capital paid-in                                                         45,787               45,787
Retained income                                                                   256,282              225,367

Accumulated other comprehensive income:
  Unrealized net capital gains                                                    118,242               30,234
                                                                         ----------------     ----------------
     TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME                                 118,242               30,234
                                                                         ----------------     ----------------
     TOTAL SHAREHOLDER'S EQUITY                                                   422,811              303,888
                                                                         ----------------     ----------------
     TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY                          $      3,502,508     $      2,743,924
                                                                         ================     ================
</TABLE>



                       See notes to financial statements.

                                       F-3
<PAGE>



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

<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,
                                                                   -----------------------------------------------------------
                                                                         2000                 1999                  1998
                                                                   ----------------     ----------------      ----------------
($ in thousands)
<S>                                                                <C>                  <C>                   <C>
COMMON STOCK
Balance, beginning of year                                         $          2,500     $          2,000      $          2,000
Issuance of stock                                                                 -                  500                     -
                                                                   ----------------     ----------------      ----------------
Balance, end of year                                                          2,500                2,500                 2,000
                                                                   ----------------     ----------------      ----------------

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

RETAINED INCOME
Balance, beginning of year                                         $        225,367     $        198,801      $        171,144
Net income                                                                   30,915               26,566                27,657
                                                                   ----------------     ----------------      ----------------
Balance, end of year                                                        256,282              225,367               198,801
                                                                   ----------------     ----------------      ----------------

ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of year                                         $         30,234     $         82,906      $         64,479
Change in unrealized net capital gains
     and losses                                                              88,008              (52,672)               18,427
                                                                   ----------------     ----------------      ----------------
Balance, end of year                                                        118,242               30,234                82,906
                                                                   ----------------     ----------------      ----------------

TOTAL SHAREHOLDER'S EQUITY                                         $        422,811     $        303,888      $        329,494
                                                                   ================     ================      ================
</TABLE>






                       See notes to financial statements.

                                        F-4
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                        YEAR ENDED DECEMBER 31,
                                                                     --------------------------------------------------------------
($ in thousands)                                                          2000                    1999                    1998
                                                                     --------------          --------------          --------------
<S>                                                                  <C>                     <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                           $       30,915          $       26,566          $    27,657
Adjustments to reconcile net income to net cash
    provided by operating activities
       Amortization and other non-cash items                                (45,051)                (37,619)             (34,890)
       Realized capital gains and losses                                      5,181                   2,096               (4,697)
       Interest credited to contractholder funds                             52,499                  36,736               41,200
       Changes in:
           Life-contingent contract benefits and
               contractholder funds                                          75,031                  38,527               53,343
           Deferred policy acquisition costs                                (25,303)                (17,262)             (16,693)
           Income taxes payable                                               4,305                   2,094               13,865
           Other operating assets and liabilities                           (11,916)                 13,049              (15,974)
                                                                     --------------          --------------          -----------
               Net cash provided by operating activities                     85,661                  64,187               63,811
                                                                     --------------          --------------          -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of fixed income securities                              164,125                 161,443               65,281
Investment collections
       Fixed income securities                                               42,449                  21,822              159,648
       Mortgage loans                                                        15,681                   7,479                5,855
Investments purchases
       Fixed income securities                                             (516,908)               (383,961)            (292,444)
       Mortgage loans                                                       (55,914)                (31,888)             (24,252)
Change in short-term investments, net                                        16,139                  29,493              (55,846)
Change in policy loans, net                                                    (663)                 (1,489)              (2,020)
                                                                     --------------          --------------          -----------
               Net cash used in investing activities                       (335,091)               (197,101)            (143,778)
                                                                     --------------          --------------          -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock                                            -                     500                    -
Contractholder fund deposits                                                408,711                 197,439              137,473
Contractholder fund withdrawals                                            (158,254)                (67,007)             (54,782)
                                                                     --------------          --------------          -----------
               Net cash provided by financing activities                    250,457                 130,932               82,691
                                                                     --------------          --------------          -----------

NET INCREASE (DECREASE) IN CASH                                               1,027                  (1,982)               2,724
CASH AT THE BEGINNING OF YEAR                                                 1,135                   3,117                  393
                                                                     --------------          --------------          -----------
CASH AT END OF YEAR                                                  $        2,162          $        1,135          $     3,117
                                                                     ==============          ==============          ===========
</TABLE>


                       See notes to financial statements.

                                        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 accounting principles generally accepted in the United States of America.

     To conform with the 2000 presentation, certain amounts in the prior year's
financial statements and notes have been reclassified.

NATURE OF OPERATIONS

     The Company markets a broad line of life insurance and investment products
in the state of New York through a combination of Allstate agents, which include
life specialists and Personal Financial Representatives, securities firms,
banks, specialized brokers and direct response marketing. Life insurance
products consist of interest-sensitive life, traditional products, including
term and whole life and immediate annuities with life contingencies. Investment
products include deferred annuities and immediate annuities without life
contingencies. Deferred annuities include fixed rate, market value adjusted and
variable annuities. In 2000, annuity premiums and deposits represented 88.2% of
the Company's total statutory premiums and deposits.

     The Company monitors economic and regulatory developments that have the
potential to impact its business. Federal legislation has allowed banks and
other financial organizations to have greater participation in the securities
and insurance businesses. This legislation may 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 that lessen
these incentives are likely to negatively impact the demand for these products.
The demand for life insurance products that are used to address a customer's
estate planning needs may be impacted to the extent any legislative changes
occur to the current estate tax laws.

     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 that market and distribute its products, change in control of
these non-affliliated entities with which the Company has alliances could
negatively impact the Company's sales.

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 policy acquisition costs, and certain reserves for life-contingent
contract benefits, is reflected as a component of shareholder's equity.
Provisions for losses 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


                                       F-6
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


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 that
approximates fair value, and includes collateral received in connection with
certain securities lending activities. Policy loans are carried at the unpaid
principal balances.

     Investment income consists primarily of interest, which is recognized on an
accrual basis. 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 financial futures contracts that are derivative
financial instruments. By meeting specific criteria, these futures are
designated as accounting hedges and accounted for on a deferral basis. In order
to qualify as accounting hedges, financial futures contracts must reduce the
primary market risk exposure on an enterprise or transaction basis in
conjunction with a 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. 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 financial futures
contract becomes ineffective (including if the occurrence of a hedged
anticipatory transaction is no longer probable), the Company may terminate the
derivative position. Gains and losses on ineffective hedges 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 deferred and amortized over the remaining life
of the hedged item.

     The Company accounts for financial futures 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. Under deferral accounting, gains and losses on financial futures
contracts are deferred as other liabilities and accrued expenses. Once the
anticipated transaction occurs, the deferred gains and losses are considered
part of the cost basis of the asset and reported net of tax in shareholder's
equity. The gains and losses deferred are then recognized in conjunction with
the earnings on the hedged item. Fees and commissions paid on these derivatives
are also deferred as an adjustment to the carrying value of the hedged item.

RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS AND INTEREST CREDITED

     Traditional life insurance products consist principally of products with
fixed and guaranteed premiums and benefits, primarily term and whole life
insurance products and certain annuities with life contingencies. Premiums from
these products are recognized as revenue when due. Benefits are recognized in
relation to such revenue so as to result in the recognition of profits over the
life of the policy and are reflected in contract benefits.

     Interest-sensitive life contracts are insurance contracts whose terms are
not fixed and guaranteed. The terms that may be changed include premiums paid by
the contractholders, interest credited to the contractholder account balances
and one or more amounts assessed against the contractholders. Premiums from
these contracts are reported as deposits to the contractholder funds. Contract
charge revenue consists of fees assessed against the contractholder account


                                       F-7
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


balances for the cost of insurance (mortality risk), contract administration and
surrender charges. Contract benefits include interest credited to contracts and
claims incurred in excess of the related contractholder account balances.

     Limited payment contracts, a type of life-contingent immediate annuity or
traditional life product, are contracts that provide insurance protection over a
contract period that extends beyond the period in which premiums are collected.
Gross premiums in excess of the net premium on limited payment contracts are
deferred and recognized over the contract period. Contract benefits are
recognized in relation to such revenue so as to result in the recognition of
profits over the life of the policy.

     Contracts that do not subject the Company to significant risks arising from
mortality or morbidity are referred to as investment contracts. Fixed rate
annuities, market value adjusted annuities and immediate annuities without life
contingencies are considered investment contracts. Deposits received for such
contracts are reported as deposits to contractholder funds. Contract charge
revenue for investment contracts consists of charges assessed against the
contractholder account balances for contract administration and surrenders.
Contract benefits include interest credited and claims incurred in excess of the
related contractholder account balances.

     Crediting rates for fixed rate annuities and interest-sensitive life
contracts are adjusted periodically by the Company to reflect current market
conditions.

     Variable annuity contracts are sold as Separate Accounts products. The
assets supporting these products are legally segregated and available only to
settle Separate Accounts contract obligations. Deposits received are reported as
Separate Accounts liabilities. The Company's contract charge revenue for these
contracts consists of charges assessed against the Separate Accounts fund
balances for contract maintenance, administration, mortality, expense and
surrenders.

DEFERRED POLICY ACQUISITION COSTS

     Certain costs that vary with and are primarily related to acquiring life
and investment business, principally agents or brokers remuneration, premium
taxes, certain underwriting costs and direct mail solicitation expenses, are
deferred and amortized to income.

     For traditional life insurance and limited payment contracts, these costs
are amortized in proportion to the estimated revenue on such business.
Assumptions relating to estimated revenue, as well as to all other aspects of
the deferred acquisition costs and reserve calculations, are determined based
upon conditions as of the date of the policy issue and are generally not revised
during the life of the policy. Any deviations from projected business in-force,
resulting from actual policy terminations differing from expected levels, and
any estimated premium deficiencies change the rate of amortization in the period
such events occur. Generally, the amortization period for these contracts
approximates the estimated lives of the policies.

     For interest-sensitive life and investment contracts, the costs are
amortized in relation to the present value of the estimated gross profits on
such business over the estimated lives of the contract periods. Gross profits
are determined at the date of policy issue and comprise estimated investment,
mortality, expense margins and surrender charges. Assumptions underlying the
gross profits are periodically updated to reflect actual experience, and changes
in the amount or timing of estimated gross profits will result in adjustments to
the cumulative amortization of these costs.

     To the extent unrealized gains or losses on fixed income securities carried
at fair value would result in an adjustment of estimated gross profits had those
gains or losses actually been realized, the related unamortized deferred policy
acquisition costs are recorded net of tax as a reduction of the unrealized gain
or loss included in shareholder's equity.

     The present value of future profits inherent in acquired blocks of
insurance is classified as a component of deferred policy acquisition costs. The
present value of future profits is amortized over the life of the blocks of
insurance using


                                       F-8
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


current crediting rates.

REINSURANCE RECOVERABLE

     In the normal course of business, the Company seeks to limit aggregate and
single exposure to losses on large risks by purchasing reinsurance from other
insurers (See Note 8). Reinsurance recoverables are estimated based upon
assumptions consistent with those used in establishing the underlying reinsured
contacts. Insurance liabilities are reported gross of reinsurance recoverables.
Reinsurance does not extinguish the Company's primary liability under the
policies written and therefore reinsurers and amounts recoverable there from are
regularly evaluated by the Company and allowances for uncollectible reinsurance
are established as appropriate.

INCOME TAXES

     The income tax provision is calculated under the liability method. 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 policy 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 deferred variable annuity contracts, the assets and
liabilities of which are legally segregated and recorded as assets and
liabilities of the Separate Accounts. Absent any contract provision wherein the
Company guarantees either a minimum return or account value upon death or
annuitization, variable annuity contractholders bear the investment risk that
the Separate Accounts' funds may not meet their stated investment objectives.

     The assets of the Separate Accounts are carried at fair value. Separate
Accounts liabilities represent the contractholders' claim to the related assets
and are carried at the fair value of the assets. In the event that the asset
value of certain contractholder accounts are projected to be below the value
guaranteed by the Company, a liability is established through a charge to
earnings. 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. As
described earlier, revenues to the Company from the Separate Accounts are
recorded as contract charges.

RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS

     The reserve for life-contingent contract benefits, which relates to
traditional life insurance, immediate annuities with life contingencies and
certain variable annuity guarantees, is computed on the basis of assumptions as
to future investment yields, mortality, 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. Detailed reserve assumptions and reserve interest rates are outlined
in Note 7. 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 net of tax 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, interest-sensitive life policies and certain other investment
contracts. Deposits 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. Detailed information on crediting rates and surrender
and withdrawal protection on contractholder funds are outlined in Note 7.

OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS

     Commitments to extend mortgage loans have only off-balance-sheet risk
because their contractual amounts are not


                                       F-9
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


recorded in the Company's statements of financial position. The contractual
amounts and fair values of these instruments are presented in Note 5.

USE OF ESTIMATES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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.

PENDING ACCOUNTING STANDARDS

     In June 1999, the Financial Accounting Standards Board ("FASB") delayed the
effective date of Statement of Financial Accounting Standards ("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 delay in
implementation was effected through the issuance of SFAS No. 137, which extends
the SFAS No. 133 requirements to fiscal years beginning after June 15, 2000. In
June 2000, the FASB issued SFAS No. 138, which amends the accounting and
reporting standards of SFAS 133 for certain derivative instruments and certain
hedging activities. As required, the Company has prospectively adopted the
provisions of SFAS No. 133 and SFAS No. 138 ("statements") as of January 1,
2001. The cumulative impact of adoption is not material to either the financial
position or results of operations of the Company.

     Upon adoption, assets and liabilities pertaining to derivatives (some
previously off-balance sheet), embedded derivatives and hedged risks are carried
at fair value. In connection with adopting the statements, all hedging
relationships were designated anew. The Company's economic hedging strategies
did not change as a result of adopting the statements, however, the accounting
for most other strategies did change. The fair value of the derivative and the
hedged risk in economic hedging strategies which qualify for hedge accounting
will be matched together in Net income. For derivatives in economic hedging
strategies which do not qualify as accounting hedges, the current settlement
portion in Net income together with the risk being economically hedged while the
change in value of the final settlement portion of the derivative will be
classified as a component of Realized capital gains and losses.

     Hedge ineffectiveness from open accounting hedges will be reported in
Realized capital gains and losses. Additionally, the market value changes of
embedded derivatives reported separately will be classified in Realized capital
gains and losses, provided the item is not economically hedged. Separation of
the convertible feature from fixed maturity securities generally results in
discounted security and a new basis of accretion of discount.

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 recoverables 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. (See Note 8 for amounts ceded to ALIC).

STRUCTURED SETTLEMENT ANNUITIES

     The Company issued $16,189, $14,561 and $12,747 of structured settlement
annuities, a type of immediate annuity, in 2000, 1999 and 1998, respectively, at
prices determined based upon interest rates in effect at the time of purchase,
to fund structured settlements in matters involving AIC. Of these amounts,
$4,392, $4,298 and $5,152 relate to structured settlement annuities with life
contingencies and are included in premium income in 2000, 1999 and 1998,
respectively. Additionally, the reserve for life-contingent contract benefits
was increased by approximately 94% of


                                       F-10
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


such premium received in each of these years. In most cases, these annuities
were issued to Allstate Settlement Corporation ("ASC"), a subsidiary of ALIC,
which, under a "qualified assignment", assumed AIC's obligation to make the
future payments.

     AIC has issued surety bonds to guarantee the payment of structured
settlement benefits assumed by ASC (from both AIC and non-related parties) and
funded by certain annuity contracts issued by the Company. ASC has entered into
General Indemnity Agreements pursuant to which it indemnified AIC for any
liabilities associated with the surety bonds and gives AIC certain collateral
security rights with respect to the annuities and certain other rights in the
event of any defaults covered by the surety bonds. Reserves recorded by the
Company for annuities related to the surety bonds were $1.29 billion and $1.19
billion at December 31, 2000 and 1999, respectively.

BUSINESS OPERATIONS

     The Company utilizes services performed by AIC and ALIC as well as business
facilities owned or leased, and operated by AIC in conducting its business
activities. In addition, the Company shares the services of employees with AIC.
The Company reimburses AIC and ALIC for the operating expenses incurred on
behalf of the Company. The Company is charged for the cost of these operating
expenses based on the level of services provided. Operating expenses, including
compensation, retirement and other benefit programs, allocated to the Company
were $15,602, $16,155 and $23,369 in 2000, 1999 and 1998, respectively. A
portion of these expenses relate to the acquisition of business that are
deferred and amortized over the contract period.

DEBT

     The Company has entered into an intercompany loan agreement with the
Corporation. The amount of funds available to the Company at a given point in
time is dependent upon the debt position of the Corporation. There was no
outstanding balance at December 31, 2000 and 1999, respectively.

BROKER/DEALER AGREEMENT

     Beginning May 1, 2000, the Company receives underwriting and distribution
services from Allstate Distributors, L.L.C. ("ADLLC"), a broker/dealer company
owned equally by ALIC and Putnam Investments, Inc. ("Putnam") for variable
annuity contracts sold pursuant to a joint venture agreement between the Company
and Putnam. The Company incurred $10,932 of commission expenses and other
distribution expenses payable to ADLLC during 2000. Other distribution expenses
include administrative, legal, financial management and sales support that the
Company provides to ADLLC, for which the Company earned administration fees.
Other distribution expenses also include marketing expenses for subsidized
interest rates associated with the Company's dollar cost averaging program, for
which ADLLC reimbursed the Company $549 for the year ended December 31, 2000.



                                       F-11
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)

4.   INVESTMENTS

     FAIR VALUES

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

<TABLE>
<CAPTION>
                                                                           GROSS UNREALIZED
                                                    AMORTIZED             ------------------                FAIR
                                                      COST             GAINS              LOSSES            VALUE
                                                      ----             -----              ------            -----
<S>                                              <C>               <C>               <C>               <C>
AT DECEMBER 31, 2000
U.S. government and agencies                     $      461,621    $      137,950    $          (81)   $      599,490
Municipal                                                97,310             2,626              (858)           99,078
Corporate                                             1,227,247            70,431           (20,527)        1,277,151
Foreign government                                       66,680            13,367                 -            80,047
Mortgage-backed securities                              368,614            13,004              (669)          380,949
Asset-backed securities                                  38,615               831               (29)           39,417
                                                 --------------    --------------    --------------    --------------
  Total fixed income securities                  $    2,260,087    $      238,209    $      (22,164)   $    2,476,132
                                                 ==============    ==============    ==============    ==============

AT DECEMBER 31, 1999
U.S. government and agencies                     $      413,875    $       53,717    $       (2,705)   $      464,887
Municipal                                                60,256               997            (1,976)           59,277
Corporate                                               996,298            36,303           (31,695)        1,000,906
Foreign government                                       61,987             3,217              (639)           64,565
Mortgage-backed securities                              291,304             4,770            (7,370)          288,704
Asset-backed securities                                  34,496                26              (316)           34,206
                                                 --------------    --------------    --------------    --------------
  Total fixed income securities                  $    1,858,216    $       99,030    $      (44,701)   $    1,912,545
                                                 ==============    ==============    ==============    ==============
</TABLE>

SCHEDULED MATURITIES
      The scheduled maturities for fixed income securities are as follows at
December 31, 2000:

<TABLE>
<CAPTION>
                                                                          AMORTIZED           FAIR
                                                                             COST             VALUE
                                                                             ----             -----
<S>                                                                     <C>              <C>
Due in one year or less                                                 $      11,073    $      11,075
Due after one year through five years                                         310,910          318,412
Due after five years through ten years                                        291,686          302,094
Due after ten years                                                         1,239,189        1,424,185
                                                                        -------------    -------------
                                                                            1,852,858        2,055,766
Mortgage- and asset-backed securities                                         407,229          420,366
                                                                        -------------    -------------
  Total                                                                 $   2,260,087    $   2,476,132
                                                                        =============    =============
</TABLE>

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



                                       F-12
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


<TABLE>
<CAPTION>
NET INVESTMENT INCOME
YEAR ENDED DECEMBER 31,                                            2000             1999               1998
                                                                   ----             ----               ----
<S>                                                           <C>               <C>               <C>
Fixed income securities                                       $     160,919     $     135,561     $     124,100
Mortgage loans                                                       14,899            12,346            10,309
Other                                                                 3,227             3,495             2,940
                                                              -------------     -------------     -------------
  Investment income, before expense                                 179,045           151,402           137,349
  Investment expense                                                  2,506             3,071             2,936
                                                              -------------     -------------     -------------
  Net investment income                                       $     176,539     $     148,331     $     134,413
                                                              =============     =============     =============
</TABLE>

<TABLE>
<CAPTION>
REALIZED CAPITAL GAINS AND LOSSES, AFTER TAX
YEAR ENDED DECEMBER 31,                                            2000             1999               1998
                                                                   ----             ----               ----
<S>                                                           <C>               <C>               <C>
Fixed income securities                                       $      (2,089)    $      (2,207)    $       4,755
Mortgage loans                                                          697                42               (65)
Other                                                                (3,789)               69                 7
                                                              -------------     -------------     -------------

   Realized capital gains and losses                                 (5,181)           (2,096)            4,697
   Income taxes                                                       1,813              (765)            1,644
                                                              -------------     -------------     -------------
   Realized capital gains and losses, after tax               $      (3,368)    $      (1,331)    $       3,053
                                                              =============     =============     =============
</TABLE>

     Excluding calls and prepayments, gross gains of $2,986, $1,713 and $2,905
and gross losses of $8,864, $3,845 and $164 were realized on sales of fixed
income securities during 2000, 1999 and 1998, respectively.

UNREALIZED NET CAPITAL GAINS

     Unrealized net capital gains on fixed income securities included in
shareholder's equity at December 31, 2000 are as follows:

<TABLE>
<CAPTION>
                                                                                GROSS UNREALIZED              UNREALIZED
                                    AMORTIZED COST     FAIR VALUE           GAINS             LOSSES           NET GAINS
                                    --------------     -----------       -----------       -----------       -----------
<S>                                 <C>                <C>               <C>               <C>               <C>
Fixed income securities              $ 2,260,087       $ 2,476,132       $   238,209       $   (22,164)      $   216,045
                                     -----------       -----------       -----------       -----------       -----------
Reserve for life-contingent
  contract benefits                                                                                              (26,500)
Deferred acquisition costs                                                                                        (7,634)
Deferred income taxes                                                                                            (63,669)
                                                                                                             -----------
Unrealized net capital gains                                                                                 $   118,242
                                                                                                             ===========
</TABLE>

<TABLE>
<CAPTION>
CHANGE IN UNREALIZED NET CAPITAL GAINS
YEAR ENDED DECEMBER 31,                                                       2000             1999              1998
                                                                              ----             ----              ----
<S>                                                                      <C>               <C>               <C>
Fixed income securities                                                  $   161,716       $  (262,766)      $    70,948
Reserves for life contingent-contract benefits                               (18,685)          179,891           (42,251)
Deferred income taxes                                                        (47,389)           28,362            (9,922)
Deferred policy acquisition costs and other                                   (7,634)            1,841              (348)
                                                                         -----------       -----------       -----------
Increase (decrease) in unrealized net capital gains                      $    88,008       $   (52,672)      $    18,427
                                                                         ===========       ===========       ===========
</TABLE>


                                       F-13
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


INVESTMENT LOSS PROVISIONS AND VALUATION ALLOWANCES

     Pretax provisions for investment losses, principally relating to valuation
allowances on mortgage loans were $114 in 1998. There were no provisions for
investment losses in 2000 or 1999.

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, 2000 and 1999.

     The valuation allowance for mortgage loans at December 31, 2000, 1999 and
1998 were $119, $600 and $600, respectively. Net additions and reductions to the
mortgage loan valuation allowances were ($481), $0 and $114 for the year ended
December 31, 2000, 1999 and 1998, respectively.

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, 2000:

<TABLE>
<CAPTION>
(% of municipal bond portfolio carrying value)                                    2000                 1999
                                                                                  ----                 ----
         <S>                                                                      <C>                  <C>
         California                                                               23.4%                20.2%
         Pennsylvania                                                             14.9                  7.5
         Nebraska                                                                 10.8                  -
         Ohio                                                                     10.7                 16.4
         Nevada                                                                    8.6                  -
         Utah                                                                      8.1                  -
         Illinois                                                                  6.9                 11.6
</TABLE>

     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, 2000:

<TABLE>
<CAPTION>
(% of commercial mortgage portfolio carrying value)                               2000                 1999
                                                                                  ----                 ----
         <S>                                                                      <C>                  <C>
         California                                                               30.8%                34.9%
         New York                                                                 26.8                 27.6
         New Jersey                                                               16.0                 12.3
         Illinois                                                                 14.3                 13.2
         Pennsylvania                                                              6.8                  9.7
</TABLE>


                                       F-14
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


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

<TABLE>
<CAPTION>
(% of commercial mortgage portfolio carrying value)                               2000                 1999
                                                                                  ----                 ----
         <S>                                                                      <C>                  <C>
         Retail                                                                    29.0%                33.1%
         Office buildings                                                          21.2                 18.9
         Warehouse                                                                 18.4                 18.5
         Apartment complex                                                         17.4                 15.8
         Industrial                                                                 6.9                  4.6
         Other                                                                      7.1                  9.1
                                                                                  ------               ------
                                                                                  100.0%               100.0%
                                                                                  ======               ======
</TABLE>

     The contractual maturities of the commercial mortgage loan portfolio as of
December 31, 2000, are as follows:

<TABLE>
<CAPTION>
                                                      NUMBER OF LOANS      CARRYING VALUE           PERCENT
                                                      ---------------      --------------           -------
<S>                                                   <C>                  <C>                      <C>
2001                                                              3        $        3,072             1.5%
2002                                                              2                 5,631             2.7
2003                                                              0                     -               -
2004                                                              3                 3,739             1.8
2005                                                              3                 7,696             3.7
Thereafter                                                       39               187,719            90.3
                                                        -----------        --------------           ------
     Total                                                       50        $      207,857           100.0%
                                                        ===========        ==============           ======
</TABLE>

     In 2000, $4.5 million of commercial mortgage loans were contractually due.
Of these, 51.1% were paid as due and 48.9% were refinanced at prevailing market
terms.

     The Company participates in securities lending programs with third parties,
primarily large brokerage firms. At December 31, 2000, fixed income securities
with a carrying value of $89,241 have been pledged as collateral under these
lending agreements. As security, the Company receives cash collateral that is
included in Short-term investments with an offsetting liability recorded in
Other liabilities.

SECURITIES ON DEPOSIT

     At December 31, 2000, fixed income securities with a carrying value of
$2,159 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 policy acquisition costs and reinsurance
recoverables) and liabilities (including traditional life and interest-sensitive
life 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 approximate fair value.


                                       F-15
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


FINANCIAL ASSETS

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

<TABLE>
<CAPTION>
                                               2000                                       1999
                             ----------------------------------------   ---------------------------------------
                                  CARRYING               FAIR                 CARRYING             FAIR
                                   VALUE                 VALUE                 VALUE               VALUE
                                   -----                 -----                 -----               -----
<S>                          <C>                     <C>                <C>                    <C>
Fixed income securities        $  2,476,132          $  2,476,132          $  1,912,545        $  1,912,545
Mortgage loans                      207,857               212,345               166,997             159,853
Short-term                           58,224                58,224                46,037              46,037
Policy loans                         31,772                31,772                31,109              31,109
Separate Accounts                   560,089               560,089               443,705             443,705
</TABLE>

CARRYING VALUE AND FAIR VALUE INCLUDES THE EFFECTS OF DERIVATIVE FINANCIAL
INSTRUMENTS WHERE APPLICABLE.

     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 values approximate fair value.

     The carrying value of policy loans is deemed to approximate 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:

<TABLE>
<CAPTION>
                                                  2000                                    1999
                             ----------------------------------------   ---------------------------------------
                                  CARRYING               FAIR                CARRYING              FAIR
                                   VALUE                 VALUE                 VALUE               VALUE
                                   -----                 -----                 -----               -----
<S>                          <C>                     <C>                <C>                    <C>
Contractholder funds on
   investment contracts        $    874,158          $    850,767           $    627,488       $    605,113
Separate Accounts                   560,089               560,089                443,705            443,705
</TABLE>

     The fair value of contractholder funds on investment contracts is based on
the terms of the underlying contracts. 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 financial
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.


                                       F-16
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


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

<TABLE>
<CAPTION>
                                                                                                 CARRYING VALUE
                                                CONTRACT        CREDIT               FAIR            ASSETS/
                                                 AMOUNT         EXPOSURE             VALUE        (LIABILITIES)
                                                 ------         --------             -----         -----------
<S>                                            <C>             <C>               <C>             <C>
AT DECEMBER 31, 2000
--------------------
Financial futures contracts                    $    21,500     $        -        $        (32)    $        (54)

AT DECEMBER 31, 1999
--------------------
Financial futures contracts                    $     8,700     $        -        $        (29)    $        588
</TABLE>

CARRYING VALUE IS REPRESENTATIVE OF DEFERRED GAINS AND LOSSES.

     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 as financial
futures contracts have limited off-balance-sheet credit risk as they are
executed on organized exchanges and require daily cash settlement of margins.

     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 financial futures contracts to manage
its market risk related to anticipatory investment purchases and sales.
Financial futures used as hedges of anticipatory transactions pertain to
identified transactions that are probable to occur and are generally completed
within 90 days.

     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 into 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 borrowers. At
December 31, 2000, the Company did not have any mortgage loan commitments
outstanding.


                                       F-17
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


6.   DEFERRED POLICY ACQUISITION COSTS

     Certain costs of acquiring business which were deferred and amortized for
the years ended December 31, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                                      2000                   1999
                                                                      ----                   ----
          <S>                                                    <C>                    <C>
          Balance, beginning of year                             $     106,932          $      87,830
          Acquisition costs deferred                                    39,047                 26,247
          Amortization charged to income                               (21,994)                (8,861)
          Adjustment from unlocking assumptions                          8,250                   (124)
          Effect of unrealized gains and (losses)                       (7,634)                 1,840
                                                                 -------------          -------------
          Balance, end of year                                   $     124,601          $     106,932
                                                                 =============          =============
</TABLE>

7.   RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS AND CONTRACTHOLDER FUNDS

     At December 31, the Reserve for life-contingent contract benefits consists
of the following:

<TABLE>
<CAPTION>
                                                                          2000             1999
                                                                          ----             ----
          <S>                                                         <C>              <C>
          Immediate annuities:
             Structured settlement annuities                          $ 1,147,530      $ 1,024,049
             Other immediate annuities                                      4,449            2,933
          Traditional life                                                 72,157           70,254
          Other                                                             2,213              780
                                                                      -----------      -----------
             Total Reserve for life-contingent contract benefits      $ 1,226,349      $ 1,098,016
                                                                      ===========      ===========
</TABLE>

     The assumptions for mortality generally utilized in calculating reserves
include the U.S. population with projected calendar year improvements and age
setbacks for impaired lives for structured settlement annuities; the 1983 group
annuity mortality table for other immediate annuities; and actual Company
experience plus loading for traditional life. Interest rate assumptions vary
from 3.5% to 11.5% for immediate annuities and 4.0% to 7.8% for traditional
life. Other estimation methods include the present value of contractually fixed
future benefits for structured settlement annuities, the present value of
expected future benefits based on historical experience for other immediate
annuities and the net level premium reserve method using the Company's
withdrawal experience rates for traditional life.

     To the extent the unrealized gains on fixed income securities would result
in a premium deficiency had those gains actually been realized, premium
deficiency reserves are established, if necessary, and have been recorded for
the structured settlement annuity business and for certain immediate annuities
with life contingencies. A liability of $26.5 million and $8 million is included
in the Reserve for life-contingent contract benefits with respect to this
deficiency for the years ended December 31, 2000 and 1999, respectively.


                                       F-18
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


     At December 31, Contractholder funds consists of the following:

<TABLE>
<CAPTION>
                                                                    2000                    1999
                                                                    ----                    ----
<S>                                                             <C>                     <C>
          Interest-sensitive life                               $   233,320             $   211,729
          Fixed annuities:
               Immediate annuities                                  337,282                 303,564
               Deferred annuities                                   486,893                 273,864
          Other investment contracts                                 50,000                  50,000
                                                                -----------             -----------
               Total contractholder funds                       $ 1,107,495             $   839,157
                                                                ===========             ===========
</TABLE>

     Contractholder funds are equal to deposits received and interest credited
to the benefit of the contractholder less withdrawals, mortality charges and
administrative expenses. Interest rates credited range from 5.3% to 7.0% for
interest-sensitive life contracts; 3.5% to 9.8% for immediate annuities; 4.6% to
8.0% for deferred annuities and 6.6% for other investment contracts. Withdrawal
and surrender charge protection includes: i) for interest-sensitive life, either
a percentage of account balance or dollar amount grading off generally over 20
years; and ii) for deferred annuities not subject to a market value adjustment,
either a declining or a level percentage charge generally over nine years or
less. Approximately 8.1% of deferred annuities are subject to a market value
adjustment.

8.   REINSURANCE

     The Company purchases reinsurance to limit aggregate and single losses on
large risks. The Company continues to have primary liability as the direct
insurer for risks reinsured. Estimating amounts of reinsurance recoverable is
impacted by the uncertainties involved in the establishment of loss reserves.
Failure of reinsurers to honor their obligations could result in losses to the
Company. The Company cedes a portion of the mortality risk on certain term life
policies with a pool of reinsurers.

     Amounts recoverable from reinsurers are estimated based upon assumptions
consistent with those used in establishing the liabilities related to the
underlying reinsured contracts. No single reinsurer had a material obligation to
the Company nor is the Company's business substantially dependent upon any
reinsurance contract.
(See Note 3 for discussion of reinsurance agreements with ALIC.)

<TABLE>
<CAPTION>
                                                                                       2000         1999         1998
                                                                                       ----         ----         ----
<S>                                                                                 <C>          <C>          <C>
PREMIUMS AND CONTRACT CHARGES
Direct                                                                              $ 150,498    $ 105,580    $ 121,881
Assumed - non-affiliate                                                                 1,194        1,047          375
Ceded
    Affiliate                                                                          (4,621)      (3,408)      (2,518)
    Non-affiliate                                                                        (870)        (845)        (686)
                                                                                    ---------    ---------    ---------
      Premiums and contract charges, net of reinsurance                             $ 146,201    $ 102,374    $ 119,052
                                                                                    =========    =========    =========
</TABLE>

<TABLE>
<CAPTION>
                                                                                       2000         1999         1998
                                                                                       ----         ----         ----
<S>                                                                                 <C>          <C>          <C>
POLICY BENEFITS AND CERTAIN COSTS AND EXPENSES
Direct                                                                              $ 271,326    $ 208,292    $ 216,074
Assumed - non-affiliate                                                                   559          509          205
Ceded
    Affiliate                                                                            (496)        (211)        (315)
    Non-affiliate                                                                        (361)      (1,187)        (393)
                                                                                    ---------    ---------    ---------
      Policy benefits and certain costs and expenses, net of reinsurance            $ 271,028    $ 207,403    $ 215,571
                                                                                    =========    =========    =========
</TABLE>


                                       F-19
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


     Included in reinsurance recoverables at December 31, 2000 and 1999 are the
net amounts owed to ALIC of $569 and $458, respectively.

9.   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, 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.

     In the normal course of its business, the Company is involved in pending
and threatened litigation and regulatory actions in which claims for monetary
damages are asserted. At this time, based on their present status, it is in the
opinion of management, that the ultimate liability, if any, in one or more of
these actions in excess of amounts currently reserved is not expected to have a
material effect on the results of operations, liquidity or financial position of
the Company.

GUARANTY FUNDS

     Under state insurance guaranty fund laws, insurers doing business in a
state can be assessed, up to prescribed limits, for certain obligations of
insolvent insurance companies to policyholders and claimants. The Company's
expense related to these funds have been immaterial.

MARKETING AND COMPLIANCE ISSUES

     Companies operating in the insurance and financial services markets have
come under the scrutiny of regulators with respect to market conduct and
compliance issues. Under certain circumstances, companies have been held
responsible for providing incomplete or misleading sales materials and for
replacing existing policies with policies that were less advantageous to the
policyholder. The Company monitors its sales materials and enforces compliance
procedures to mitigate exposure to potential litigation. The Company is a member
of the Insurance Marketplace Standards Association, an organization that
advocates ethical market conduct.

10.  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 June 30, 1995, the Corporation was a subsidiary of Sears, Roebuck
& Co. ("Sears") and, with its eligible domestic subsidiaries, was included in
the Sears consolidated federal income tax return and federal income tax
allocation agreement. Effective June 30, 1995, the Corporation and Sears entered
into a new tax sharing agreement, which governs their respective rights and
obligations with respect to federal income taxes for all periods during which
the Corporation was a subsidiary of Sears, 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.


                                       F-20
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


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

<TABLE>
<CAPTION>
                                                                             2000            1999
                                                                             ----            ----
<S>                                                                      <C>             <C>
DEFERRED ASSETS
Life and annuity reserves                                                $    49,070     $    42,248
Discontinued operations                                                          366             366
Other postretirement benefits                                                    284             296
Other assets                                                                   1,150           1,319
                                                                         -----------     -----------

      Total deferred assets                                                   50,870          44,229

DEFERRED LIABILITIES

Deferred policy acquisition costs                                            (32,047)        (25,790)
Unrealized net capital gains                                                 (63,669)        (16,280)
Difference in tax bases of investments                                        (5,952)         (3,194)
Prepaid commission expense                                                      (759)           (682)
Other liabilities                                                             (1,624)         (1,360)
                                                                         -----------     -----------

      Total deferred liabilities                                            (104,051)        (47,306)
                                                                         -----------     -----------

      Net deferred liability                                             $   (53,181)    $    (3,077)
                                                                         ===========     ===========
</TABLE>

     Although realization is not assured, management believes it is more likely
than not that the deferred tax asset 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:

<TABLE>
<CAPTION>
                                                        2000         1999         1998
                                                        ----         ----         ----
<S>                                                   <C>          <C>          <C>
Current                                               $ 12,901     $  8,650     $ 13,679
Deferred                                                 2,715        5,990        1,255
                                                      --------     --------     --------
      Total income tax expense                        $ 15,616     $ 14,640     $ 14,934
                                                      ========     ========     ========
</TABLE>

     The Company paid income taxes of $11,310, $12,547 and $3,788 in 2000, 1999
and 1998, respectively. The Company had a current income tax liability of
$11,723 and $10,132 at December 31, 2000 and 1999, 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:

<TABLE>
<CAPTION>
                                                              2000             1999              1998
                                                              ----             ----              ----
<S>                                                          <C>              <C>               <C>
Statutory federal income tax rate                            35.0%            35.0%             35.0%
State income tax expense                                      1.0              1.6               1.6
Other                                                        (2.4)            (1.1)             (1.5)
                                                             ----             ----              ----
Effective income tax rate                                    33.6%            35.5%             35.1%
                                                             ====             ====              ====
</TABLE>

     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, 2000,
approximately $389, will result in federal income taxes payable of $136 if
distributed by the Company. No provision


                                       F-21
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


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
1983.

11.  STATUTORY FINANCIAL INFORMATION

     The Company's statutory capital and surplus was $238,158 and $214,738 at
December 31, 2000 and 1999, respectively. The Company's statutory net income was
$26,088, $18,767 and $13,649 for the years ended December 31, 2000, 1999 and
1998, respectively.

PERMITTED STATUTORY ACCOUNTING PRACTICES

     The Company prepares its statutory financial statements in accordance with
accounting 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 has approved a January 1, 2001 implementation date for newly
developed statutory accounting principles ("codification"). The Company's state
of domicile, New York, has rejected certain accounting principles, specifically
Statement of Statutory Accounting Principle ("SSAP") No. 10, accounting for
taxes and continues to review codification and existing statutory accounting
requirements to align existing state laws and regulations as necessary. The
Company currently estimates it will record an increase to surplus of
approximately $4.5 million at implementation. The increase to surplus is
primarily due to favorable treatment investment write-downs receive within the
asset valuation reserve and the reclassification of private placement prepayment
penalties and mortgage loan make-whole fees from the interest maintenance
reserve to investment income. The NAIC has installed a formal maintenance
process to develop and propose new guidance, as well as on-going clarification
and interpretation of issues. The impact of any future changes will be recorded
as they are approved.

DIVIDENDS

     The ability of the Company to pay dividends is dependent on business
conditions, income, cash requirements of the Company and other relevant factors.
The payment of shareholder dividends by the Company without prior approval of
the state insurance regulator is limited to formula amounts based on net income
and capital and surplus, determined in accordance with statutory accounting
practices, as well as the timing and amount of dividends paid in the preceding
twelve months. The maximum amount of dividends that the Company can distribute
during 2001 without prior approval of the New York State Insurance Department is
$23,566.

     In the twelve-month period beginning January 1, 2000, the Company did not
pay any dividends.

RISK-BASED CAPITAL

     The NAIC has a standard for assessing the solvency of insurance companies,
which is referred to as risk-based capital ("RBC"). The standard is based on 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, 2000, RBC for the
Company was significantly above a level that would require regulatory action.

12.  BENEFIT PLANS

PENSION PLANS

     Defined benefit pension plans, sponsored by AIC, cover domestic full-time
employees and certain part-time employees. Benefits under the pension plans are
based upon the employee's length of service and eligible annual


                                       F-22
<PAGE>
                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS

                                ($ IN THOUSANDS)


compensation. AIC's funding policy for the pension plans is to make annual
contributions in accordance with accepted actuarial cost methods. The (benefit)
and cost to the Company included in net income was $(62), $(263) and $382 for
the pension plans in 2000, 1999 and 1998, respectively.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

     AIC 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 AIC's established retirement policy and are
continuously insured under AIC's group plans or other approved plans for ten or
more years prior to retirement. AIC shares the cost of the retiree medical
benefits with retirees based on years of service, with AIC's share being subject
to a 5% limit on annual medical cost inflation after retirement. AIC's
postretirement benefit plans currently are not funded. AIC has the right to
modify or terminate these plans.

PROFIT SHARING PLAN

     Employees of the Corporation are eligible to become members of The Savings
and Profit Sharing Fund of Allstate Employees ("Allstate Plan"). Contributions
are based on the Corporation's matching obligation and performance.

     The Company's allocation of profit sharing expense was $198, $176, $567 in
2000, 1999 and 1998, respectively.

13.  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>
<CAPTION>
                                           2000                                1999                              1998
                            ---------------------------------- ----------------------------------- --------------------------------
                                                      After-                              After-                            After-
                               Pretax       Tax        tax        Pretax       Tax         tax       Pretax       Tax        tax
                               ------       ---        ---        ------       ---         ---       ------       ---        ---
<S>                          <C>         <C>         <C>        <C>         <C>         <C>         <C>        <C>         <C>
UNREALIZED CAPITAL GAINS
 AND LOSSES:
   Unrealized holding
      gains (losses)
      arising during
      the period             $ 129,754   $ (45,414)  $ 84,340   $ (83,241)  $  29,134   $ (54,107)  $ 33,218   $ (11,626)  $ 21,592
   Less: reclassification
      adjustments               (5,643)      1,975     (3,668)     (2,207)        772      (1,435)     4,869      (1,704)     3,165
                             ---------   ---------   --------   ---------   ---------   ---------   --------   ---------   --------
Unrealized net capital
  gains (losses)               135,397     (47,389)    88,008     (81,034)     28,362     (52,672)    28,349      (9,922)    18,427
                             ---------   ---------   --------   ---------   ---------   ---------   --------   ---------   --------
Other comprehensive
  income (loss)              $ 135,397   $ (47,389)  $ 88,008   $ (81,034)  $  28,362   $ (52,672)  $ 28,349   $  (9,922)  $ 18,427
                             =========   =========   ========   =========   =========   =========   ========   =========   ========
</TABLE>



                                       F-23
<PAGE>

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

                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                      GROSS                                   NET
YEAR ENDED DECEMBER 31, 2000                                         AMOUNT              CEDED              AMOUNT
----------------------------                                         ------              -----              ------
<S>                                                             <C>                <C>                 <C>
Life insurance in force                                         $    15,916,421    $      1,592,962    $    14,323,459
                                                                ===============    ================    ===============

Premiums and contract charges:
    Life and annuities                                          $       143,550    $          4,706    $       138,844
    Accident and health                                                   8,142                 785              7,357
                                                                ---------------    ----------------    ---------------
                                                                $       151,692    $          5,491    $       146,201
                                                                ===============    ================    ===============

<CAPTION>

                                                                      GROSS                                   NET
YEAR ENDED DECEMBER 31, 1999                                         AMOUNT              CEDED              AMOUNT
----------------------------                                         ------              -----              ------
<S>                                                             <C>                <C>                 <C>
Life insurance in force                                         $    14,140,049    $      1,066,993    $    13,073,056
                                                                ===============    ================    ===============

Premiums and contract charges:
    Life and annuities                                          $        99,760    $          3,397    $        96,363
    Accident and health                                                   6,867                 856              6,011
                                                                ----------------   ----------------    ---------------
                                                                $       106,627    $          4,253    $       102,374
                                                                ===============    ================    ===============

<CAPTION>

                                                                      GROSS                                   NET
YEAR ENDED DECEMBER 31, 1998                                         AMOUNT              CEDED              AMOUNT
----------------------------                                         ------              -----              ------
<S>                                                             <C>                <C>                 <C>
Life insurance in force                                         $    12,656,826    $        857,500    $    11,799,326
                                                                ===============    ================    ===============

Premiums and contract charges:
    Life and annuities                                          $       116,455    $          2,318    $       114,137
    Accident and health                                                   5,801                 886              4,915
                                                                ---------------    ----------------    ---------------
                                                                $       122,256    $          3,204    $       119,052
                                                                ===============    ================    ===============
</TABLE>



                                       F-24
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                  SCHEDULE V--VALUATION AND QUALIFYING ACCOUNTS
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                    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, 2000
----------------------------
Allowance for estimated losses
   on mortgage loans                              $         600     $          -      $        481     $         119
                                                  =============     ============      ============     =============

YEAR ENDED DECEMBER 31, 1999
----------------------------
Allowance for estimated losses
   on mortgage loans                              $         600     $          -      $          -     $         600
                                                  =============     ============      ============     =============

YEAR ENDED DECEMBER 31, 1998
----------------------------
Allowance for estimated losses
   on mortgage loans                              $         486     $        114      $          -     $         600
                                                  =============     ============      ============     =============
</TABLE>



                                       F-25