UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

                                   Form 10-K

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


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

For fiscal year ended December 31, 1999       Commission file number 33-47245
                                                                     33-65355
                                                                     033-65381
                                                                     033-35445
                                                                     033-24228


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


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


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

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


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

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

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

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

     As of December 31, 1999 there were 100,000  shares of common  capital stock
outstanding, par value $25 per share, all of which shares are held by ALIC.

<PAGE>

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

                  Annual Report for 1999 On Form 10-K

                          TABLE OF CONTENTS


                                                                PAGE
                                                                ----

PART I

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

PART II

ITEM 5.    Market for Registrant's Common Equity and
           Related Stockholder Matters.......................... 5
ITEM 6.    Selected Financial Data*.............................N/A
ITEM 7.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations.................. 6
ITEM 7A.   Quantitiative and Qualitative Disclosures About
           Market Risk..........................................15
ITEM 8.    Financial Statements and Supplementary Data..........15
ITEM 9.    Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure..................15

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...................................16

Index to Financial Statement Schedules..........................17
Signatures......................................................18
Exhibit Index...................................................E-1

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



<PAGE>

                               PART I

ITEM 1.  BUSINESS

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

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

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

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

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

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


                                       3
<PAGE>

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

ITEM 2.  PROPERTIES

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

ITEM 3.  LEGAL PROCEEDINGS

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





                                       4
<PAGE>



                                    PART II


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

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



                                       5
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


                   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 1999 presentation, certain
prior year amounts have been reclassified.

The Company, a wholly owned subsidiary of Allstate Life Insurance Company
("ALIC"), which is a wholly owned subsidiary of Allstate Insurance Company
("AIC"), a wholly owned subsidiary of The Allstate Corporation ("Corporation"),
markets a broad line of life insurance and savings products in the state of New
York through a combination of exclusive agencies, securities firms, banks,
specialized brokers and direct response marketing. Life insurance consists of
traditional products, including term and whole life, interest-sensitive life and
immediate annuities with life contingencies. Savings products include deferred
annuities and immediate annuities without life contingencies. Deferred annuities
include fixed rate, market value adjusted and variable annuities. Group pension
savings products include immediate annuities also referred to as retirement
annuities.

The Company has identified itself as a single segment entity.

FINANCIAL HIGHLIGHTS
($ in thousands)

<TABLE>
<CAPTION>
                                                                      1999               1998               1997
                                                                      ----               ----               ----

<S>                                                            <C>                <C>                <C>
Statutory premiums and deposits                                $       304,535    $       264,362    $       206,881
                                                               ===============    ===============    ===============
Investments                                                    $     2,156,688    $     2,216,909    $     1,907,997
Separate Accounts assets                                               443,705            366,247            308,595
                                                               ---------------    ---------------    ---------------
Investments, including Separate Accounts assets                $     2,600,393    $     2,583,156    $     2,216,592
                                                               ===============    ===============    ===============

GAAP premiums                                                  $        63,748    $        85,771    $        90,366
Contract charges                                                        38,626             33,281             28,597
Net investment income                                                  148,331            134,413            124,887
Contract benefits                                                      178,267            183,839            179,872
Operating costs and expenses                                            29,134             31,100             28,667
                                                               ---------------    ---------------    ---------------
Operating income before tax                                             43,304             38,526             35,311
Income tax expense                                                      15,406             13,511             13,051
                                                               ---------------    ---------------    ---------------
Operating income (1)                                                    27,898             25,015             22,260
Realized capital gains and losses, after-tax (2)                        (1,332)             2,642                456
                                                               ----------------   ---------------    ---------------
Net income                                                     $        26,566    $        27,657    $        22,716
                                                               ===============    ===============    ===============
</TABLE>

(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 GAAP measure
of performance. Our method of calculating operating income may be different from
the method used by other companies and therefore comparability may be limited.
(2) Net of the effect of related amortization of deferred policy acquisition
costs in 1999 and 1998.

STATUTORY PREMIUMS AND DEPOSITS
Statutory premiums and deposits, which include premiums and deposits for all
products, are used to analyze sales trends. 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. The increase in fixed annuity sales was primarily due to
new marketing partnerships in the banking distribution channel. In 1998, total
statutory premiums and deposits increased $57.5 million or 27.8%. The increase
was due primarily to sales of fixed annuities in the banking distribution
channel.



                                       6
<PAGE>

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



GAAP PREMIUMS AND CONTRACT CHARGES
Under generally accepted accounting principles ("GAAP"), premiums represent
revenue generated from traditional life products with significant mortality
risks. Revenues for interest-sensitive life insurance and fixed and variable
annuity contracts, 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. Total
premiums were $63.7 million in 1999 compared to $85.8 million in 1998, as higher
traditional life premiums were more than offset by lower sales of immediate
annuities with life contingencies. The higher traditional life premiums were due
to increased marketing efforts in the direct response marketing distribution
channel. The types of immediate annuities sold may fluctuate significantly from
year to year, which impacts premiums reported. The lower sales of immediate
annuities with life contingencies in 1999 also caused a decrease in the reserve
for life-contingent contracts which is a component of contract benefits reported
in the statement of operations and comprehensive income. In 1998, total premiums
were $85.8 million compared to $90.4 million in 1997 primarily due to lower
sales of immediate annuities with life contingencies.

Contract charges increased 16.1% and 16.4% in 1999 and 1998, respectively. The
increase, for both years, was primarily due to higher interest-sensitive life
contract charges which were the result of growth in interest-sensitive life
policies in force.

NET INVESTMENT INCOME
Pretax net investment income increased 10.4% and 7.6% in 1999 and 1998,
respectively. Increases in both years were due to higher investment balances,
before the impact of unrealized gains and losses on fixed income securities,
partially offset by slightly lower portfolio yields. Investments, excluding
Separate Accounts assets and unrealized gains on fixed income securities, grew
10.7% and 14.3% in 1999 and 1998, respectively. Despite recent increases in
interest rates, current investment yields are still lower than average portfolio
yields, therefore funds from maturing investments were generally reinvested at
lower yields resulting in reduced investment income. If interest rates continue
to rise, this trend may reverse over time.

REALIZED CAPITAL GAINS AND LOSSES
Realized capital losses, after-tax, were $1.3 million in 1999 compared to
realized capital gains, after-tax, of $2.6 million in 1998. In 1999, realized
capital 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. Realized
capital gains in 1998 were due primarily to sales and pre-payments of fixed
income securities. Year to year fluctuations in realized capital gains are
largely the result of the timing of sales decisions reflecting management's view
of individual securities and overall market conditions.

OPERATING INCOME
Operating income increased 11.5% in 1999 to $27.9 million. The increase was due
to higher net investment income and contract charges and lower operating costs
and expenses partially offset by less favorable mortality experience. Operating
income increased 12.4% in 1998 to $25.0 million as favorable mortality
experience and increased contract charges were partially offset by higher
expenses.



                                       7
<PAGE>


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

INVESTMENTS

The composition of the investment portfolio at December 31, 1999 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)                                                                               TO TOTAL
                                                                                               --------
<S>                                                           <C>                              <C>
Fixed income securities (1)                                   $        1,912,545                   88.7%
Mortgage loans                                                           166,997                    7.8
Short-term                                                                46,037                    2.1
Policy loans                                                              31,109                    1.4
                                                              ------------------                  -----

    Total                                                     $        2,156,688                  100.0%
                                                              ==================                  =====
</TABLE>


(1)  Fixed income securities are carried at fair value. Amortized cost for these
     securities was $1,858,216 at December 31, 1999.

Total investments were $2.16 billion at December 31, 1999 compared to $2.22
billion at December 31, 1998. Positive cash flows generated from operations were
more than offset by lower unrealized gains on fixed income securities.

FIXED INCOME SECURITIES The Company's fixed income securities portfolio consists
of privately-placed securities, publicly traded corporate bonds, U.S. government
bonds, mortgage-backed securities, foreign government bonds, asset-backed
securities and tax-exempt municipal bonds. 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, 1999, unrealized net capital gains on the fixed income securities
portfolio totaled $54.3 million compared to $317.1 million at December 31, 1998.
The decrease in the unrealized gain position is primarily attributable to an
increase in interest rates.

At December 31, 1999, 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, 1999 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                                     $1,510,140             79.0%
             2          Baa                                             381,668             19.9
             3          Ba                                               15,313               .8
             4          B                                                 5,424               .3
                                                                  -------------          ----------
                                                                     $1,912,545            100.0%
                                                                  =============          ==========
</TABLE>


As of December 31, 1999, the fixed income securities portfolio contained $529.8
million of privately-placed corporate obligations compared to $555.9 million at
December 31, 1998. 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

                                       8
<PAGE>

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

public securities is reduced liquidity. At December 31, 1999, 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, 1999 and 1998, $288.7 million and $305.1 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, thus minimizing 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, 1999, over 36% of the MBS portfolio was
invested in planned amortization class bonds.

The fixed income securities portfolio contained $34.2 million and $34.5 million
of asset-backed securities ("ABS") at December 31, 1999 and 1998, respectively.
ABS are subject to credit and interest rate risk. Credit risk is mitigated by
monitoring the performance of the collateral. Approximately 35% of all
securities are rated in the highest rating category by one or more credit rating
agencies. Interest rate risk is similar to the risk posed by MBS, however to a
lesser degree because of the nature of the underlying assets. Over 53% 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.

MORTGAGE LOANS The Company's $167.0 million investment in mortgage loans at
December 31, 1999 is comprised primarily of loans secured by first mortgages on
developed commercial real estate. Geographical and property type diversification
are key considerations used to manage the Company's mortgage loan risk.

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

SHORT-TERM INVESTMENTS The Company's short-term investment portfolio was $46.0
million and $76.1 million at December 31, 1999 and 1998, respectively. The
Company invests available cash balances primarily in taxable short-term
securities having a final maturity date or redemption date of one year or less.
The short-term investment portfolio at December 31, 1999 decreased primarily due
to the settlement of a $34.0 million intercompany payable in early January 1999.



                                       9
<PAGE>



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


SEPARATE ACCOUNTS

Separate Accounts assets and liabilities increased 21.1% to $443.7 million at
December 31, 1999. The increases were primarily attributable to sales of
variable annuity contracts and favorable investment performance of the Separate
Accounts investment portfolios, partially offset by surrenders and withdrawals.

MARKET RISK

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

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

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

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

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



                                       10
<PAGE>


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


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 years is expected to decrease in value by approximately 5%.
At December 31, 1999, the difference between the Company's liability and asset
duration was approximately .9 years, versus a 2.7 year gap at December 31, 1998.
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
change in the gap is due to the large percentage of structured settlement
annuity assets and liabilities in the portfolio and its duration gaps
sensitivity to changes in interest rates. Structured settlement annuities are a
type of immediate annuity.

The Company seeks to invest premiums and deposits to generate 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 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 obligations, and fixed rate single and flexible premium
deferred annuities.

Based upon the information and assumptions the Company uses in its duration
calculation and interest rates in effect at December 31, 1999, 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 $13.8 million, versus an increase of $16.0
million at December 31,




                                       12
<PAGE>


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

1998. In addition, there are $287.3 million of assets supporting life insurance
products which are not financial instruments and have not been included in the
above analysis. This amount is slightly greater than the $260.6 million at
December 31, 1998. According to the duration calculation, in the event of a 100
basis point immediate increase in interest rates, these assets would decrease in
value by $18.0 million, up from the $12.2 million at December 31, 1998. 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 rather, is intended to illustrate the potential impact of
such an event.

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

EQUITY PRICE RISK Equity price risk is the risk that the Company will incur
economic losses due to adverse changes in a particular stock, stock fund or
stock index. At December 31, 1999, the Company had variable annuity funds with
balances totaling $443.7 million. This is an increase over the $366.2 million of
variable annuity funds at December 31, 1998. The Company earns mortality and
expense fees as a percentage of fund balance. In the event of an immediate
decline of 10% in the fund balances due to equity market declines, the Company
would earn approximately $555 thousand less in annualized fee income. This is a
slight increase over the $500 thousand amount determined at December 31, 1998.
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 their 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, 1999 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.

LIQUIDITY AND CAPITAL RESOURCES

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

The maturity structure of the Company's fixed income securities, which represent
88.7% of the Company's total investments, is managed to meet the anticipated
cash flow requirements of the underlying liabilities. A portion of the Company's
diversified product portfolio, primarily fixed deferred annuity and
interest-sensitive life insurance products, is subject to discretionary
surrender and withdrawal by contractholders. Total surrenders and withdrawal
amounts were $62.1 million, $56.5 million, and $63.0 million in 1999, 1998, and
1997, respectively. As the Company's interest-sensitive life policies and
annuity contracts in force grow and age, the dollar amount of surrenders and
withdrawals could 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. Management believes
its assets are sufficiently liquid to meet future obligations to its life and
annuity contractholders under various interest rate scenarios.

At December 31, 1999, the Moody's and Standard and Poor's claims-paying ratings
for the Company were Aa2 and AA+, respectively.


                                       12
<PAGE>


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



The NAIC has a standard for assessing the solvency of insurance companies, which
is referred to as risk-based capital ("RBC"). The requirement consists of a
formula for determining each insurer's RBC and a model law specifying 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, 1999, RBC
for the Company was significantly above a level that would require regulatory
action.

YEAR 2000

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

In 1995, the Corporation commenced a four phase plan which included
reprogramming, remediating or replacing computer systems and equipment which may
have failed to operate properly in or after the year 1999, due to the inability
of the systems and equipment to only recognize the last two digits of the year
in any date ("Year 2000"). Because of the comprehensiveness of the Corporation's
plan, and its timely completion, the Corporation has experienced no material
impacts on its results of operations, liquidity or financial position due to the
Year 2000 issue. The Corporation expects to incur total costs related to this
plan of $109 million between the years of 1995 and 2000. These costs are
expensed as incurred. A portion of these costs were incurred by the Company on a
pro rata basis of usage of computer-related systems and non-IT, as compared to
the usage of all the entities which shares these services with the Corporation.
These amounts were not material to the results of operations of the Company.

OTHER DEVELOPMENTS

The NAIC's codification initiative has produced a comprehensive guide of
statutory accounting principles which the Company will implement in January
2001. The Company's state of domicile, New York, continues to review
codification and existing statutory accounting requirements for desired
revisions to existing state laws and regulations. The requirements are not
expected to have a material impact on the statutory surplus of the Company.

PENDING ACCOUNTING STANDARDS

In June 1999, the Financial Accounting Standards Board 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. This statement
requires that all derivatives be recognized on the balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair value through
income. If the derivative is a hedge, depending on the nature of the hedge,
changes in the fair value of derivatives will either be offset against the
change in the fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. Additionally, the change in
fair value of a derivative which is not effective as a hedge will be
immediately recognized in earnings. The delay was effected through the
issuance of SFAS No. 137, which extends the SFAS No. 133 requirements to
fiscal years beginning after June 15, 2000. As such, the Company expects to
adopt the provisions of SFAS No. 133 as of January 1, 2001. The impact of
this statement is dependent upon the Company's derivative positions and
market

                                       13
<PAGE>


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

conditions existing at the date of adoption. Based on existing interpretations
of the requirements of SFAS No. 133, the impact of the adoption is not expected
to be material to the results of operations or financial position of the
Company.

FORWARD-LOOKING STATEMENTS

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



                                       14
<PAGE>


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Statements filed with this Report.

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

No disclosure required by this Item.


                                       15
<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,  1999,   together  with  the  Report  of  Independent
Accountants are set forth on pages F-1 - 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)

27                 Financial Data Schedule (filed herewith)

99                 Power of Attorney (filed herewith)

                                       16
<PAGE>



                             Financial Statements

                                     Index
                                     -----

                                                                            Page
                                                                            ----

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

Financial Statements:

         Statements of Financial Position,
                  December 31, 1999 and 1998...............................F-2


         Statements of Operations and Comprehensive Income for the Years Ended
                  December 31, 1999, 1998 and 1997.........................F-3

         Statements of Shareholder's Equity for the Years Ended
                  December 31, 1999, 1998 and 1997.........................F-4

         Statements of Cash Flows for the Years Ended
                  December 31, 1999, 1998 and 1997.........................F-5

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

         Schedule IV - Reinsurance for the Years Ended
                  December 31, 1999, 1998 and 1997.........................F-24

         Schedule V - Valuation and Qualifying Accounts
                  December 31, 1999, 1998 and 1997.........................F-25





                                       17
<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, 1999 and 1998, 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, 1999. Our audits also
included Schedule IV - Reinsurance and Schedule V - Valuation and Qualifying
Accounts. These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1999 and
1998, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1999 in conformity with generally
accepted accounting principles. Also, in our opinion, Schedule IV - Reinsurance,
and Schedule V - Valuation and Qualifying Accounts, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Chicago, Illinois
February 25, 2000

                                      F-1
<PAGE>

                                 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                                       STATEMENTS OF FINANCIAL POSITION


<TABLE>
<CAPTION>

                                                                                     DECEMBER 31,
                                                                        ---------------------------------------
                                                                              1999                 1998
                                                                        ------------------  -------------------
<S>                                                                     <C>                 <C>
($ in thousands, except par value data)

ASSETS

Investments
   Fixed income securities, at fair value
      (amortized cost $1,858,216 and $1,648,972)                              $ 1,912,545          $ 1,966,067
   Mortgage loans                                                                 166,997              145,095
   Short-term                                                                      46,037               76,127
   Policy loans                                                                    31,109               29,620
                                                                        -----------------   ------------------
         Total investments                                                      2,156,688            2,216,909

Cash                                                                                1,135                3,117
Deferred policy acquisition costs                                                 106,932               87,830
Accrued investment income                                                          25,712               22,685
Reinsurance recoverables                                                            1,949                2,210
Other assets                                                                        7,803                9,887
Separate Accounts                                                                 443,705              366,247
                                                                        -----------------   ------------------
         TOTAL ASSETS                                                        $  2,743,924          $ 2,708,885
                                                                        =================   ==================

LIABILITIES
Reserve for life-contingent contract benefits                                 $ 1,098,016          $ 1,208,104
Contractholder funds                                                              839,157              703,264
Current income taxes payable                                                       10,132               14,029
Deferred income taxes                                                               3,077               25,449
Other liabilities and accrued expenses                                             41,218               23,463
Payable to affiliates, net                                                          4,731               38,835
Separate Accounts                                                                 443,705              366,247
                                                                        -----------------   ------------------
         TOTAL LIABILITIES                                                      2,440,036            2,379,391
                                                                        -----------------   ------------------


COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 13)

SHAREHOLDER'S EQUITY
Common stock, $25 par value, 100,000 and 80,000
      shares authorized, issued and outstanding                                     2,500                2,000
Additional capital paid-in                                                         45,787               45,787
Retained income                                                                   225,367              198,801

Accumulated other comprehensive income:
    Unrealized net capital gains                                                   30,234               82,906
                                                                        -----------------   ------------------
         TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME                              30,234               82,906
                                                                        -----------------   ------------------
         TOTAL SHAREHOLDER'S EQUITY                                               303,888              329,494
                                                                        -----------------   ------------------
         TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY                          $  2,743,924          $ 2,708,885
                                                                        =================   ==================
</TABLE>


See notes to financial statements.

                                       F-2

<PAGE>

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

<TABLE>
<CAPTION>

                                                                                    YEAR ENDED DECEMBER 31,
                                                                  ------------------------------------------------------------
($ in thousands)                                                        1999                 1998                 1997
                                                                  ------------------   ------------------   ------------------

<S>                                                                        <C>                  <C>                  <C>
REVENUES
Premiums (net of reinsurance ceded
   of $4,253, $3,204 and $3,087 )                                          $ 63,748             $ 85,771             $ 90,366
Contract charges                                                             38,626               33,281               28,597
Net investment income                                                       148,331              134,413              124,887
Realized capital gains and losses                                            (2,096)               4,697                  701
                                                                           --------             --------             --------
                                                                            248,609              258,162              244,551
                                                                           --------             --------             --------

COSTS AND EXPENSES
Contract benefits (net of reinsurance recoveries
   of $1,166, $997 and $1,985 )                                             178,267              183,839              179,872
Amortization of deferred policy acquisition costs                             8,985                7,029                5,023
Operating costs and expenses                                                 20,151               24,703               23,644
                                                                           --------             --------             --------
                                                                            207,403              215,571              208,539
                                                                           --------             --------             --------

INCOME FROM OPERATIONS
   BEFORE INCOME TAX EXPENSE                                                 41,206               42,591               36,012
Income tax expense                                                           14,640               14,934               13,296
                                                                           --------             --------             --------

NET INCOME                                                                   26,566               27,657               22,716
                                                                           --------             --------             --------

OTHER COMPREHENSIVE (LOSS) INCOME, AFTER TAX
Change in unrealized net capital gains and losses                           (52,672)              18,427               27,627
                                                                           --------             --------             --------

COMPREHENSIVE (LOSS) INCOME                                               $ (26,106)            $ 46,084             $ 50,343
                                                                          =========             ========             ========
</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,
                                                                  ------------------------------------------------------------
                                                                        1999                 1998                 1997
                                                                  ------------------   -------------------   -----------------
($ in thousands)

COMMON STOCK
<S>                                                               <C>                  <C>                  <C>
Balance, beginning of year                                                  $ 2,000              $ 2,000              $ 2,000
Issuance of new shares of stock                                                 500                    -                    -
                                                                  -----------------   ------------------   ------------------

Balance, end of year                                                          2,500                2,000                2,000
                                                                  -----------------   ------------------   ------------------
ADDITIONAL CAPITAL PAID-IN                                                $  45,787             $ 45,787             $ 45,787
                                                                  -----------------   ------------------   ------------------

RETAINED INCOME

Balance, beginning of year                                                $ 198,801            $ 171,144            $ 148,428
Net income                                                                   26,566               27,657               22,716
                                                                  -----------------   ------------------   ------------------
Balance, end of year                                                        225,367              198,801              171,144
                                                                  -----------------   ------------------   ------------------

ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of year                                                 $ 82,906             $ 64,479             $ 36,852
Change in unrealized net capital gains
     and losses                                                             (52,672)              18,427               27,627
                                                                  -----------------   ------------------   ------------------
Balance, end of year                                                         30,234               82,906               64,479
                                                                  -----------------   ------------------   ------------------

TOTAL SHAREHOLDER'S EQUITY                                               $  303,888            $ 329,494            $ 283,410
                                                                  =================   ==================   ==================
</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)                                                        1999                 1998                 1997
                                                                  ------------------   -------------------   -----------------

<S>                                                               <C>                  <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income                                                                 $ 26,566             $ 27,657             $ 22,716
Adjustments to reconcile net income to net cash
    provided by operating activities
       Amortization and other non-cash items                                (37,619)             (34,890)             (31,112)
       Realized capital gains and losses                                      2,096               (4,697)                (701)
       Interest credited to contractholder funds                             36,736               41,200               31,667
       Changes in:
           Life-contingent contract benefits and
               contractholder funds                                          38,527               53,343               68,114
           Deferred policy acquisition costs                                (17,262)             (16,693)             (10,781)
           Income taxes payable                                               2,094               13,865                 (158)
           Other operating assets and liabilities                            13,049              (15,974)               8,545
                                                                  -----------------   ------------------   ------------------
Net cash provided by operating activities                                    64,187               63,811               88,290
                                                                  -----------------   ------------------   ------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of fixed income securities                              161,443               65,281               15,723
Investment collections
       Fixed income securities                                               21,822              159,648              120,061
       Mortgage loans                                                         7,479                5,855                5,365
Investments purchases
       Fixed income securities                                             (383,961)            (292,444)            (236,984)
       Mortgage loans                                                       (31,888)             (24,252)             (35,200)
Change in short-term investments, net                                        29,493              (55,846)              16,342
Change in policy loans, net                                                  (1,489)              (2,020)              (2,241)
                                                                  -----------------   ------------------   ------------------
               Net cash used in investing activities                       (197,101)            (143,778)            (116,934)
                                                                  -----------------   ------------------   ------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock                                          500                    -                    -
Contractholder fund deposits                                                197,439              137,473               79,384
Contractholder fund withdrawals                                             (67,007)             (54,782)             (51,374)
                                                                  -----------------   ------------------   ------------------
Net cash provided by financing activities                                   130,932               82,691               28,010
                                                                  -----------------   ------------------   ------------------

NET (DECREASE) INCREASE IN CASH                                              (1,982)               2,724                 (634)
CASH AT THE BEGINNING OF YEAR                                                 3,117                  393                1,027
                                                                  -----------------   ------------------   ------------------
CASH AT END OF YEAR                                                        $  1,135              $ 3,117                $ 393
                                                                  =================   ==================   ==================
</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 generally accepted accounting principles.

To conform with the 1999 presentation, certain amounts in the prior years'
financial statements and notes have been reclassified.

NATURE OF OPERATIONS
The Company markets a broad line of life insurance and savings products in the
state of New York through a combination of exclusive agencies, securities firms,
banks, specialized brokers and through direct response marketing. Life insurance
consists of traditional products, including term and whole life,
interest-sensitive life and immediate annuities with life contingencies. Savings
products include deferred annuities and immediate annuities without life
contingencies. Deferred annuities include fixed rate, market value adjusted and
variable annuities. Group pension savings products include immediate annuities
also referred to as retirement annuities. In 1999, annuity premiums and deposits
represented 76.2% of the Company's total statutory premiums and deposits.

The Company monitors economic and regulatory developments which have the
potential to impact its business. Recently enacted federal legislation will
allow for 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 which lessen these incentives are likely to negatively impact the demand
for these products.

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

Although the Company currently benefits from agreements with financial services
entities who market and distribute its products, change in control of these
non-affliliated entities with which the Company has alliances could 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 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.



                                       F-6
<PAGE>


                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)


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

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

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

DERIVATIVE FINANCIAL INSTRUMENTS
The Company utilizes financial futures contracts which 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 terminates the
derivative position. Gains and losses on these terminations are reported in
realized capital gains and losses in the period they occur. The Company may also
terminate derivatives as a result of other events or circumstances. Gains and
losses on these terminations are 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





                                       F-7
<PAGE>



                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)

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
contractholder, interest credited to the contractholder account balance and one
or more amounts assessed against the contractholder. Premiums from these
contracts are reported as deposits to the contractholder funds. Contract charge
revenue consists of fees assessed against the contractholder account balance for
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 balance.

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 balance for contract administration and surrenders.
Contract benefits include interest credited and claims incurred in excess of the
related contractholder account balance.

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

Investment contracts also include variable annuity contracts which 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 which vary with and are primarily related to acquiring life and
savings business, principally agents and brokers remuneration, premium taxes,
certain underwriting costs and direct mail solicitation expenses, are deferred
and amortized into income. Deferred policy acquisition costs are periodically
reviewed as to recoverability and written down where necessary.

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 inforce, 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
proportion to the estimated gross profits on such business over the estimated
lives of the contract periods. Gross profits are determined



                                       F-8
<PAGE>


                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)

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.

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 current crediting rates.

To the extent unrealized gains or losses on securities carried at fair value
would result in an adjustment of estimated gross profits had those gains or
losses actually been realized, the related carrying value of deferred
acquisition costs, including present value of future profits, are adjusted
together with accumulated unrealized net capital gains included in shareholder's
equity.

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. 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 therefrom 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 provisions wherein the
Company contractually guarantees either a minimum return or account value to the
beneficiaries of the contractholders in the form of a death benefit, the
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' 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 and comprehensive income. Revenues to the
Company from the Separate Accounts consist of contract maintenance and
administration fees, and mortality, surrender and expense charges.

RESERVES FOR LIFE-CONTINGENT CONTRACT BENEFITS
The reserve for life-contingent contract benefits, which relates to traditional
life insurance, group retirement annuities, immediate annuities with life
contingencies and certain variable annuity guarantees, is computed on the basis
of assumptions as to mortality, future investment yields, terminations and




                                       F-9
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)


expenses at the time the policy is issued. 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 as a reduction of the unrealized gains included in
shareholder's equity.

CONTRACTHOLDER FUNDS
Contractholder funds arise from the issuance of interest-sensitive life and
certain investment contracts. Deposits received are recorded as interest-bearing
liabilities. Contractholder funds are equal to deposits received, net of
commissions, 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 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 generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

NEW ACCOUNTING STANDARDS
In 1999, the Company adopted Statement of Position ("SOP") 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments." The SOP
provides guidance concerning when to recognize a liability for insurance-related
assessments and how those liabilities should be measured. Specifically,
insurance-related assessments should be recognized as liabilities when all of
the following criteria have been met: 1) an assessment has been imposed or it is
probable that an assessment will be imposed, 2) the event obligating an entity
to pay an assessment has occurred and 3) the amount of the assessment can be
reasonably estimated. Adoption of this statement was not material to the
Company's results of operations or financial position.

PENDING ACCOUNTING STANDARDS
In June 1999, the Financial Accounting Standards Board 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. This statement
requires that all derivatives be recognized on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
If the derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of derivatives will either be offset against the change in the
fair value of the hedged assets, liabilities, or firm commitments through
earnings or recognized in other comprehensive income until the hedged item is
recognized in earnings. Additionally, the change in fair value of a derivative
which is not effective as a hedge will be immediately recognized in earnings.
The delay was effected through the issuance of SFAS No. 137, which extends the
SFAS No. 133 requirements to fiscal years beginning after June 15, 2000. As
such, the Company expects to adopt the provisions of SFAS No. 133 as of January
1, 2001. The impact of this statement is dependent upon the Company's derivative
positions and market conditions existing at the date of adoption. Based on
existing interpretations of the requirements of SFAS



                                       F-10
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)


No. 133, the impact of the adoption is not expected to be material to the
results of operations or financial position of the Company.

3.   RELATED PARTY TRANSACTIONS

REINSURANCE

The Company has reinsurance agreements with ALIC in order to limit aggregate and
single exposure on large risks. A portion of the Company's premiums and policy
benefits are ceded to ALIC and reflected net of such reinsurance in the
statements of operations and comprehensive income. Reinsurance 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.

The following amounts were ceded to ALIC under reinsurance agreements.


<TABLE>
<CAPTION>

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

                                                 1999               1998               1997
                                                 ----               ----               ----

<S>                                        <C>                <C>                <C>
      Premiums                             $     3,408        $     2,519        $     2,171
      Policy benefits                              211                315                327
</TABLE>

Included in reinsurance recoverables at December 31, 1999 and 1998 are the net
amounts owed to ALIC of $458 and $3, respectively.

STRUCTURED SETTLEMENT ANNUITIES
The Company issued $14,561, $12,747 and $12,766 of structured settlement
annuities, a type of immediate annuity, in 1999, 1998 and 1997, 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,
$4,298, $5,152 and $3,468 relate to structured settlement annuities with life
contingencies and are included in premium income in 1999, 1998 and 1997,
respectively. Additionally, the reserve for life-contingent contract benefits
was increased by approximately 94% of 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 $1.19 billion and $1.08 billion at
December 31, 1999 and 1998, respectively.

BUSINESS OPERATIONS
The Company utilizes services performed by AIC and ALIC and business facilities
owned or leased, and operated by AIC in conducting its business activities. 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
and retirement and other benefit programs, allocated to the Company were
$16,155, $23,369 and $19,425 in 1999, 1998 and 1997, respectively. A



                                       F-11
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)


portion of these expenses relate to the acquisition of business which are
deferred and amortized over the contract period.

4.   INVESTMENTS

FAIR VALUES

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

<TABLE>
<CAPTION>

                                                                            GROSS UNREALIZED
                                                    AMORTIZED               ----------------               FAIR
                                                       COST             GAINS            LOSSES            VALUE
                                                       ----             -----            ------            -----

<S>                                              <C>               <C>              <C>               <C>
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
                                                 ==============    ==============   ==============    ==============

AT DECEMBER 31, 1998

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

SCHEDULED MATURITIES

The scheduled maturities for fixed income securities are as follows at December
31, 1999:

<TABLE>
<CAPTION>

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

<S>                                                                     <C>              <C>
Due in one year or less                                                 $         6,720  $         6,798
Due after one year through five years                                           168,795          168,859
Due after five years through ten years                                          217,305          218,381
Due after ten years                                                           1,139,596        1,195,597
                                                                        ---------------  ---------------
                                                                              1,532,416        1,589,635

Mortgage- and asset-backed securities                                           325,800          322,910
                                                                        ---------------  ---------------
  Total                                                                 $     1,858,216  $     1,912,545
                                                                        ===============  ===============
</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,                                             1999             1998             1997
                                                                    ----             ----             ----


<S>                                                           <C>               <C>              <C>
Fixed income securities                                       $     135,561     $     124,100    $     116,763
Mortgage loans                                                       12,346            10,309            7,896
Other                                                                 3,495             2,940            2,200
                                                              -------------     -------------    -------------
  Investment income, before expense                                 151,402           137,349          126,859
  Investment expense                                                  3,071             2,936            1,972
                                                              -------------     -------------    -------------
  Net investment income                                       $     148,331     $     134,413    $     124,887
                                                              =============     =============    =============
</TABLE>

REALIZED CAPITAL GAINS AND LOSSES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,                                            1999              1998             1997
                                                                   ----              ----             ----

<S>                                                           <C>               <C>              <C>
Fixed income securities                                            $ (2,207)         $ 4,755           $  955
Mortgage loans                                                           42              (65)            (221)
Other                                                                    69                7              (33)
                                                              -------------     ------------    -------------

   Realized capital gains and losses                                 (2,096)           4,697              701
   Income taxes                                                        (765)           1,644              245
                                                              -------------     ------------    -------------
   Realized capital gains and losses, after tax                    $ (1,331)         $ 3,053           $  456
                                                              =============     ============    =============
</TABLE>

Excluding calls and prepayments, gross gains of $1,713, $2,905 and $471 and
gross losses of $3,920, $164 and $105 were realized on sales of fixed income
securities during 1999, 1998 and 1997, respectively.

UNREALIZED NET CAPITAL GAINS

Unrealized net capital gains on fixed income securities included in
shareholder's equity at December 31, 1999 are as follows:

<TABLE>
<CAPTION>
                                        COST/                                  GROSS UNREALIZED              UNREALIZED
                                    AMORTIZED COST      FAIR VALUE          GAINS             LOSSES          NET GAINS
                                    --------------      ----------          -----             ------          ---------
<S>                                    <C>               <C>                <C>               <C>             <C>
 Fixed income securities               $1,858,216        $1,912,545         $ 99,030          $(44,701)       $ 54,329
                                       ==========        ==========         ========          ========
 Reserve for life-contingent
    contract benefits                                                                                           (7,815)
 Deferred income taxes                                                                                         (16,280)
                                                                                                              --------
 Unrealized net capital gains                                                                                 $ 30,234
                                                                                                              ========
</TABLE>


<TABLE>
<CAPTION>
CHANGE IN UNREALIZED NET CAPITAL GAINS
YEAR ENDED DECEMBER 31,                                            1999             1998             1997
                                                                   ----             ----             ----

<S>                                                             <C>              <C>               <C>
Fixed income securities                                         $(262,766)       $ 70,948          $123,519
Reserves for life contingent-contract benefits                    179,891         (42,251)          (80,155)
Deferred income taxes                                              28,362          (9,922)          (14,876)
Deferred policy acquisition costs and other                         1,841            (348)             (861)
                                                                ---------        --------          --------
(Decrease) increase in unrealized net capital gains             $ (52,672)       $ 18,427          $ 27,627
                                                                =========        ========          ========
</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 and $261 in 1998 and 1997, respectively.
There was not a provision for investment losses in 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, 1999 and 1998.

Valuation allowances for mortgage loans at December 31, 1999, 1998 and 1997 were
$600, $600 and $486, respectively. For the years ended December 31, 1999, 1998
and 1997, there were no reductions of the mortgage loan valuation allowance for
dispositions of impaired loans. Net additions to the mortgage loan valuation
allowances were $114 and $261 for the years ended December 31, 1998 and 1997,
respectively. There were no additions or reductions to the mortgage loan
valuation allowance for the year ended December 31, 1999.

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, 1999:

<TABLE>
<CAPTION>
(% of municipal bond portfolio carrying value)          1999                1998
                                                        ----                ----

<S>                                                     <C>                 <C>
         Arizona                                        22.7%                   - %
         California                                     20.2                  17.4
         Ohio                                           16.4                  30.2
         Illinois                                       11.6                  21.1
         Pennsylvania                                    7.5                    -
         Indiana                                         5.0                    -
</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, 1999:

<TABLE>
<CAPTION>
(% of commercial mortgage portfolio carrying value)     1999                 1998
                                                        ----                 ----

<S>                                                     <C>                 <C>
         California                                     34.9%               41.9%
         New York                                       27.6                26.3
         Illinois                                       13.2                15.8
         New Jersey                                     12.3                 6.9
         Pennsylvania                                    9.7                 6.2
</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)         1999                1998
                                                            ----                ----

<S>                                                          <C>                  <C>
         Retail                                              33.1%               39.5%
         Office buildings                                    18.9                11.7
         Warehouse                                           18.5                19.2
         Apartment complex                                   15.8                18.5
         Industrial                                           4.6                 5.5
         Other                                                9.1                 5.6
                                                            -----               -----
                                                            100.0%              100.0%
                                                            =====               =====
</TABLE>

The contractual maturities of the commercial mortgage loan portfolio as of
December 31, 1999, for loans that were not in foreclosure are as follows:

<TABLE>
<CAPTION>
                                NUMBER OF LOANS                    CARRYING VALUE                   PERCENT
                                ---------------                    --------------                   -------

<S>                           <C>                        <C>
2000                                    2                          $         4,475                     2.7%
2001                                    5                                    7,165                     4.3
2002                                    2                                    5,904                     3.5
2004                                    4                                    5,289                     3.2
Thereafter                             33                                  144,164                    86.3
                                    -----                          ---------------                   -----
     Total                             46                          $       166,997                   100.0%
                                    =====                          ===============                   =====
</TABLE>

In 1999, there were no commercial mortgage loans which were contractually due.

SECURITIES ON DEPOSIT

At December 31, 1999, fixed income securities with a carrying value of $1,903
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 on the
following page 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 are assumed to 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>

                                                         1999                                1998
                                                         ----                                ----
                                             CARRYING             FAIR             CARRYING            FAIR
                                               VALUE              VALUE              VALUE            VALUE
                                               -----              -----              -----            -----

<S>                                      <C>                <C>                <C>                <C>
Fixed income securities                  $    1,912,545     $    1,912,545     $      1,966,067   $     1,966,067
Mortgage loans                                  166,997            159,853              145,095           154,872
Short-term investments                           46,037             46,037               76,127            76,127
Policy loans                                     31,109             31,109               29,620            29,620
Separate Accounts                               443,705            443,705              366,247           366,247
</TABLE>

CARRYING VALUE AND FAIR VALUE INCLUDE 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 value are deemed to approximate fair value.

The carrying value of policy loans are 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>
                                                        1999                                      1998
                                                        ----                                      ----
                                               CARRYING             FAIR               CARRYING            FAIR
                                                 VALUE              VALUE                VALUE             VALUE
                                                 -----              -----                -----             -----
<S>                                     <C>                 <C>                <C>                <C>
Contractholder funds on
   investment contracts                 $        627,488    $       605,113    $        512,239   $       518,448
Separate Accounts                                443,705            443,705             366,247           366,247
</TABLE>

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

DERIVATIVE FINANCIAL INSTRUMENTS
The only derivative financial instruments used by the Company are 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, 1999
Financial futures contracts                    $       8,700     $           -     $         (29)   $         588

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



                                       F-17
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)


similar commitments to borrowers. At December 31, 1999, the Company had $10,000
in mortgage loan commitments which had a fair value of $100. The Company had no
mortgage loan commitments at December 31, 1998.

6.       DEFERRED POLICY ACQUISITION COSTS

Certain costs of acquiring business which were deferred and amortized for the
years ended December 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>

                                                                 1999                 1998
                                                                 ----                 ----

<S>                                                          <C>                 <C>
          Balance, beginning of year                             $ 87,830            $ 71,946
          Acquisition costs deferred                               26,247              23,723
          Amortization charged to income                           (8,861)             (8,238)
          Adjustment from unlocking assumptions                      (124)              1,209
          Effect of unrealized gains/(losses)                       1,840                (810)
                                                             ------------        ------------

          Balance, end of year                                  $ 106,932            $ 87,830
                                                             ============        ============
</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>
                                                                                 1999               1998
                                                                                 ----               ----
                     <S>                                                        <C>                <C>
                     Immediate annuities:
                          Structured settlement annuities                       $ 1,024,049        $ 1,135,813
                          Other immediate annuities                                   2,933              2,577
                     Traditional life                                                70,254             68,511
                     Other                                                              780              1,203
                                                                                -----------        -----------
                          Total life-contingent contract benefits               $ 1,098,016        $ 1,208,104
                                                                                ===========        ===========
</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 10.3% for immediate annuities and 4.5% to 7.0% 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.

Premium deficiency reserves are established, if necessary and have been recorded
for the structured settlement annuity business, to the extent the unrealized
gains on fixed income securities would result in a premium deficiency had those
gains actually been realized. A liability of $8 million and $188 million is
included in the reserve for life-contingent contract benefits with respect to
this deficiency for the years ended December 31, 1999 and 1998, respectively.
The decrease in this liability in 1999 reflects declines in unrealized capital
gains on fixed income securities.



                                       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>

                                                                                 1999               1998
                                                                                 ----               ----

<S>                                                                               <C>                 <C>
                     Interest-sensitive life                                      $211,729            $189,970
                     Fixed annuities:
                          Immediate annuities                                      303,564             285,977
                          Deferred annuities                                       273,864             177,317
                     Other investment contracts                                     50,000              50,000
                                                                                  --------            --------
                          Total contractholder funds                              $839,157            $703,264
                                                                                  ========            ========
</TABLE>


Contractholder funds are equal to deposits received, net of commissions, and
interest credited to the benefit of the contractholder less withdrawals,
mortality charges and administrative expenses. Interest rates credited range
from 5.5% to 6.5% for interest-sensitive life contracts; 3.5% to 9.8% for
immediate annuities; 4.0% to 7.9% 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 2% of deferred annuities
are subject to a market value adjustment.

8.       CORPORATION RESTRUCTURING

On November 10, 1999 the Corporation announced a series of strategic initiatives
to aggressively expand its selling and servicing capabilities. The Corporation
also announced that it is implementing a program to reduce expenses by
approximately $600 million. The reduction will result in the elimination of
approximately 4,000 current non-agent positions, across all employment grades
and categories by the end of 2000, or approximately 10% of the Corporation's
non-agent work force. The impact of the reduction in employee positions is not
expected to materially impact the results of operations of the Company.

These cost reductions are part of a larger initiative to redeploy the cost
savings to finance new initiatives including investments in direct access and
internet channels for new sales and service capabilities, new competitive
pricing and underwriting techniques, new agent and claim technology and enhanced
marketing and advertising. As a result of the cost reduction program, the
Corporation recorded restructuring and related charges of $81 million pretax
during the fourth quarter of 1999. The Corporation anticipates that additional
pretax restructuring related charges of approximately $100 million will be
expensed as incurred throughout 2000. The Company's allocable share of these
expenses were immaterial in 1999 and are expected to be immaterial in 2000.

9.       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



                                       F-19
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)


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.

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

<TABLE>
<CAPTION>
                                                                               1999               1998
                                                                               ----               ----
<S>                                                                      <C>                <C>
DEFERRED ASSETS
Life and annuity reserves                                                        $ 42,248           $ 41,073
Discontinued operations                                                               366                364
Other postretirement benefits                                                         296                328
Other assets                                                                        1,319              2,023
                                                                         ----------------   ----------------
      Total deferred assets                                                        44,229             43,788

DEFERRED LIABILITIES

Deferred policy acquisition costs                                                 (25,790)           (20,573)
Unrealized net capital gains                                                      (16,280)           (44,642)
Difference in tax bases of investments                                             (3,194)            (1,784)
Prepaid commission expense                                                           (682)              (790)
Other liabilities                                                                  (1,360)            (1,448)
                                                                         ----------------   ----------------
      Total deferred liabilities                                                  (47,306)           (69,237)
                                                                         ----------------   ----------------
      Net deferred liability                                                     $ (3,077)         $ (25,449)
                                                                         ================   ================
</TABLE>


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

<TABLE>
<CAPTION>
                                                             1999               1998               1997
                                                             ----               ----               ----

<S>                                                         <C>                 <C>                <C>
Current                                                     $ 8,650             $ 13,679           $ 14,874
Deferred                                                      5,990                1,255             (1,578)
                                                            -------             --------           --------
      Total income tax expense                              $14,640             $ 14,934           $ 13,296
                                                            =======             ========           ========
</TABLE>

The Company paid income taxes of $12,547, $3,788 and $13,350 in 1999, 1998 and
1997, respectively.

                                       F-20
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)

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>

                                                                1999              1998        1997
                                                                ----              ----        ----

<S>                                                            <C>               <C>         <C>
   Statutory federal income tax rate                           35.0%             35.0%       35.0%
   State income tax expense                                     1.6               1.6         2.2
   Other                                                       (1.1)             (1.5)        (.3)
                                                              -----             -----       -----
   Effective income tax rate                                   35.5%             35.1%       36.9%
                                                              =====             =====       =====
</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, 1999, approximately $389,
will result in federal income taxes payable of $136 if distributed by the
Company. No provision for taxes has been made as the Company has no plan to
distribute amounts from this account. No further additions to the account have
been permitted since the Tax Reform Act of 1984.

10.      STATUTORY FINANCIAL INFORMATION

The Company's statutory capital and surplus was $214,738 and $196,416 at
December 31, 1999 and 1998, respectively. The Company's statutory net income was
$18,767, $13,649 and $18,592 for the years ended December 31, 1999, 1998 and
1997, 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's codification initiative has produced a comprehensive guide of
statutory accounting principles, which the Company will implement in January
2001. The Company's state of domicile, New York, continues to review
codification and existing statutory accounting requirements for desired
revisions to existing state laws and regulations. The requirements are not
expected to have a material impact on the statutory surplus of the Company.

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

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 requirement consists of a
formula for determining each insurer's RBC and a model law specifying regulatory
actions if an insurer's RBC falls below specified levels. The RBC formula for
life insurance companies establishes capital requirements relating to insurance,
business, asset and



                                       F-21
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)


interest rate risks. At December 31, 1999, RBC for the Company was significantly
above a level that would require regulatory action.

11.      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, average annual compensation and
estimated social security retirement benefits. 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 $(263), $382 and $597 for the pension plans in 1999, 1998 and 1997,
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 FUND
Employees of the Corporation and its domestic subsidiaries, including the
Company are also eligible to become members of The Savings and Profit Sharing
Fund of Allstate Employees ("Allstate Plan"). The Corporation's contributions
are based on the Corporation's matching obligation and performance.

The Company paid $176, $567, $164 in 1999, 1998 and 1997, respectively for
profit sharing.

12.      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>
                                               1999                           1998                            1997
                                  ------------------------------  -----------------------------  ------------------------------
                                                         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
        (losses) gains arising
        during the period         $(83,241)  $ 29,134  $(54,107)  $ 33,218  $(11,626)  $ 21,592  $ 43,686   $(15,290)  $ 28,396
      Less: reclassification
        adjustments                 (2,207)       772    (1,435)     4,869    (1,704)     3,165     1,183       (414)       769
                                  --------   --------  --------   --------  --------   --------  --------   --------  --------

Unrealized net capital
 (losses) gains                    (81,034)    28,362   (52,672)    28,349    (9,922)    18,427    42,503    (14,876)    27,627
                                  --------   --------  --------   --------  --------   --------  --------   --------   --------
Other comprehensive
 (loss) income                    $(81,034)  $ 28,362  $(52,672)  $ 28,349  $ (9,922)  $ 18,427  $ 42,503   $(14,876)  $ 27,627
                                  ========   ========  ========   ========  ========   ========  ========   ========   ========
</TABLE>


                                       F-22
<PAGE>


                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                          NOTES TO FINANCIAL STATEMENTS
                                ($ IN THOUSANDS)

13.      COMMITMENTS AND CONTINGENT LIABILITIES

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

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

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 any exposure to potential litigation. The Company is a member of the
Insurance Marketplace Standards Association, an organization which advocates
ethical market conduct.



                                       F-23
<PAGE>



                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                            SCHEDULE IV--REINSURANCE
                                ($ IN THOUSANDS)

<TABLE>
<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
                                             ============       ===========         ============
</TABLE>



<TABLE>
<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>


<TABLE>
<CAPTION>

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

<S>                                          <C>                <C>                 <C>
Life insurance in force                      $ 11,339,990       $ 721,040           $ 10,618,950
                                             ============       =========           ============
Premiums and contract charges:
    Life and annuities                       $    116,167       $   2,185           $    113,982
    Accident and health                             5,883             902                  4,981
                                             ------------       ---------           ------------
                                             $    122,050       $   3,087           $    118,963
                                             ============       =========           ============
</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, 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
                                                  ============      ============     ============      ============


YEAR ENDED DECEMBER 31, 1997

Allowance for estimated losses
   on mortgage loans                              $        225      $        261     $          -      $        486
                                                  ============      ============     ============      ============
</TABLE>


                                       F-25





<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 and Director
         (Principal Executive Officer)

Date     March 28, 2000
         --------------

        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/ MARLA G. FRIEDMAN
        ----------------------
        Marla G. Friedman
        Director

Date    March 24, 2000
        --------------

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

Date    March 24, 2000
        ---------------


By      /s/ LEONARD G. SHERMAN
        ----------------------
        Leonard G. Sherman
        Director

Date    March 24, 2000
        --------------

<PAGE>


By      /s/ KEVIN R. SLAWIN
        ----------------------
        Kevin R. Slawin
        Director

Date    March  24, 2000
        -----------------

By      /s/ PATRICIA A. WILSON
        -----------------------
        Patricia A. Wilson
        Director

Date    March  24, 2000
        -----------------

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

Date    March 28, 2000
        ------------------

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

Date    March 24, 2000
        -----------------

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

Date    March 24, 2000
        -----------------


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

Date    March 24, 2000
        -----------------

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

Date    March 24, 2000
        -----------------


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

Date    March 24, 2000
        -----------------





<PAGE>
                                      EXHIBIT INDEX

                 The Allstate Life Insurance Company of New York
                 Form 10-K for the year ended December 31, 1999

Exhibit No.                Description

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


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

27   Financial Data Schedule (filed herewith)



                                      E-1