UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K

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

For the fiscal year ended December 31, 2002
                          -----------------


Commission file number: 333-75938, 333-86352
                        --------------------



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

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NEW YORK                                                 53-0242530
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(State or other jurisdiction of                (IRS employer identification no.)
incorporation or organization)

1000 WOODBURY ROAD, SUITE 208, WOODBURY, NY                11797
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 (Address of principal executive offices)                (Zip code)

Registrant's telephone number, including area code  (516) 682-8700
                                                   ---------------


--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of Act: None
Securities registered pursuant to Section 12(g) of 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. Yes [ X ] No [ ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock,  as of the latest  practicable  date:  1,377,863  shares of Common
Stock  as  of  March   10,   2003  all  of   which   were   directly   owned  by
Security-Connecticut Life Insurance Company.

NOTE:  WHEREAS RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK MEETS THE CONDITIONS
SET FORTH IN GENERAL  INSTRUCTION  I(1)(a)  AND (b) OF FORM  10-K,  THIS FORM IS
BEING FILED WITH THE REDUCED  DISCLOSURE FORMAT PURSUANT TO GENERAL  INSTRUCTION
I(2).


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                                            RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
                             (A wholly-owned subsidiary of Security-Connecticut Life Insurance Company)
                                                     Annual Report on Form 10-K
                                                For the Year Ended December 31, 2002


                                                          TABLE OF CONTENTS

Form 10-K
  Item No.                                                                                                      Page
-----------------                                                                                            ----------
                  PART I
<S>               <C>                                                                                            <C>

   Item 1.        Business**............................................................................          3
   Item 2.        Properties** .........................................................................          6
   Item 3.        Legal Proceedings.....................................................................          7
   Item 4.        Submission of Matters to a Vote of Security Holders*  ................................          7

                  PART II

   Item 5.        Market for Registrant's Common Equity and Related Stockholder Matters ................          7
   Item 6.        Selected Financial Data*..............................................................          7
   Item 7.        Management's Narrative Analysis of the Results of Operations and
                  Financial Condition**.................................................................          7
   Item 7A.       Quantitative and Qualitative Disclosure About Market Risk.............................         13
   Item 8.        Financial Statements and Supplementary Data...........................................         14
   Item 9.        Changes in and Disagreements with Accountants on Accounting and
                  Financial Disclosure *................................................................         44

                  PART III

   Item 10.       Directors and Executive Officers of the Registrant*...................................         44
   Item 11.       Executive Compensation* ..............................................................         44
   Item 12.       Security Ownership of Certain Beneficial Owners and Management*.......................         44
   Item 13.       Certain Relationships and Related Transactions* ......................................         44
   Item 14.       Controls and Procedures............................ ..................................         44

                  PART IV

   Item 15.       Exhibits, Financial Statement Schedules, and Reports on Form
                  8-K...................................................................................         45
                  Index to Financial Statement Schedules................................................         59
                  Signatures............................................................................         53

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


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                                     PART I

ITEM 1.  BUSINESS

ORGANIZATION OF BUSINESS

ReliaStar  Life  Insurance  Company of New York ("RLNY" or the  "Company")  is a
wholly-owned   subsidiary  of   Security-Connecticut   Life  Insurance   Company
("Security-Connecticut") a Minnesota domiciled insurance company, which provides
financial products and services in the United States.  Security-Connecticut is a
wholly-owned  subsidiary of ReliaStar Life Insurance Company ("ReliaStar Life").
ReliaStar Life is a  wholly-owned  subsidiary of Lion  Connecticut  Holding Inc.
("Lion  Connecticut").  Lion  Connecticut's  ultimate parent is ING Groep,  N.V.
("ING"), a global financial services company based in The Netherlands.

On April 1, 2002,  ReliaStar Life acquired First Golden  American Life Insurance
Company of New York ("First Golden"), an affiliated entity, for a purchase price
of $27.7 million in cash and $0.2 million in receivables. The purchase price was
based on First Golden's  statutory-basis book value.  ReliaStar Life contributed
First Golden to  Security-Connecticut  at GAAP book value.  Security-Connecticut
contributed  First  Golden to RLNY and First Golden was  dissolved  into RLNY at
GAAP book value.  The  contribution  of First  Golden to RLNY was recorded as an
increase to  stockholder's  equity of $31.4 million which equaled First Golden's
April 1, 2002 GAAP book value.  Approval  for the merger was  obtained  from the
Insurance Departments of the States of New York and Delaware.

Statement  of  Financial   Accounting   Standards   ("FAS")  No.  141  "Business
Combinations"  excludes  transfers of net assets or exchanges of shares  between
entities under common control and is therefore covered by Accounting  Principles
Board ("APB") Opinion No. 16 "Business Combinations." In accordance with Opinion
No. 16, the statement of financial  position and other financial  information is
presented as of the  beginning of the period ended  December 31, 2002, as though
the assets and liabilities had been transferred at January 1, 2002 on a combined
basis.  Prior year information was not restated due to the  immateriality of the
First Golden amounts to the prior periods.

PRODUCTS AND SERVICES

Management has determined that under FAS No. 131  "Disclosure  about Segments of
an Enterprise and Related  Information," the Company has one operating  segment,
ING U.S. Financial Services ("USFS").

The Company is  principally  engaged in the business of providing life insurance
and related financial  services  products.  The Company provides and distributes
individual life insurance and annuities, employee benefits products and services
and retirement plans. The Company's  strategy is to offer,  principally  through
education-based  marketing,  a wide variety of products and services designed to
address  customers'  needs for  financial  security,  especially  tax-advantaged
savings for retirement and protection in the event of death.

The  Company's  qualified  and  nonqualified  annuity  contracts  that include a
variety of funding and payout  options for  individuals  and employer  sponsored
retirement  plans  qualified  under Internal  Revenue Code Sections 401, 403 and
457, as well as non-qualified deferred compensation plans. Annuity contracts may
be deferred  or  immediate  (payout  annuities).  These  products  also  include


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programs  offered to qualified  plans and  non-qualified  deferred  compensation
plans that  package  administrative  and  record-keeping  services  along with a
variety of investment  options,  including  affiliated and nonaffiliated  mutual
funds and variable and fixed investment options.  In addition,  the Company also
offers  wrapper  agreements  entered into with  retirement  plans which  contain
certain benefit responsive  guarantees (i.e.  liquidity  guarantees of principal
and previously  accrued  interest for benefits paid under the terms of the plan)
with respect to portfolios  of plan-owned  assets not invested with the Company.
The  Company  also  offers   investment   advisory  services  and  pension  plan
administrative services.

INDIVIDUAL LIFE AND ANNUITY INSURANCE PRODUCTS

The Company offers a wide range of individual life insurance products, including
term, universal life,  second-to-die universal life, variable universal life, as
well as variable annuities through a network of independent agents and financial
professionals. These products are marketed to individual customers who prefer to
purchase  insurance and investment  products from a personal  financial adviser.
These  products  target  middle  and  upper-income  families  and niche  markets
including U.S. military personnel and small-business owners.

Variable  universal life and fixed universal life insurance products represent a
significant  portion of the individual life insurance  premium volume.  Variable
universal  life  insurance  policies  contain  alternative   investment  options
(generally  mutual  funds)  and  policy  values  which  will vary based upon the
investment returns of the fund(s) selected by the policyholder,  while providing
certain  benefits  associated with  traditional  life  insurance,  such as death
benefits and cash values.  Fixed universal life policies  provide for guaranteed
levels of insurance  protection and minimum interest rate  guarantees.  Interest
sensitive  products  provide for interest  crediting rates which may be adjusted
periodically,  subject to minimum  guaranteed rates as set forth in policyholder
contracts.  Adjustments  are made to the crediting  rates on interest  sensitive
products  based upon a variety of  factors,  including  investment  performance,
market  interest  rates  and   competitive   factors.   Profits   recognized  on
interest-sensitive  products are affected by  mortality  experience,  the margin
between   interest  rates  earned  on  investments  and  interest   credited  to
policyholders,  as well as capital gains and losses on investments,  persistency
and expenses.

The variable  annuity products offered contain  alternative  investment  options
(generally  mutual  funds)  and  policy  values  which  will vary based upon the
investment returns of the fund(s) selected by the policyholder.

Variable  annuities  are  long-term  savings  vehicles in which  contract  owner
premiums (purchase  payments) are recorded and maintained in sub-accounts with a
separate  account  established  and registered  with the Securities and Exchange
Commission ("SEC") as a unit investment trust.  Variable annuities issued by the
Company are a combination of variable and fixed deferred annuity contracts under
which some or all of the premiums  may be  allocated by the contract  owner to a
fixed account available under the contract.

The Company  discourages  premature  surrenders of  interest-sensitive  products
through  contractual  surrender charges and the adjustment of interest crediting
rates.  The  policies and  annuities  sold  contain  provisions  which allow the
contractholder   to  withdraw  or  surrender   their   contracts  under  defined
circumstances.   These  contracts   generally  contain  provisions  which  apply
penalties  or  otherwise  limit  the  ability  of  contractholders  to make such
withdrawals or surrenders. The interest rates that the Company might be required
to credit under their interest-sensitive insurance products to forestall


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surrenders,  particularly  in a time of rapidly  rising market  interest  rates,
could have an adverse effect on operating income.

Individual  life  insurance  business  is subject to risks in the event that the
Company's   mortality   experience   deviates  from  the  assumptions   used  in
establishing its premium rates.

EMPLOYEE BENEFIT PRODUCTS

The Company  targets the sale of employee  benefits  and  financial  services to
medium and large  corporate  employers and affinity  groups.  Additionally,  the
Company  sells  individual  and  payroll-deduction  products to employees of its
corporate  clients.   Principal  products  include  group  and  individual  life
insurance and non-medical group insurance  products.  The Company also maintains
an in-force block of 401(k) retirement plan business.

Group life and disability  insurance and employee  benefit related  services are
offered by the Company.  Employee  benefits  products are marketed through major
brokerage operations and through direct sales to employers.

Group term life insurance is marketed to employer groups in the Company's target
market. Premiums for these policies are based largely upon the experience of the
Company,  in  some  instances,   on  the  experience  of  the  particular  group
policyholder.  The  primary  risks  related  to this  line of  business  include
deviations from expected mortality,  expenses and investment income. The Company
seeks to control the mortality risk through reinsurance treaties.

The Company  also markets  group  disability  income  insurance.  This  coverage
compensates  employees  for  loss of  income  due to  sickness  or  injury.  The
profitability  of this  business  is affected by  morbidity  experience  and the
investment return on assets supporting the policy reserves.

The Company  markets  individual  life  insurance  policies to  employees at the
worksite  and to members of affinity  groups.  The  products  delivered to these
markets include universal life insurance policies, whole life insurance policies
and individual term life policies.

The Company also markets individual cancer policies to employees at the worksite
as well as medical  stop loss  coverage  to  employer  sponsors  of  self-funded
employee health benefit plans.

COMPETITION

The businesses in which the Company engages in are each highly competitive.  The
products compete in marketplaces  characterized by a large number of competitors
with similar  products.  Competition  is based largely upon the crediting  rates
under the policies,  the credit and claims paying ratings of competing insurers,
name recognition, the commission structures of competing insurers and the levels
of service afforded  distributors.  Competing investment  opportunities are also
made available by mutual funds, banks and other financial  intermediaries,  many
of which have greater resources than the Company. The products are not generally
eligible for legal  protection  from being copied by others,  and capital is the
most significant barrier to entry by new competitors.

Group life  insurance  is a  homogeneous  product  sold in a highly  competitive
market.  The Company's  competitors  include all of the largest  insurers  doing
business in the United States.


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REGULATION

Insurance   companies  are  subject  to  regulation   and   supervision  by  the
jurisdictions in which they are domiciled and transact business.  The Company is
domiciled in New York. The laws of the state of New York establishes supervisory
agencies with broad  administrative  and supervisory powers relative to granting
and  revoking  licenses  to  transact  business,   regulating  trade  practices,
licensing agents,  approving policy forms, filing certain premium rates, setting
insurance  liability and investment reserve  requirements,  determining the form
and content of required financial statements, determining the reasonableness and
adequacy  of  capital  and  surplus  and  prescribing  the  types,  amounts  and
concentrations  of  investments  permitted.  The  Company is subject to periodic
examinations by the regulatory  agencies,  including market conduct examinations
of  sales  practices.   A  number  of  states  require  insurance  companies  to
participate in assigned risk or other pools  providing  insurance for people who
cannot qualify in the regular markets.

The state of New York imposes  National  Association of Insurance  Commissioners
("NAIC")  developed  minimum   risk-based  capital   requirements  on  insurance
enterprises.  The  formulas for  determining  the amount of  risk-based  capital
specify  various  weighting  factors that are applied to financial  balances and
various levels of activity,  based upon the nature and perceived  degree of risk
associated with such balances and levels of activity.  Regulatory  compliance is
measured by a company's  risk-based  capital  ratio,  which is  calculated  as a
company's  regulatory  total  adjusted  capital,  as  defined,  divided  by  its
authorized control level risk-based capital,  as defined.  Companies with ratios
below specific trigger points are classified  within certain  regulatory  action
levels,  each of which  requires  specified  corrective  action.  The risk-based
capital ratio of the Company  exceeds the ratio at which  regulatory  corrective
action would be required.

In  addition to state  insurance  laws,  the Company is also  subject to general
business and corporation  laws,  federal and state securities laws, the Employee
Retirement Income Security Act of 1974, as amended, the Internal Revenue Code of
1986, as amended, consumer protection laws, fair credit reporting acts and other
laws.

Some  annuities  and  insurance  policies  issued by the  Company  are funded by
separate  accounts,  the interests in which are registered  under the Securities
Act of 1933,  as  amended,  and  subject  to review by the SEC.  These  laws and
regulations  are  primarily  intended  to protect  investors  in the  securities
markets and generally grant  supervisory  agencies broad  administrative  power,
including  the power to limit or restrict the conduct of business for failure to
comply with such laws and regulations.

GEOGRAPHIC DISTRIBUTION

The Company operates primarily in the United States and is authorized to conduct
business in all 50 states and the District of Columbia.

ITEM 2.  PROPERTIES

The Company's home office is located at 1000 Woodbury Road, Suite 208, Woodbury,
NY 11797.  All Company office space is leased or subleased by the Company or its
other affiliates.  The Company pays  substantially all expenses  associated with
its leased and subleased  office  properties.  Expenses not paid directly by the
Company are paid for by an affiliate and allocated back to the Company.


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ITEM 3.  LEGAL PROCEEDINGS

The Company is a party to threatened or pending lawsuits arising from the normal
conduct of business.  Due to the climate in insurance  and business  litigation,
suits against the Company sometimes include claims for substantial compensatory,
consequential or punitive damages and other types of relief.  Moreover,  certain
claims  are  asserted  as class  actions,  purporting  to  represent  a group of
similarly situated individuals. While it is not possible to forecast the outcome
of such lawsuits,  in light of existing  insurance,  reinsurance and established
reserves,  it is the opinion of management that the disposition of such lawsuits
will not have materially adverse effect on the Company's operations or financial
position.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Omitted pursuant to General Instruction I(2)(c) of Form 10-K.


                                     PART II

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

All of the Company's outstanding shares are owned by  Security-Connecticut  Life
Insurance  Company,  which  is  a  wholly-owned  subsidiary  of  ReliaStar  Life
Insurance Company whose ultimate parent is ING.

ITEM 6.  SELECTED FINANCIAL DATA

Omitted pursuant to General Instruction I(2)(a) of Form 10-K.

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

OVERVIEW

The  following  narrative  analysis of the results of  operations  and financial
condition  presents a review of the Company for the twelve month  periods  ended
December 31, 2002 versus 2001.  This review should be read in  conjunction  with
the financial statements and other data presented herein.

CHANGE IN ACCOUNTING PRINCIPLE

In June 2001, the Financial  Accounting  Standards Board ("FASB") issued FAS No.
142,  "Goodwill  and  Other  Intangible  Assets,"  effective  for  fiscal  years
beginning  after December 15, 2001.  Under FAS No. 142,  goodwill and intangible
assets deemed to have indefinite  lives are no longer  amortized but are subject
to annual  impairment  tests.  Other intangible  assets are still amortized over
their estimated  useful lives.  The Company  adopted the new standard  effective
January 1, 2002.

As required  under FAS No. 142, the Company  completed the first of the required
impairment  tests as of January 1, 2002.  Step one of the impairment  test was a
screen  for  potential  impairment,  while step two  measured  the amount of the
impairment. All of the Company's operations fall under one reporting unit, USFS,
due to the consolidated nature of the Company's operations. Step one of the


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impairment test required the Company to estimate the fair value of the reporting
unit and compare the  estimated  fair value to its carrying  value.  The Company
determined  the estimated fair value  utilizing a discounted  cash flow approach
and applying a discount rate equivalent to the Company's  weighted  average cost
of  capital.  Fair value was  determined  to be less than  carrying  value which
required the Company to complete  step two of the test. In step two, the Company
allocated  the fair value of the  reporting  unit  determined in step one to the
assets and  liabilities of the reporting unit resulting in an implied fair value
of goodwill of zero.

The  comparison of the fair value amount  allocated to goodwill and the carrying
value of  goodwill  resulted  in an  impairment  loss  upon  adoption  of $865.0
million,  which  represents  the  entire  carrying  amount of  goodwill,  net of
accumulated  amortization.  This  impairment  charge  is shown  as a  change  in
accounting principle on the Income Statement.

RESULTS OF OPERATIONS

Premiums  for the year  ended  December  31,  2002,  increased  by $6.0  million
compared to the same period in 2001.  The growth of  premiums is  attributed  to
growth in the Company's life insurance products.

Fee income and other income for the year ended  December 31, 2002,  increased by
$8.0 million  compared to the same period in 2001. The increase is due to growth
in life  insurance  products,  partially  offset by  decreases  in fee income on
variable annuity assets which decreased as a result of market declines.

Net investment  income for the year ended December 31, 2002,  decreased by $11.5
million  compared to the same  period in 2001.  The  decrease in net  investment
income was due to the decrease in yield and declining interest rates,  partially
offset by a slight increase in assets.

Net  realized  capital  gains  (losses)  for the year ended  December  31, 2002,
decreased by $13.3 million  compared to the same period in 2001. The increase in
capital  losses  are due to  higher  impairments  of  certain  fixed  maturities
compared to 2001(refer to Note 2 of Notes to Financial Statements).

Interest  credited  and  other  benefits  to  policyholders  for the year  ended
December 31, 2002,  increased  by $22.5  million  compared to the same period in
2001.  This increase is the result of higher  future  policy  benefits and claim
reserves.

General  expenses  for the year ended  December  31,  2002,  decreased  by $15.3
million  compared to the same period in 2001.  This reduction is attributed to a
lower  allocation of corporate and service charges from the Company's parent and
other affiliates who provide services to the Company.

Amortization of deferred policy acquisition costs and value of business acquired
for the year ended December 31, 2002,  increased by $6.1 million compared to the
same period in 2001.  Amortization  of  long-duration  products is  reflected in
proportion to actual and estimated future gross profits.  Estimated future gross
profits are computed based on underlying  assumptions  related to the underlying
contracts,  including  but not limited to  interest  margins,  mortality  lapse,
premium persistency, expenses, and asset growth. The increase in the


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amortization  of  deferred  policy  acquisition  costs  and  value of  insurance
acquired reflects the impact of these variables on the overall book of business.

The cumulative  effect of the change in accounting  principle for the year ended
December 31, 2002,  was ($865.0)  million.  As noted in the Change in Accounting
Principle  section,  this write down is related to FAS No. 142, which  addresses
the value of goodwill and other intangible assets.

Earnings,  excluding goodwill  amortization,  change in accounting principle and
net realized capital gains and losses (net of taxes),  decreased by $7.1 million
for the year ended December 31, 2002, as compared to the year ended December 31,
2001. The decrease in net earnings is the result of investment  income decreases
due to lower investment income yields.

FINANCIAL CONDITION

INVESTMENTS

FIXED MATURITIES

Total fixed maturities  reflected net unrealized  capital gains of $95.2 million
and $61.5 million at December 31, 2002 and 2001, respectively.

It is management's  objective that the portfolio of fixed  maturities be of high
quality and be well  diversified by market sector.  The fixed  maturities in the
Company's  portfolio are generally rated by external rating agencies and, if not
externally  rated, are rated by the Company on a basis believed to be similar to
that used by the rating  agencies.  The average  quality rating of the Company's
fixed maturities portfolio was A+ at December 31, 2002 and 2001.

Fixed maturities rated BBB and below may have  speculative  characteristics  and
changes in economic conditions or other circumstances are more likely to lead to
a weakened  capacity of the issuer to make principal and interest  payments than
is the case with higher rated fixed maturities.

The  percentage  of total  fixed  maturities  by quality  rating  category is as
follows:
                                December 31, 2002        December 31, 2001
-------------------------------------------------------------------------------
AAA                                     44.9%                   35.6%
AA                                       4.7                     6.8
A                                       20.6                    18.0
BBB                                     23.6                    31.8
BB                                       4.2                     4.4
B and Below                              2.0                     3.4
-------------------------------------------------------------------------------
  Total                                100.0%                  100.0%
===============================================================================

The percentage of total fixed maturities by market sector is as follows:
                                December 31, 2002        December 31, 2001
-------------------------------------------------------------------------------
U.S. Corporate                          54.0%                   59.2%
Residential Mortgage-backed             23.4                    20.2
Commercial/Multifamily
  Mortgage-backed                        7.0                     7.7
Foreign (1)                              0.2                      -
U.S. Treasuries/Agencies                 6.1                     0.4
Asset-backed                             9.3                    12.5
-------------------------------------------------------------------------------
  Total                                100.0%                  100.0%
===============================================================================

(1) Primarily U.S. dollar denominated

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The Company analyzes the general account  investments to determine whether there
has been an other than temporary  decline in fair value below the amortized cost
basis in accordance  with FAS No. 115,  "Accounting  for Certain  Investments in
Debt and Equity Securities." Management considers the length of the time and the
extent  to which  the  market  value has been  less  than  cost;  the  financial
condition and near-term prospects of the issuer;  future economic conditions and
market forecasts;  and the Company's intent and ability to retain the investment
in the issuer for a period of time  sufficient  to allow for  recovery in market
value. If it is probable that all amounts due according to the contractual terms
of a debt security will not be collected,  an other than temporary impairment is
considered to have occurred.

In addition, the Company invests in structured securities that meet the criteria
of Emerging Issues Task Force ("EITF") Issue No. 99-20  "Recognition of Interest
Income  and  Impairment  on  Purchased  and  Retained  Beneficial  Interests  in
Securitized  Financial  Assets." Under EITF Issue No. 99-20, a determination  of
the  required  impairment  is  based  on  credit  risk  and the  possibility  of
significant  prepayment risk that restricts the Company's ability to recover the
investment.  An  impairment is recognized if the market value of the security is
less than book value and there has been an adverse change in cash flow since the
last remeasurement date.

When a decline  in fair value is  determined  to be other  than  temporary,  the
individual  security is written down to fair value and the loss is accounted for
as a realized loss.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity  is the ability of the Company to  generate  sufficient  cash flows to
meet the cash requirements of operating,  investing,  and financing  activities.
The Company's  principal  sources of liquidity are  premiums,  product  charges,
investment  income,  maturing  investments,  proceeds  from debt  issuance,  and
capital  contributions.  Primary uses of these funds are payments of commissions
and operating  expenses,  interest and premium  credits,  investment  purchases,
repayment of debt, as well as withdrawals and surrenders.

The Company's  liquidity  position is managed by maintaining  adequate levels of
liquid assets,  such as cash or cash  equivalents  and  short-term  investments.
Additional sources of liquidity include borrowing  facilities to meet short-term
cash  requirements.  The  Company  maintains  a $97.4  million  reciprocal  loan
agreement with ING America Insurance Holdings, Inc. ("ING AIH"), a perpetual $30
million  revolving  note  facility  with  Bank of New York  and a $30.0  million
revolving  note  facility with  SunTrust  Bank,  which expires on July 30, 2003.
Management  believes  that these  sources of liquidity  are adequate to meet the
Company's short-term cash obligations.

The  NAIC  risk-based  capital   requirements  require  insurance  companies  to
calculate  and report  information  under a risk-based  capital  formula.  These
requirements  are  intended  to  allow  insurance   regulators  to  monitor  the
capitalization  of insurance  companies based upon the type and mixture of risks
inherent in a Company's  operations.  The formula includes  components for asset
risk, liability risk, interest rate exposure, and other factors. The Company has
complied with the NAIC's  risk-based  capital  reporting  requirements.  Amounts
reported indicate that the Company has total adjusted capital above all required
capital levels.


                                       10
<PAGE>


CRITICAL ACCOUNTING POLICIES

GENERAL

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United  States  requires  the use of  estimates  and
assumptions  in  certain  circumstances  that  affect  amounts  reported  in the
accompanying  financial  statements and related  footnotes.  These estimates and
assumptions are evaluated on an on-going basis based on historical developments,
market  conditions,  industry  trends and other  information  that is reasonable
under the  circumstances.  There can be no  assurance  that actual  results will
conform to estimates and  assumptions,  and that reported  results of operations
will not be affected in a materially  adverse  manner by the need to make future
accounting  adjustments to reflect  changes in these  estimates and  assumptions
from time to time.

The Company has  identified  the  following  estimates  as critical in that they
involve a higher degree of judgment and are subject to a  significant  degree of
variability;  goodwill  impairment  testing,  investment  impairment testing and
amortization of deferred  acquisition costs and value of business  acquired.  In
developing these estimates  management  makes  subjective and complex  judgments
that are  inherently  uncertain  and  subject  to  material  change as facts and
circumstances  develop.  Although  variability  is inherent in these  estimates,
management  believes the amounts  provided are appropriate  based upon the facts
available upon compilation of the consolidated financial statements.

GOODWILL IMPAIRMENT TESTING

The  Company  tested  goodwill as of January 1, 2002 for  impairment  using fair
value  calculations  based on the present  value of estimated  future cash flows
from  business  currently in force and business  that we estimate we will add in
the future.  These  calculations  require  management  to make  estimates on the
amount of future revenues and the appropriate discount rate. The calculated fair
value of goodwill and the resulting  impairment  loss recorded is based on these
estimates,  which require a significant amount of management judgment.  Refer to
Note 1 of the  Financial  Statements  for a  discussion  of the  results  of the
Company's goodwill testing procedures and to Management's  Narrative Analysis of
the Results of Operations  for the impact these  procedures had on the Company's
income.

INVESTMENT IMPAIRMENT TESTING

The Company reviews the general account investments for impairments by analyzing
the amount and length of time  amortized  cost has exceeded  fair value,  and by
making  certain  estimates  and  assumptions  regarding  the issuing  companies'
business prospects,  future economic  conditions and market forecasts.  Based on
the facts and circumstances of each case,  management uses judgement in deciding
whether any calculated  impairments are temporary or other than  temporary.  For
those  impairments  judged to be other than  temporary,  we reduce the  carrying
value of those  investments  to the  current  fair value and  record  impairment
losses for the difference (refer to Note 2 of the Financial Statements).

AMORTIZATION OF DEFERRED ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

Deferred  policy  acquisition  costs  ("DAC")  and  value of  business  acquired
("VOBA") are amortized with interest over the life of the contracts  (usually 25
years) in relation to the present value of estimated gross profits from


                                       11
<PAGE>


projected  interest  margins,   asset-based  fees,  policy   administration  and
surrender charges less policy maintenance fees.

Changes in  assumptions  can have a  significant  impact on the  calculation  of
DAC/VOBA and its related  amortization  patterns.  Due to the  relative  size of
DAC/VOBA  balance and the sensitivity of the calculation to minor changes in the
underlying  assumptions  and the  related  volatility  that could  result in the
reported  DAC/VOBA  balance,  the  Company  performs  a  quarterly  analysis  of
DAC/VOBA.  At each  balance  sheet date,  actual  historical  gross  profits are
reflected  and  expected  future  gross  profits  and  related  assumptions  are
evaluated  for continued  reasonableness.  Any  adjustment  in estimated  profit
requires  that the  amortization  rate be revised  retroactively  to the date of
policy or  contract  issuance  ("unlocking"),  which could be  significant.  The
cumulative  difference  related to prior periods is recognized as a component of
current  period's  amortization,  along with  amortization  associated  with the
actual gross profits of the period.  In general,  increases in estimated returns
result in  increased  expected  future  profitability  and may lower the rate of
amortization,  while increases in lapse/surrender  and mortality  assumptions or
decreases in returns reduce the expected future  profitability of the underlying
business and may increase the rate of amortization.

One of the most  significant  assumptions  involved in the  estimation of future
gross profits for variable  universal life and deferred  annuity products is the
assumed return associated with future separate account  performance.  To reflect
the  near-term and long-term  volatility in the equity  markets this  assumption
involves a  combination  of near-term  expectations  and a long-term  assumption
about market  performance.  The overall return generated by the separate account
is dependent on several  factors,  including the relative mix of the  underlying
sub-accounts  among  bond  funds  and  equity  funds  as well as  equity  sector
weightings.

As part of the regular  analysis  of  DAC/VOBA,  at the end of third  quarter of
2002,  the Company  unlocked its  assumptions  by resetting  its  near-term  and
long-term  assumptions for the separate account returns to 9% (gross before fund
management fees and mortality and expense and other policy charges),  reflecting
a blended return of equity and other sub-accounts. This unlocking adjustment was
primarily  driven by the  sustained  downturn in the equity  markets and revised
expectations  for future  returns.  For the year ended  December 31,  2002,  the
Company recorded an acceleration of DAC/VOBA  amortization totaling $1.5 million
before tax, or $1.0 million, net of $0.5 million of federal income tax benefit.

FORWARD-LOOKING INFORMATION/RISK FACTORS

In  connection  with the "safe  harbor"  provisions  of the  Private  Securities
Litigation  Reform Act of 1995, the Company cautions readers  regarding  certain
forward-looking  statements contained in this report and in any other statements
made by, or on behalf of, the Company, whether or not in future filings with the
SEC.   Forward-looking   statements  are  statements  not  based  on  historical
information  and  which  relate  to  future  operations,  strategies,  financial
results,  or  other  developments.  Statements  using  verbs  such as  "expect,"
"anticipate,"   "believe"  or  words  of  similar   import   generally   involve
forward-looking  statements.  Without  limiting the  foregoing,  forward-looking
statements  include  statements which represent the Company's beliefs concerning
future levels of sales and  redemptions  of the Company's  products,  investment
spreads  and  yields,  or  the  earnings  and  profitability  of  the  Company's
activities.

Forward-looking  statements are  necessarily  based on estimates and assumptions
that are inherently subject to significant business, economic and competitive


                                       12
<PAGE>


uncertainties and contingencies,  many of which are beyond the Company's control
and many of which are subject to change.  These  uncertainties and contingencies
could cause  actual  results to differ  materially  from those  expressed in any
forward-looking statements made by, or on behalf of, the Company. Whether or not
actual results differ materially from  forward-looking  statements may depend on
numerous  foreseeable and  unforeseeable  developments.  Some may be national in
scope,  such as general economic  conditions,  changes in tax law and changes in
interest rates. Some may be related to the insurance industry generally, such as
pricing competition,  regulatory developments and industry consolidation. Others
may relate to the Company  specifically,  such as credit,  volatility  and other
risks  associated with the Company's  investment  portfolio.  Investors are also
directed to consider other risks and uncertainties  discussed in documents filed
by the Company  with the SEC. The Company  disclaims  any  obligation  to update
forward-looking information.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Asset/liability  management  is  integrated  into many aspects of the  Company's
operations,   including   investment   decisions,   product   development,   and
determination  of  crediting  rates.  As part of the  risk  management  process,
different economic  scenarios are modeled,  including cash flow testing required
for  insurance  regulatory  purposes,  to  determine  that  existing  assets are
adequate to meet projected  liability cash flows.  Key variables in the modeling
process include interest rates, anticipated contractholder behavior and variable
separate  account   performance.   Contractholders  bear  the  majority  of  the
investment risk related to variable insurance products.

The fixed account liabilities are supported by a portfolio  principally composed
of fixed rate investments that can generate predictable, steady rates of return.
The portfolio  management  strategy for the fixed  account  considers the assets
available  for sale.  This  enables  the Company to respond to changes in market
interest rates,  changes in prepayment risk, changes in relative values of asset
sectors and individual  securities and loans, changes in credit quality outlook,
and other relevant factors. The objective of portfolio management is to maximize
returns,  taking in to account  interest  rate and credit risk, as well as other
risks. The Company's  asset/liability  management discipline includes strategies
to  minimize  exposure  to  loss as  interest  rates  and  economic  and  market
conditions change.

Term life  products  for employee  benefits are short term in nature,  with some
longer term claim reserves. Cash flow testing and additional sensitivity testing
(with varying  mortality,  morbidity and expense levels) provides assurance that
the existing assets are adequate to meet projected liability cash flows.

For universal life products,  cash flow testing of higher  mortality,  surrender
and expense  levels than  expected  indicate  that  solvency is not  impaired by
reasonable  variations  in these  risks.  There is  currently  a gap between the
charges that are made to the policies for cost of insurance and expenses and the
guaranteed  maximums,  allowing  some margin for adverse  experience.  Crediting
rates are also changed regularly to reflect changes in the portfolio.

On the  basis of these  analyses,  management  believes  there is  currently  no
material solvency risk to the Company.


                                       13
<PAGE>
<TABLE>
<CAPTION>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                                         INDEX TO FINANCIAL STATEMENTS

                                                                                                          Page
                                                                                                         -------
<S>                                                                                                        <C>
Report of Independent Auditors .........................................................................   15

Financial Statements:

Income Statements for the years ended December 31, 2002 and 2001, four months
ended December 31, 2000 and eight months ended August 31, 2000..........................................   16

Balance Sheets as of December 31, 2002 and 2001.........................................................   17

Statements of Changes in Shareholder's Equity for the years ended December 31, 2002
and 2001, four months ended December 31, 2000 and eight months ended August 31, 2000....................   18

Statements of Cash Flows for the years ended December 31, 2002 and 2001, four months
ended December 31, 2000 and eights months ended August 31, 2000.........................................   19

Notes to Financial Statements...........................................................................   20









                                                        14
</TABLE>
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors
ReliaStar Life Insurance Company of New York

We have audited the  accompanying  balance  sheets of ReliaStar  Life  Insurance
Company of New York as of December 31, 2002 and 2001 ("Successor Company"),  and
the related income  statements,  statements of changes in shareholder's  equity,
and statements of cash flows for the years ended December 31, 2002 and 2001, and
for  the  period  from  September  1,  2000 to  December  31,  2000  ("Successor
Company"),  and  for  the  period  from  January  1,  2000 to  August  31,  2000
("Preacquisition Company"). These financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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,  the Successor Company's financial  statements referred to above
present fairly, in all material  respects,  the financial  position of ReliaStar
Life  Insurance  Company  of New York at  December  31,  2002 and 2001,  and the
results of its operations  and its cash flows for the years then ended,  and for
the period from  September  1, 2000 to December  31, 2000,  in  conformity  with
accounting  principles generally accepted in the United States.  Further, in our
opinion,  the Preacquisition  Company's  financial  statements referred to above
present fairly, in all material  respects,  the result of its operations and its
cash flows for the period from January 1, 2000 to August 31, 2000, in conformity
with accounting principles generally accepted in the United States.

As discussed in Note 1 to the financial statements, effective September 1, 2000,
ING America  Insurance  Holdings Inc.  acquired all of the outstanding  stock of
ReliaStar  Financial  Corp.,  ReliaStar  Life  Insurance  Company  of New York's
indirect parent and sole shareholder in a business combination  accounted for as
a purchase.  As a result of the acquisition,  the financial  information for the
periods after the  acquisition  is presented on a different cost basis than that
for the periods before the acquisition and, therefore, is not comparable.

As  discussed in Note 1 to the  financial  statements,  the Company  changed the
accounting  principle for goodwill and other intangible assets effective January
1, 2002.


                                                       /s/ Ernst & Young LLP

Atlanta, Georgia
March 21, 2003


                                       15
<PAGE>
<TABLE>
<CAPTION>

                                            RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
                             (A wholly-owned subsidiary of Security-Connecticut Life Insurance Company)

                                                          INCOME STATEMENTS
                                                              (Millions)

                                                                                                                 Preacquisition
                                                                                                                ----------------
                                                                                               Four months        Eight months
                                                         Year ended         Year ended            ended               ended
                                                        December 31,       December 31,        December 31,        August 31,
                                                             2002               2001              2000                2000
                                                       ---------------    --------------    ----------------    ----------------
Revenues:
<S>                                                          <C>               <C>               <C>                 <C>
   Premiums                                                  $66.2             $60.2             $19.8               $28.1
   Fee income                                                 94.3              90.4              31.8                63.3
   Net investment income                                     130.8             142.3              48.3                97.7
   Net realized capital gains (losses)                        (2.7)             10.6               0.5                 1.3
   Other income                                               11.7               7.6               1.7                 5.9
                                                       ---------------    --------------    ----------------    ----------------
            Total revenue                                    300.3             311.1             102.1               196.3
                                                       ---------------    --------------    ----------------    ----------------

Benefits, losses and expenses:
   Benefits:
       Interest credited and other benefits to
        policyholders                                        181.1             158.6              59.1               101.8
   Underwriting, acquisition, and insurance expenses:
   General expenses                                           36.2              51.5              15.7                32.4
   Amortization:
   Deferred policy acquisition costs and
      value of business acquired                              32.6              26.5              10.1                21.5
   Goodwill                                                    -                22.6               2.8                 5.8
                                                       ---------------    --------------    ----------------    ----------------
   Total benefits, losses and expenses                       249.9             259.2              87.7               161.5
                                                       ---------------    --------------    ----------------    ----------------
Income before income taxes                                    50.4              51.9              14.4                34.8

   Income tax expense                                         17.8              26.1               7.4                12.0
                                                       ---------------    --------------    ----------------    ----------------
Income before cumulative effect of change in                  32.6              25.8               7.0                22.8
   accounting principle
Cumulative effect of change in accounting principle         (865.0)              -                 -                   -
                                                       ---------------    --------------    ----------------    ----------------

Net income (loss)                                          $(832.4)            $25.8              $7.0               $22.8
                                                       ===============    ==============    ================    ================










                                                  See Notes to Financial Statements


                                                               16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                            RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
             (A wholly-owned subsidiary of Security-Connecticut Life Insurance Company)

                                           BALANCE SHEETS
                                    (Millions, except share data)

                                                                    December 31,        December 31,
                                                                        2002                2001
                                                                  -----------------    ---------------
<S>                                                                   <C>                  <C>
Assets
------
Investments:
   Fixed maturities, available for sale, at fair value
     (amortized cost of $1,523.0 at 2002 and $1,441.3 at 2001)       $1,601.5             $1,486.2
   Equity securities, at fair value (cost of $4.4 at 2002 and
     $3.6 at 2001)                                                        4.4                  6.0
   Mortgage loans on real estate                                        243.6                265.5
   Policy loans                                                          85.2                 85.0
   Short-term investments                                                55.6                  5.4
   Other investments                                                     11.9                  6.8
   Securities pledged to creditors (amortized cost of $0.9 at
     2002 and $13.9 at 2001)                                              0.9                 13.9
                                                                  -----------------    ---------------
Total investments                                                     2,003.1              1,868.8

Cash and cash equivalents                                                 2.4                (17.5)
Short term investments under securities loan agreement                    -                   15.1
Accrued investment income                                                19.3                 21.9
Accounts and notes receivable                                             6.9                  7.7
Reciprocal loan with affiliate                                            -                   47.1
Reinsurance recoverable                                                  54.6                 51.6
Deferred policy acquisition costs                                        61.3                 26.0
Value of  business acquired                                              48.2                 64.7
Goodwill (net of accumulated amortization of $31.2 at 2001)               -                  865.0
Deferred income taxes                                                    26.1                 46.5
Other assets                                                              5.2                  3.6
Assets held in separate accounts                                        429.4                487.4
                                                                  -----------------    ---------------

              Total assets                                           $2,656.5             $3,487.9
                                                                  =================    ===============

Liabilities and Shareholder's Equity
------------------------------------
Policy liabilities and accruals:
   Future policy benefits and claims reserves                       $ 1,595.6             $1,550.5
   Unearned  premiums                                                     0.2                  0.9
   Other policy claims and benefits payable                              26.6                 40.7
   Other policyholder's funds                                            23.3                 17.3
                                                                  -----------------    ---------------
Total policy liabilities and accruals                                 1,645.7              1,609.4

Payables under securities loan agreement                                  -                   15.1
Current income taxes                                                     12.3                  -
Other borrowed money                                                     74.2                 75.4
Other liabilities                                                        69.1                 87.9
Liabilities related to separate accounts                                429.4                487.4
                                                                  -----------------    ---------------
              Total liabilities                                       2,230.7              2,275.2
                                                                  -----------------    ---------------

Shareholder's equity:
   Common stock (1,377,863 shares authorized, issued and
        outstanding; $2.00 per share par value)                           2.8                  2.8
   Additional paid-in capital                                         1,225.6              1,194.6
   Accumulated other comprehensive income                                35.4                  6.5
   Retained earnings (deficit)                                         (838.0)                 8.8
                                                                  -----------------    ---------------
              Total shareholder's equity                                425.8              1,212.7
                                                                  -----------------    ---------------

              Total liabilities and shareholder's equity             $2,656.5             $3,487.9
                                                                  =================    ===============

                                      See Notes to Financial Statements

                                                    17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                            RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
                             (A wholly-owned subsidiary of Security-Connecticut Life Insurance Company)

                                            STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
                                                             (Millions)

                                                                                   Accumulated
                                                                                      Other           Retained           Total
                                                   Common        Additional       Comprehensive       Earnings        Shareholder's
                                                   Stock        Paid-in-Capital   Income (Loss)       (Deficit)          Equity
----------------------------------------------- ------------    -------------     --------------    -------------    --------------
<S>                                                     <C>           <C>                 <C>           <C>                <C>
Balance at December 31, 1999                      $     2.8       $   235.2         $     (9.4)     $    213.0         $   441.6
Dividends to Shareholder                                -               -                  -              (6.0)             (6.0)
Comprehensive income:
   Net income                                           -               -                  -              22.8              22.8
   Other comprehensive income net of tax:
      Unrealized (loss) on securities
      ($(1.6) pretax)                                   -               -                 (1.0)            -                (1.0)
                                                                                                                     --------------
  Comprehensive income                                                                                                      21.8
                                                ------------    -------------     --------------    -------------    --------------
Balance at August 31, 2000                              2.8           235.2              (10.4)          229.8             457.4
Purchase Accounting Adjustment                          -             959.4               10.4          (229.8)            740.0
Dividends to Shareholder                                -               -                  -              (6.0)             (6.0)
Comprehensive income:
   Net income                                           -               -                  -               7.0               7.0
   Other comprehensive income net of tax:
      Unrealized gain on securities
      ($14.5 pretax)                                    -               -                  9.4             -                 9.4
                                                                                                                     --------------
  Comprehensive income                                                                                                      16.4
                                                ------------    -------------     --------------    -------------    --------------
Balance at December 31, 2000                            2.8         1,194.6                9.4             1.0           1,207.8
Dividends to Shareholder                                -               -                  -             (18.0)            (18.0)
Comprehensive income:
   Net income                                           -               -                  -              25.8              25.8
   Other comprehensive income net of tax:
      Unrealized (loss) on securities
      ($(4.5) pretax)                                   -               -                 (2.9)            -                (2.9)
                                                                                                                     --------------
  Comprehensive income                                                                                                      22.9
                                                ------------    -------------     --------------    -------------    --------------
Balance at December 31, 2001                            2.8         1,194.6                6.5             8.8           1,212.7

Capital contribution                                    -              31.4                -               -                31.4
Other                                                   -              (0.4)               -               -                (0.4)
Dividends to Shareholder                                -               -                  -             (14.4)            (14.4)
Comprehensive income:
   Net loss                                             -               -                  -            (832.4)           (832.4)
   Other comprehensive income net of tax:
       Unrealized gain on securities
       ($45.1 pretax)                                   -               -                 28.9             -                28.9
                                                                                                                     --------------
  Comprehensive (loss)                                                                                                    (803.5)
                                                ------------    -------------     --------------    -------------    --------------
Balance at December 31, 2002                        $   2.8       $ 1,225.6         $     35.4        $ (838.0)        $   425.8
                                                ============    =============     ==============    =============    ==============




                                                  See Notes to Financial Statements


                                                                              18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                            RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
                             (A wholly-owned subsidiary of Security-Connecticut Life Insurance Company)
                                                      STATEMENTS OF CASH FLOWS
                                                             (Millions)
                                                                                                                  Preacquisition
                                                                                                                 -----------------
                                                                                                  Four months      Eight months
                                                                Year ended      Year ended           ended             ended
                                                               December 31,    December 31,       December 31,       August 31,
                                                                    2002           2001               2000             2000
                                                              --------------  --------------    ---------------  -----------------
Cash Flows from Operating Activities:
<S>                                                           <C>               <C>               <C>             <C>
Net income (loss)                                             $   (832.4)       $   25.8          $    7.0        $   22.8
Adjustments to reconcile net income to net cash provided
  by operating activities:
    Interest credited to insurance                                  45.5            43.0              21.1            44.5
    Future policy benefits                                         (75.3)          (77.9)            (35.9)          (81.5)
    Net realized capital (gains) losses                              2.7           (10.6)             (0.5)           (1.3)
    Increase (decrease) in receivables and payables                (29.1)           28.9              12.5            24.1
    (Increase) decrease in deferred policy acquisition costs       (19.7)          (34.1)            (14.8)          (18.5)
    (Increase) decrease in value of business acquired               16.7            26.5              10.1            21.5
    Amounts due to related parties                                  49.9           (58.4)             (4.0)           12.7
    Provision for deferred income taxes                              3.5             2.4              12.8            (2.4)
    Impairment of goodwill                                         865.0             -                 -               -
    Amortization of goodwill                                         -              22.6               2.8             5.8
    Other                                                           (1.6)          (30.9)             (8.9)            4.6
                                                              --------------  --------------    ---------------  -----------------
Net cash provided by (used for) operating activities                25.2           (62.7)              2.2            32.3
                                                              --------------  --------------    ---------------  -----------------

Cash Flows from Investing Activities:
    Proceeds from the sale of:
          Fixed maturities available for sale                    2,248.5         1,277.5              74.7           113.7
          Equity securities                                          -               1.0               -               -
          Mortgages                                                  -               -                52.0            19.2
    Investment maturities and collections of:
          Fixed maturities available for sale                        -              77.0             154.5            69.4
          Short-term investments                                     -               -                 -               3.8
          Mortgage loans                                            21.9            10.2               -               -
    Acquisition of investments:
          Fixed maturities available for sale                   (2,290.5)       (1,371.2)           (251.6)         (169.4)
          Equity securities                                         (0.8)            -                 -               -
          Short-term investments                                   (35.1)           (2.1)            (13.0)            -
          Mortgages                                                  -             (29.5)             (1.4)            -
    Increase (decrease) in policy loans                             (0.2)           (0.6)             (0.6)            -
    Other, net                                                      (5.1)           (1.8)              4.0            (1.4)
                                                              --------------  --------------    ---------------  -----------------
Net cash provided by (used for) investing activities               (61.3)          (39.5)             18.6            35.3
                                                              --------------  --------------    ---------------  -----------------

Cash Flows from Financing Activities:
    Deposits and interest credited for investment contracts        149.0           145.2              49.2            88.8
    Maturities and withdrawals from insurance contracts            (83.2)         (130.9)            (60.9)         (156.5)
    Increase in borrowed money                                      (1.2)            -                 -               -
    Dividends to shareholder                                       (14.4)          (18.0)             (6.0)           (6.0)
    Increase in borrowed money                                       -              90.5               -               -
                                                              --------------  --------------    ---------------  -----------------
Net cash provided by (used for) financing activities                50.2            86.8             (17.7)          (73.7)
                                                              --------------  --------------    ---------------  -----------------

Net increase (decrease) in cash and cash equivalents                14.1           (15.4)              3.1            (6.1)
Cash received from first Golden                                      5.8             -                 -               -
                                                              --------------  --------------    ---------------  -----------------
Cash and cash equivalents, beginning of period                     (17.5)           (2.1)             (5.2)            0.9
                                                              --------------  --------------    ---------------  -----------------
Cash and cash equivalents, end of period                         $   2.4        $  (17.5)           $ (2.1)         $ (5.2)
                                                              ==============  ==============    ===============  =================





                                                  See Notes to Financial Statements

                                                                 19
</TABLE>
<PAGE>


RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

ReliaStar  Life  Insurance  Company of New York ("RLNY" or the  "Company")  is a
wholly-owned   subsidiary  of   Security-Connecticut   Life  Insurance   Company
("Security-Connecticut")  which is a  wholly-owned  subsidiary of ReliaStar Life
Insurance  Company  ("ReliaStar  Life")  ultimately  owned  by ING  Groep,  N.V.
("ING").

On September  1, 2000,  ING America  Insurance  Holdings,  Inc.,  ("ING AIH") an
indirect  wholly-owned  subsidiary  of ING,  acquired  ReliaStar,  of which  the
Company is part for  approximately $6 billion.  The purchase price was comprised
of  approximately  $5.1  billion in cash and the  assumption  of $917 million of
outstanding debt and other net liabilities.

For accounting  purposes,  the  acquisition was accounted for using the purchase
method.  The  application of the purchase  method,  including the recognition of
goodwill,  is being pushed down and  reflected on the  financial  statements  of
ReliaStar's  subsidiaries,  including  the Company.  The Balance  Sheet  changes
related  to  accounting  for  this  acquisition  were  non-cash  in  nature  and
accordingly have been excluded from the preacquisition statement of cash flows.

The  purchase  price was  allocated  to assets  and  liabilities  based on their
respective fair values.  This  revaluation  resulted in a net decrease to assets
before allocation of goodwill. The net decrease to assets reflects the write off
of deferred policy  acquisition costs ("DPAC") of $166.1 million,  which was the
balance as of August 31,  2000,  the  establishment  of present  value of future
profits  ("PVFP") of $112.4  million and a net  increase of other assets of $5.0
million. Goodwill resulting from the transaction attributable to the Company was
approximately $896.2 million and was amortized over 40 years prior to January 1,
2002. PVFP resulting from the transaction is being amortized over the years that
it is anticipated such profits will be received.

Unaudited  pro forma  income from  continuing  operations  and net income of the
Company for the period from  January 1, 2000 to August 31, 2000,  assuming  that
the  acquisition of the Company  occurred at the beginning of the period,  would
have been  approximately $8.5 million.  The pro forma  adjustments,  which do no
affect revenues, reflect primarily goodwill amortization.

On April 1, 2002,  ReliaStar Life acquired First Golden  American Life Insurance
Company of New York ("First Golden"), an affiliated entity, for a purchase price
of $27.7 million in cash and $0.2 million in receivables. The purchase price was
based on First Golden's  statutory-basis book value.  ReliaStar Life contributed
First Golden to  Security-Connecticut  at GAAP book value.  Security-Connecticut
contributed  First  Golden to RLNY and First Golden was  dissolved  into RLNY at
GAAP book value.  The  contribution  of First  Golden to RLNY was recorded as an
increase to  stockholder's  equity of $31.4 million which equaled First Golden's
April 1, 2002 GAAP book value.  Approval  for the merger was  obtained  from the
Insurance Departments of the States of New York and Delaware.

Statement  of  Financial   Accounting   Standards   ("FAS")  No.  141  "Business
Combinations"  excludes  transfers of net assets or exchanges of shares  between
entities under common control and is therefore covered by Accounting  Principles
Board ("APB") Opinion No. 16 "Business Combinations." In accordance with Opinion


                                       20
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


No. 16, the statement of financial  position and other financial  information is
presented as of the  beginning of the period ended  December 31, 2002, as though
the assets and liabilities had been transferred at January 1, 2002 on a combined
basis.  Prior year information was not restated due to the  immateriality of the
First Golden amounts to the prior periods.

DESCRIPTION OF BUSINESS

The Company is  principally  engaged in the business of providing life insurance
and related financial  services  products.  The Company provides and distributes
individual life insurance and annuities;  employee benefit products and services
and retirement plans. The Company operates primarily in the United States and is
authorized to conduct business in all 50 states and the District of Columbia.

NEW ACCOUNTING STANDARDS

ACCOUNTING FOR GOODWILL AND INTANGIBLE ASSETS

In June 2001, the Financial  Accounting  Standards Board ("FASB") issued FAS No.
142,  Accounting for Goodwill and Other Intangible Assets,  effective for fiscal
years beginning after December 15, 2001.  Under the new statement,  goodwill and
intangible  assets deemed to have  indefinite  lives will no longer be amortized
but will be  subject  to  annual  impairment  tests in  accordance  with the new
statement.  Other  intangible  assets will  continue to be amortized  over their
estimated useful lives.

As required  under FAS No. 142, the Company  completed the first of the required
impairment  tests as of January 1, 2002.  Step one of the impairment  test was a
screen  for  potential  impairment,  while step two  measured  the amount of the
impairment. All of the Company's operations fall under one reporting unit, USFS,
due to the  consolidated  nature of the  Company's  operations.  Step one of the
impairment test required the Company to estimate the fair value of the reporting
unit and compare the  estimated  fair value to its carrying  value.  The Company
determined  the estimated fair value  utilizing a discounted  cash flow approach
and applying a discount rate equivalent to the Company's  weighted  average cost
of  capital.  Fair value was  determined  to be less than  carrying  value which
required the Company to complete  step two of the test. In step two, the Company
allocated  the fair value of the  reporting  unit  determined in step one to the
assets and  liabilities of the reporting unit resulting in an implied fair value
of goodwill of zero.

The  comparison of the fair value amount  allocated to goodwill and the carrying
value of  goodwill  resulted  in an  impairment  loss  upon  adoption  of $865.0
million,  which  represents  the  entire  carrying  amount of  goodwill,  net of
accumulated  amortization.  This  impairment  charge  is shown  as a  change  in
accounting principle on the Income Statement.

The Company adopted the new statement effective January 1, 2002.  Application of
the  nonamortization  provisions of the new statement resulted in an increase in
net income of $22.6  million for the year ended  December 31, 2002.  The Company
performed the first of the required  impairment tests for goodwill as of January
1, 2002.


                                       21
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


Had the  Company  been  accounting  for its  goodwill  under FAS  No.142 for all
periods  presented,  the  Company's  net income for the year ended  December 31,
2001, four months ended December 31, 2000 and eight months ended August 31, 2000
would have been as follows:
<TABLE>
<CAPTION>

                                                                                               Preacquisition
                                                                                            ---------------------
                                                      Year ended         Four months ended    Eight months ended
     (Millions)                                    December 31, 2001     December 31, 2000     August 31, 2000
     ------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                   <C>                  <C>
     Reported net income                              $   25.8              $   7.0              $  22.8
     Add back goodwill amortization                       22.6                  2.8                  5.8
     ------------------------------------------------------------------------------------------------------------
     Adjusted net income                              $   48.4              $   9.8              $  28.6
     ============================================================================================================
</TABLE>

ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In  June  1998,  the  FASB  issued  FAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities," as amended and interpreted by FAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities" - Deferral of the
Effective  Date of FASB  Statement  133,  FAS No.  138,  Accounting  for Certain
Derivative  Instruments and Certain Hedging Activities - an Amendment of FAS No.
133, and certain FAS No.133  implementation  issues." This Standard, as amended,
requires  companies  to record all  derivatives  on the balance  sheet as either
assets or liabilities and measure those instruments at fair value. The manner in
which companies are to record gains or losses resulting from changes in the fair
values of those derivatives  depends on the use of the derivative and whether it
qualifies  for hedge  accounting.  FAS No. 133 was  effective  for the Company's
financial  statements beginning January 1, 2001. Adoption of FAS No. 133 did not
have a  material  effect on the  Company's  financial  position  or  results  of
operations  given the  Company's  limited  derivative  and  embedded  derivative
holdings.

The  Company  occasionally  purchases  a financial  instrument  that  contains a
derivative  that is "embedded"  in the  instrument.  In addition,  the Company's
insurance  products are  reviewed to determine  whether they contain an embedded
derivative.  The Company  assesses whether the economic  characteristics  of the
embedded   derivative   are  clearly  and  closely   related  to  the   economic
characteristics  of the  remaining  component  of the  financial  instrument  or
insurance  product (i.e.,  the host contract) and whether a separate  instrument
with the same terms as the embedded  instrument  would meet the  definition of a
derivative  instrument.  When it is  determined  that  the  embedded  derivative
possesses economic  characteristics  that are not clearly and closely related to
the economic characteristics of the host contract and that a separate instrument
with the same terms  would  qualify as a  derivative  instrument,  the  embedded
derivative  is  separated  from the host  contract  and  carried at fair  value.
However,  in cases where the host  contract  is  measured  at fair  value,  with
changes in fair value  reported  in current  period  earnings  or the Company is
unable to reliably  identify and measure the embedded  derivative for separation
from its host contracts,  the entire contract is carried on the balance sheet at
fair value and is not  designated as a hedging  instrument.  The Company did not
have embedded derivatives at December 31, 2002 or 2001.




                                       22
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


FUTURE ACCOUNTING STANDARDS

GUARANTEES

In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of  Indebtedness  of Others," to clarify  accounting  and  disclosure
requirements  relating to a guarantor's issuance of certain types of guarantees.
FIN 45 requires  entities  to  disclose  additional  information  about  certain
guarantees,  or groups of  similar  guarantees,  even if the  likelihood  of the
guarantor's  having to make any  payments  under the  guarantee  is remote.  The
disclosure  provisions  are effective for financial  statements for fiscal years
ended after December 15, 2002. For certain  guarantees,  the interpretation also
requires that  guarantors  recognize a liability  equal to the fair value of the
guarantee upon its issuance.  This initial recognition and measurement provision
is to be applied only on a prospective  basis to  guarantees  issued or modified
after  December  31,  2002.  The  Company  has  performed  an  assessment  of it
guarantees and believes that all of its significant guarantees are excluded from
the scope of this interpretation.

EMBEDDED DERIVATIVES

The FASB issued FAS No. 133, "Accounting for Derivative  Instruments and Hedging
Activities in 1998 and continues to issue  guidance for  implementation  through
its Derivative  Implementation  Group ("DIG").  DIG recently released a draft of
FASB  Statement  No.  133  Implementation  Issue  B36,  "Embedded   Derivatives:
Bifurcation of a Debt Instrument That  Incorporates  Both Interest Rate Risk and
Credit  Risk  Exposures  That are  Unrelated  or Only  Partially  Related to the
Creditworthiness  of the  Issuer of That  Instrument"  ("DIG  B36").  Under this
interpretation,   modified  coinsurance  and  coinsurance  with  funds  withheld
reinsurance  agreements as well as other types of receivables and payables where
interest is determined by reference to a pool of fixed maturity  assets or total
return  debt  index  may  be   determined  to  contain   bifurcatable   embedded
derivatives.  The required date of adoption of DIG B36 has not been  determined.
If the  guidance is finalized in its current  form,  the Company has  determined
that certain of its existing reinsurance receivables (payables),  investments or
insurance  products contain embedded  derivatives that may require  bifurcation.
The Company has not yet completed its  evaluation  of the potential  impact,  if
any, on its financial positions, results of operations, or cash flows.

VARIABLE INTEREST ENTITIES

In January 2003, FASB issued Interpretation No. 46 ("FIN 46"), "Consolidation of
Variable Interest  Entities" ("VIE"),  an interpretation of Accounting  Research
Bulletin ("ARB") No. 51. This Interpretation addresses consolidation by business
enterprises  of  variable  interest  entities,  which  have  one or  both of the
following  characteristics:  a)  insufficient  equity  investment at risk, or b)
insufficient  control by equity  investors.  This guidance is effective for VIEs
created  after  January 31, 2003 and for  existing  VIEs as of July 1, 2003.  An
entity with  variable  interests in VIEs created  before  February 1, 2003 shall
apply the guidance no later than the  beginning  of the first  interim or annual
reporting period beginning after June 15, 2003.


                                       23
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


In  conjunction  with the  issuance of this  guidance,  the Company  conducted a
review of its involvement  with VIEs. The Company does have an investment in P&F
Loan Trust ("P&F") in the amount of $5 million as of December 31, 2002. P&F is a
private CDO issued in 1997,  to invest in a total  return swap on a $299 million
pool of leveraged loans.  ING,  through its affiliates,  owns $55 million of the
P&F securities,  which  represents  ING's maximum exposure to loss. ING has been
determined  by management  to be the primary  beneficiary.  Since all of the ING
entities owning the P&F are insurance  entities and none of their operations are
more closely related to the operations of P&F ; the affiliated  entity owing the
most  significant  portion will  consolidate  this VIE.  Security Life of Denver
("SLD"),  an affiliate,  will be the primary beneficiary and consolidator of P&F
Loan Trust.

RECLASSIFICATIONS

Certain  reclassifications have been made to prior year financial information to
conform to the current year classifications.

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

Cash and cash  equivalents  include cash on hand,  money market  instruments and
other debt issues with a maturity of 90 days or less when purchased.

INVESTMENTS

All  of the  Company's  fixed  maturity  and  equity  securities  are  currently
designated as available-for-sale.  Available-for-sale securities are reported at
fair value and  unrealized  gains and losses on these  securities  are  included
directly in  shareholder's  equity,  after  adjustment  for  related  charges in
deferred policy  acquisition  costs,  value of business  acquired,  and deferred
income taxes.

The Company analyzes the general account  investments to determine whether there
has been an other than temporary  decline in fair value below the amortized cost
basis in accordance  with FAS No. 115,  "Accounting  for Certain  Investments in
Debt and Equity Securities." Management considers the length of the time and the
extent to which the fair value has been less than cost; the financial  condition
and near-term  prospects of the issuer;  future  economic  conditions and market
forecasts;  and the Company's intent and ability to retain the investment in the
issuer for a period of time  sufficient to allow for recovery in fair value.  If
it is probable that all amounts due according to the contractual terms of a debt
security will not be collected, an other than temporary impairment is considered
to have occurred.


                                       24
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


In addition, the Company invests in structured securities that meet the criteria
of Emerging Issues Task Force ("EITF") Issue No. 99-20  "Recognition of Interest
Income  and  Impairment  on  Purchased  and  Retained  Beneficial  Interests  in
Securitized  Financial  Assets." Under EITF Issue No. 99-20, a determination  of
the  required  impairment  is  based  on  credit  risk  and the  possibility  of
significant  prepayment risk that restricts the Company's ability to recover the
investment.  An  impairment  is  recognized if the fair value of the security is
less than book value and there has been an adverse change in cash flow since the
last remeasurement date.

When a decline  in fair value is  determined  to be other  than  temporary,  the
individual  security is written down to fair value and the loss accounted for as
a realized loss.

Realized  capital gains and losses on investments are reflected on the Company's
results of operations.  Unrealized  capital gains and losses on investments  are
reflected in shareholder's equity, net of related income taxes.

Purchases and sales of fixed maturities and equity securities (excluding private
placements)  are  recorded  on the trade  date.  Purchases  and sales of private
placements and mortgage loans are recorded on the closing date.

The Company engages in securities  lending  whereby certain  securities from its
portfolio are loaned to other  institutions  for short periods of time.  Initial
collateral, primarily cash, is required at a rate of 102% of the market value of
the loaned domestic securities. The collateral is deposited by the borrower with
a lending agent, and retained and invested by the lending agent according to the
Company's guidelines to generate additional income.

The market  value of the loaned  securities  is  monitored on a daily basis with
additional  collateral  obtained  or  refunded  as the fair  value of the loaned
securities fluctuates.

In  accordance  with FAS No. 140,  "Accounting  for  Transfers  and Servicing of
Financial Assets and Extinguishments of Liabilities," general account securities
on  loan  are  reflected  on  the  Balance  Sheets  as  "securities  pledged  to
creditors", which includes the following:
<TABLE>
<CAPTION>

                                                                   Gross           Gross
     December 31, 2002                          Amortized       Unrealized       Unrealized          Fair
     (Millions)                                    Cost            Gains           Losses            Value
     -----------------------------------------------------------------------------------------------------------
<S>                                          <C>               <C>             <C>              <C>
     Total securities pledged to creditors   $       0.9       $        -      $         -      $       0.9
     ===========================================================================================================

                                                                   Gross           Gross
     December 31, 2001                          Amortized       Unrealize d      Unrealized          Fair
     (Millions)                                    Cost            Gains           Losses            Value
     -----------------------------------------------------------------------------------------------------------
     Total securities pledged to creditors   $      13.9       $        -      $         -      $      13.9
     ===========================================================================================================
</TABLE>


                                       25
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


Total  securities  pledged to creditors at December 31, 2002 and 2001  consisted
entirely of fixed maturity securities.

Reverse   dollar   repurchase   agreement  and  reverse   repurchase   agreement
transactions are accounted for as  collateralized  borrowings,  where the amount
borrowed  is  equal  to the  sales  price of the  underlying  securities.  These
transactions are reported in "Other Liabilities."

Mortgage  loans on real estate are  reported at amortized  cost less  impairment
writedowns.  If the value of any  mortgage  loan is  determined  to be  impaired
(i.e., when it is probable the Company will be unable to collect all amounts due
according to the contractual terms of the loan agreement), the carrying value of
the mortgage  loan is reduced to the present  value of expected  cash flows from
the loan,  discounted at the loan's  effective  interest  rate, or to the loan's
observable  market price,  or the fair value of the underlying  collateral.  The
carrying  value of the  impaired  loans is reduced by  establishing  a permanent
writedown charged to realized loss

Policy  loans  are  carried  at unpaid  principal  balances,  net of  impairment
reserves.

Short-term  investments,  consisting  primarily of money market  instruments and
other fixed maturity  issues  purchased with an original  maturity of 91 days to
one year, are considered available for sale and are carried at fair value, which
approximates amortized cost.

The Company's use of  derivatives  is limited to hedging  purposes.  The Company
enters into interest rate and currency  contracts,  including  swaps,  caps, and
floors to reduce and  manage  risks  associated  with  changes in value,  yield,
price,  cash flow or exchange rates of assets or liabilities held or intended to
be held. Changes in the fair value of open derivative  contracts are recorded in
net realized capital gains and losses.

On occasion,  the Company sells call options  written on  underlying  securities
that are  carried at fair  value.  Changes in fair  value of these  options  are
recorded in net realized capital gains or losses.

DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

Deferred Policy  Acquisition Costs ("DAC") is an asset, which represents certain
costs of acquiring certain insurance business, which are deferred and amortized.
These costs, all of which vary with and are primarily  related to the production
of new  and  renewal  business,  consist  principally  of  commissions,  certain
underwriting and contract issuance expenses, and certain agency expenses.  Value
of Business Acquired ("VOBA") is an asset, which represents the present value of
estimated net cash flows embedded in the Company's  contracts,  which existed at
the time the  Company  was  acquired  by ING.  DAC and  VOBA are  evaluated  for
recoverability  at each balance  sheet date and these assets would be reduced to
the extent that gross profits are inadequate to recover the asset.

The  amortization  methodology  varies by product type based upon two accounting
standards: FAS No. 60, "Accounting and Reporting by Insurance Enterprises" ("FAS


                                       26
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


No. 60") and FAS No. 97, "Accounting and Reporting by Insurance  enterprises for
Certain Long-Duration  Contracts and for Realized Gains and Losses from the Sale
of Investment" ("FAS No. 97").

Under FAS No. 60,  acquisition  costs for traditional  life insurance  products,
which  primarily  include  whole  life and term life  insurance  contracts,  are
amortized over the premium  payment period in proportion to the premium  revenue
recognition.

Under FAS No.  97,  acquisition  costs for  universal  life and  investment-type
products,  which include universal life policies and fixed and variable deferred
annuities,  are  amortized  over the life of the blocks of policies  (usually 25
years) in relation to the emergence of estimated  gross  profits from  surrender
charges,  investment  margins,  mortality and expense  margins,  asset-based fee
income,  and actual  realized gains  (losses) on  investments.  Amortization  is
adjusted retrospectively when estimates of current or future gross profits to be
realized from a group of products are revised.

Activity for the year-ended December 31, 2002 within VOBA was as follows:

             (Millions)
             -----------------------------------------------------------------
             Balance at December 31,2001                $            64.7
             Adjustment for FAS No. 115                              (4.0)
             Additions                                                4.5
             Interest accrued at 7%                                   1.1
             Amortization                                           (18.1)
             -----------------------------------------------------------------
             Balance at December 31,2002                $            48.2
             =================================================================

The  estimated  amount of VOBA to be amortized,  net of interest,  over the next
five years is $13.2 million,  $7.6 million,  $6.0 million, $5.1 million and $4.9
million for the years 2003,  2004,  2005,  2006 and 2007,  respectively.  Actual
amortization incurred during these years may vary as assumptions are modified to
incorporate actual results.

As part of the regular  analysis of DAC/VOBA,  at the end of third quarter 2002,
the Company  unlocked its  assumptions  by resetting its near-term and long-term
assumptions for the separate account returns to 9% (gross before fund management
fees and mortality and expense and other policy  charges),  reflecting a blended
return of equity and other sub-accounts. This unlocking adjustment was primarily
driven by the sustained downturn in the equity markets and revised  expectations
for future returns.  For the year ended December 31, 2002, the Company  recorded
an  acceleration of DAC/VOBA  amortization  totaling $1.5 million before tax, or
$1.0 million, net of $0.5 million of federal income tax benefit.

POLICY LIABILITIES AND ACCRUALS

Future policy benefits include reserves for universal life,  immediate annuities
with life contingent payouts and traditional life insurance contracts.  Reserves
for universal  life products are equal to cumulative  deposits less  withdrawals
and charges  plus  credited  interest  thereon.  Reserves for  traditional  life
insurance contracts represent the present value of future benefits to be paid to
or on behalf of  policyholders  and related  expenses  less the present value of
future net premiums.


                                       27
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


Reserves for  immediate  annuities  with life  contingent  payout  contracts are
computed on the basis of assumed  investment  yield,  mortality,  and  expenses,
including a margin for adverse  deviations.  Such assumptions  generally vary by
plan, year of issue and policy duration.  Reserve interest rates range from 5.0%
to 7.5% for all  years  presented.  Investment  yield is based on the  Company's
experience.

Mortality  and  withdrawal  rate  assumptions  are  based  on  relevant  Company
experience and are  periodically  reviewed  against both industry  standards and
experience.

Other  policyholders'  funds include  reserves for deferred  annuity  investment
contracts and immediate annuities without life contingent  payouts.  Reserves on
such  contracts  are equal to cumulative  deposits less charges and  withdrawals
plus  credited  interest  thereon  (rates  range from 3.0% to 7.5% for all years
presented) net of  adjustments  for  investment  experience  that the Company is
entitled to reflect in future credited interest.

REVENUE RECOGNITION

For universal  life and certain  annuity  contracts,  charges  assessed  against
policyholders'  funds for the cost of insurance,  surrender,  expenses and other
fees are  recorded as revenue as charges  are  assessed  against  policyholders.
Other amounts received for these contracts are reflected as deposits and are not
recorded as revenue.  Related  policy  benefits  are recorded in relation to the
associated  premiums or gross  profit so that  profits are  recognized  over the
expected lives of the contracts.  When annuity payments with life  contingencies
begin under contracts that were initially investment contracts,  the accumulated
balance in the  account is treated as a single  premium  for the  purchase of an
annuity and reflected as an  offsetting  amount in both premiums and current and
future benefits in the Income Statement.

SEPARATE ACCOUNTS

Separate Account assets and liabilities  generally represent funds maintained to
meet specific investment objectives of policyholders or contractholders who bear
the  investment  risk,  subject,  in some cases,  to minimum  guaranteed  rates.
Investment  income and investment  gains and losses generally accrue directly to
such  policyholders or  contractholders.  The assets of each account are legally
segregated and are not subject to claims that arise out of any other business of
the Company.

Separate  Account  assets  supporting  variable  options  under  universal  life
policies and annuity contracts are invested, as designated by the contractholder
or  policyholder  (who bears the investment  risk subject,  in limited cases, to
minimum  guaranteed  rates) in shares of mutual  funds  which are managed by the
Company, or other selected mutual funds not managed by the Company.


                                       28
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


Separate  Account  assets are  carried at fair value.  At December  31, 2002 and
2001, unrealized gains of $0.1 million and of $0.0 million, respectively,  after
taxes,  on assets  supporting  a  guaranteed  interest  option are  reflected in
shareholder's equity.

Separate  Account assets and liabilities  are shown as separate  captions in the
Balance  Sheets.  Deposits,  investment  income and net realized and  unrealized
capital  gains and losses of the  Separate  Accounts  are not  reflected  in the
Financial  Statements  (with the  exception of realized and  unrealized  capital
gains and losses on the assets supporting the guaranteed  interest option).  The
Statements  of Cash Flows do not reflect  investment  activity  of the  Separate
Accounts.

REINSURANCE

The Company  utilizes  reinsurance  agreements  to reduce its  exposure to large
losses in all  aspects  of its  insurance  business.  Such  reinsurance  permits
recovery of a portion of losses from reinsurers,  although it does not discharge
the primary  liability of the Company as direct insurer of the risks  reinsured.
The Company  evaluates  the  financial  strength  of  potential  reinsurers  and
continually   monitors  the  financial  condition  of  reinsurers.   Only  those
reinsurance  recoverable  balances  deemed probable of recovery are reflected as
assets on the Company's Balance Sheets.

INCOME TAXES

The Company is taxed at regular  corporate rates after adjusting income reported
for  financial  statement  purposes  for  certain  items.  Deferred  income  tax
expenses/benefits  result from changes  during the year in cumulative  temporary
differences between the tax basis and book basis of assets and liabilities.






                                       29
<PAGE>
<TABLE>
<CAPTION>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


2. INVESTMENTS

Fixed maturities available for sale as of December 31 were as follows:

                                                                             Gross           Gross
                                                             Amortized     Unrealized     Unrealized       Fair
     2002 (Millions)                                           Cost          Gains          Losses        Value
     -----------------------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>                         <C>
     U.S. government and government agencies and
      authorities                                         $      96.6    $       1.8   $       -     $      98.4

     States, municipalities and political subdivisions            1.7            0.1           -             1.8

     U.S. corporate securities:
       Public utilities                                         104.3            8.0           1.1         111.2
       Other corporate securities                               805.3           67.7          10.5         862.5
     -----------------------------------------------------------------------------------------------------------
          Total U.S. corporate securities                       909.6           75.7          11.6         973.7
     -----------------------------------------------------------------------------------------------------------

     Foreign securities:
       Government                                                 3.4            0.4           -             3.8
     -----------------------------------------------------------------------------------------------------------
          Total foreign securities                                3.4            0.4           -             3.8
     -----------------------------------------------------------------------------------------------------------

     Mortgage-backed securities                                 367.4            8.2           0.1         375.5

     Other asset-backed securities                              145.2            9.0           5.0         149.2

     -----------------------------------------------------------------------------------------------------------
     Total fixed maturities, including fixed
      maturities pledged to creditors                         1,523.9           95.2          16.7       1,602.4
     Less: Fixed maturities pledged to creditors                  0.9            -             -             0.9
     -----------------------------------------------------------------------------------------------------------

     Fixed maturities                                     $   1,523.0    $      95.2   $      16.7   $   1,601.5
     ===========================================================================================================


                                                        30
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS

                                                                           Gross        Gross
                                                           Amortized     Unrealized   Unrealized       Fair
     2001 (Millions)                                         Cost          Gains        Losses        Value
     -----------------------------------------------------------------------------------------------------------
<S>                                                           <C>             <C>          <C>          <C>
     U.S. government and government agencies and
      authorities                                        $     5.8      $     0.1     $    -        $    5.9

     States, municipalities and political subdivisions         4.3            0.3          -             4.6

     U.S. corporate securities:
       Public utilities                                       67.0            3.0          0.4          69.6
       Other corporate securities                            785.3           37.5          8.7         814.1
     -----------------------------------------------------------------------------------------------------------
          Total U.S. corporate securities                    852.3           40.5          9.1         883.7
     -----------------------------------------------------------------------------------------------------------

     Foreign securities:
       Government                                              0.1            -            -             0.1
     -----------------------------------------------------------------------------------------------------------
          Total foreign securities                             0.1            -            -             0.1
     -----------------------------------------------------------------------------------------------------------

     Mortgage-backed securities                              296.6            7.0          0.1         303.5

     Other asset-backed securities                           296.1           13.6          7.4         302.3

     -----------------------------------------------------------------------------------------------------------
     Total fixed maturities, including fixed
      maturities pledged to creditors                      1,455.2           61.5         16.6       1,500.1
     Less: Fixed maturities pledged to creditors              13.9            -            -            13.9
     -----------------------------------------------------------------------------------------------------------

     Fixed maturities                                    $ 1,441.3      $    61.5     $   16.6      $1,486.2
     ===========================================================================================================
</TABLE>

The amortized  cost and fair value of total fixed  maturities for the year-ended
December 31, 2002 are shown below by contractual maturity. Actual maturities may
differ from  contractual  maturities  because  securities  may be  restructured,
called, or prepaid.
<TABLE>
<CAPTION>

     (Millions)                                         Amortized Cost        Fair Value
     --------------------------------------------------------------------------------------
<S>                                                      <C>                 <C>
     Due to mature:
       One year or less                                  $      -            $      -
       After one year through five years                      223.2               237.1
       After five years through ten years                     457.8               490.4
       After ten years                                        330.3               350.3
       Mortgage-backed securities                             367.4               375.4
       Other asset-backed securities                          145.2               149.2
     Less: Fixed maturities securities pledged to
      creditor                                                  0.9                 0.9
     --------------------------------------------------------------------------------------
     Fixed maturities                                    $  1,523.0          $  1,601.5
     ======================================================================================
</TABLE>

At December 31, 2002 and 2001, fixed maturities with fair values of $5.7 million
and $5.0  million,  respectively,  were on deposit  as  required  by  regulatory
authorities.

Beginning in April 2001,  the Company  entered into  reverse  dollar  repurchase
agreement and reverse repurchase  agreement  transactions to increase its return
on  investments  and improve  liquidity.  These  transactions  involve a sale of
securities and an agreement to repurchase  substantially  the same securities as
those sold. The dollar rolls and reverse repurchase agreements are accounted for


                                       31
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


as  short-term  collateralized  financings  and  the  repurchase  obligation  is
reported as a component of other borrowed money on the Balance Sheets.

The  repurchase  obligation  totaled $73.1 million and $77.5 million at December
31, 2002 and 2001,  respectively.  The primary risk  associated  with short-term
collateralized  borrowings  is that the  counterparty  will be unable to perform
under the terms of the contract. The Company's exposure is limited to the excess
of the net  replacement  cost of the securities over the value of the short-term
investments,  an amount that was not material at December 31, 2002 or 2001.  The
Company believes the  counterparties  to the dollar roll and reverse  repurchase
agreements  are  financially  responsible  and  that  the  counterparty  risk is
immaterial.

During 2002, the Company  determined that twenty two fixed  maturities had other
than  temporary  impairments.  As a result,  at December 31,  2002,  the Company
recognized a pre-tax loss of $11.4  million to reduce the carrying  value of the
fixed maturities to their combined fair value of $25.9 million. During 2001, the
Company   determined  that  ten  fixed   maturities  had  other  than  temporary
impairments. As a result, at December 31, 2001, the Company recognized a pre-tax
loss of $0.9 million to reduce the  carrying  value of the fixed  maturities  to
their fair value of $11.4 million.

3. FINANCIAL INSTRUMENTS

ESTIMATED FAIR VALUE

The following  disclosures are made in accordance  with the  requirements of FAS
No. 107,  "Disclosures  about Fair Value of Financial  Instruments." FAS No. 107
requires  disclosure  of fair value  information  about  financial  instruments,
whether or not recognized in the balance  sheet,  for which it is practicable to
estimate that value. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly  affected by the assumptions used,  including
the  discount  rate and  estimates  of future cash flows.  In that  regard,  the
derived fair value estimates,  in many cases, could not be realized in immediate
settlement of the instrument.

FAS  No.  107  excludes  certain  financial  instruments  and  all  nonfinancial
instruments from its disclosure  requirements.  Accordingly,  the aggregate fair
value amounts presented do not represent the underlying value of the Company.

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

FIXED  MATURITIES:  The fair values for the actively traded marketable bonds are
determined  based upon the quoted market prices.  The fair values for marketable
bonds without an active market are obtained through several  commercial  pricing
services  which  provide the  estimated  fair  values.  Fair values of privately
placed  bonds are  determined  using a  matrix-based  pricing  model.  The model
considers  the current  level of risk-free  interest  rates,  current  corporate
spreads,  the credit quality of the issuer and cash flow  characteristics of the
security. Using this data, the model generates estimated market values which the


                                       32
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


Company  considers  reflective of the fair value of each privately  placed bond.
Fair values for privately placed bonds are determined  through  consideration of
factors  such as the net worth of the  borrower,  the value of  collateral,  the
capital structure of the borrower,  the presence of guarantees and the Company's
evaluation of the borrower's ability to compete in their relevant market.

EQUITY SECURITIES:  Fair values of these securities are based upon quoted market
value.  For equity  securities  not actively  traded,  estimated fair values are
based upon values of issues of comparable  yield and quality or conversion value
where applicable.

MORTGAGE LOANS ON REAL ESTATE: The fair values for mortgage loans on real estate
are estimated  using  discounted  cash flow analyses and rates  currently  being
offered in the  marketplace  for similar loans to borrowers  with similar credit
ratings.  Loans with similar  characteristics are aggregated for purposes of the
calculations.

CASH,  SHORT-TERM  INVESTMENTS AND POLICY LOANS:  The carrying amounts for these
assets approximate the assets' fair values.

ASSETS HELD IN SEPARATE ACCOUNTS:  Assets held in separate accounts are reported
at the quoted fair values of the individual securities in the separate accounts.

OTHER FINANCIAL  INSTRUMENTS  REPORTED AS ASSETS: The carrying amounts for these
financial  instruments  (primarily  premiums and other  accounts  receivable and
accrued investment income) approximate those assets' fair values.

INVESTMENT  CONTRACT  LIABILITIES:  The fair values for deferred  annuities  are
estimated to be the amount  payable on demand at the  reporting  date,  as those
investment  contracts  have no  defined  maturity  and are  similar to a deposit
liability.  The  amount  payable at the  reporting  date was  calculated  as the
account balance less applicable surrender charges.

The fair values for  supplementary  contracts  without  life  contingencies  and
immediate  annuities were estimated  using  discounted  cash flow analyses.  The
discount rate was based upon treasury rates plus a pricing margin.

The carrying  amounts reported for other  investment  contracts,  which includes
retirement plan deposits, approximate those liabilities' fair value.

CLAIM AND OTHER DEPOSIT FUNDS:  The carrying amounts for claim and other deposit
funds approximate the liabilities' fair values.

OTHER FINANCIAL  INSTRUMENTS  REPORTED AS LIABILITIES:  The carrying amounts for
other financial  instruments  (primarily normal payables of a short-term nature)
approximate those liabilities' fair values.


                                       33
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


The  carrying  values and  estimated  fair  values of  certain of the  Company's
financial instruments at December 31, 2002 and 2001 were as follows:
<TABLE>
<CAPTION>

                                                          2002                             2001
     -----------------------------------------------------------------------------------------------------
                                              Carrying         Fair             Carrying         Fair
     (Millions)                                 Value         Value              Value          Value
     -----------------------------------------------------------------------------------------------------
     Assets:
<S>                                         <C>           <C>               <C>            <C>
        Fixed maturities                    $  1,601.5    $  1,601.5        $    1,486.2   $     1,486.2
        Equity securities                          4.4           4.4                 6.0             6.0
        Mortgage loans on real estate            243.6         275.6               265.5           280.2
        Policy loans                              85.2          85.2                85.0            85.0
        Cash and short-term investments           58.0          58.0                 3.0             3.0
        Assets held in separate accounts         429.4         429.4               487.4           487.4

     Liabilities:
        Investment contract liabilities:
        Deferred annuities                      (411.3)       (409.6)             (420.7)         (417.5)
        Supplementary contracts and
          immediate annuities                    (13.1)        (13.1)              (21.8)          (22.7)
        Liabilities related to separate
          accounts                              (429.4)       (429.4)             (487.4)         (487.4)
     -----------------------------------------------------------------------------------------------------
</TABLE>

Fair value  estimates are made at a specific  point in time,  based on available
market  information and judgments about various financial  instruments,  such as
estimates  of timing and  amounts of future cash flows.  Such  estimates  do not
reflect any premium or discount  that could result from offering for sale at one
time the Company's entire holdings of a particular financial instrument,  nor do
they consider the tax impact of the  realization of unrealized  gains or losses.
In many cases, the fair value estimates cannot be substantiated by comparison to
independent  markets,  nor can the  disclosed  value be  realized  in  immediate
settlement  of the  instruments.  In  evaluating  the  Company's  management  of
interest  rate,  price and  liquidity  risks,  the fair values of all assets and
liabilities should be taken into consideration, not only those presented above.

4. NET INVESTMENT INCOME

Sources of net investment income were as follows:
<TABLE>
<CAPTION>

                                                                                             Preacquisition
                                                                                            ---------------
                                                                               Four months    Eight months
                                                 Year-ended     Year-ended        ended          ended
                                                December 31,   December 31,    December 31,    August 31,
     (Millions)                                     2002           2001           2000            2000
     ------------------------------------------------------------------------------------------------------
<S>                                                <C>             <C>             <C>            <C>
     Fixed maturities                              $108.7          $116.2          $36.2          $78.6
     Equity securities                                -               0.1            -              0.4
     Mortgage loans                                  20.7            21.4            7.5           16.3
     Policy loans                                     5.9             6.4            2.0            3.8
     Short term investments and
        cash equivalents                              0.3             1.4            1.5            0.1
     Other                                           (0.7)            1.2            0.7            0.3
     ------------------------------------------------------------------------------------------------------
     Gross investment income                        134.9           146.7           47.9           99.5
     Less: investment (expenses) income              (4.1)           (4.4)           0.4           (1.8)
     ------------------------------------------------------------------------------------------------------
     Net investment income                         $130.8          $142.3          $48.3          $97.7
     ======================================================================================================
</TABLE>


                                       34
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


5. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY

The Company paid $14.4 million and $18.0 million in cash dividends to its Parent
in 2002 and 2001, respectively.  Of the $14.4 million paid in 2002, $0.0 million
was accrued for in 2001.

The Company did  receive  capital  contributions  in 2002.  In 2002,  the amount
contributed  ($31.4  million)  from  Security-Connecticut  related  to the First
Golden merger (refer to Note 1).

The Company's  ability to pay cash  dividends to its parent is restricted by law
or subject to approval of the insurance  regulatory  authorities of the State of
New York. These authorities  recognize only statutory  accounting  practices for
determining the ability of an insurer to pay dividends to its shareholders.

Under New York insurance law regulating the payment of dividends by the Company,
any such  payment  must be paid solely from the earned  surplus of the  Company.
Earned  surplus  means the  earned  surplus as  determined  in  accordance  with
statutory  accounting  practices  (unassigned  funds),  less the  amount of such
earned  surplus which is  attributable  to unrealized  capital  gains.  Further,
without approval of the Superintendent,  the Company may not pay in any calendar
year any dividend  which,  when  combined with other  dividends  paid within the
preceding 12 months,  exceeds the lesser of (i) 10% of the  Company's  statutory
surplus  at the  prior  year end or (ii)  100% of the  Company's  statutory  net
investment income for the prior calendar year.

The underlying  statutory  capital and surplus of the Company was $267.0 million
and $214.6  million at December 31, 2002 and 2001,  respectively.  Statutory net
income was $18.0  million,  $11.0  million and $6.1  million for the years ended
December 31, 2002, 2001 and 2000, respectively.

As of December 31, 2002,  the Company does not utilize any statutory  accounting
practices,  which  are not  prescribed  by state  regulatory  authorities  that,
individually  or in the  aggregate,  materially  affect  statutory  capital  and
surplus.

For 2001,  the Company was required to implement  statutory  accounting  changes
("Codification") ratified by the National Association of Insurance Commissioners
("NAIC") and state insurance departments.  The cumulative effect of Codification
to the Company's statutory surplus as of January 1, 2001 was a decrease of $11.9
million.

The Company  maintains a $97.4 million  reciprocal  loan  agreement with ING AIH
(refer to Note 10), a perpetual $30.0 million  revolving note facility with Bank
of New York and a $30.0 million revolving note facility with SunTrust Bank which
expires on July 30, 2003.



                                       35
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


6. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS

Realized  capital gains or losses are the difference  between the carrying value
and sale proceeds of specific  investments  sold. Net realized  capital (losses)
gains on investments were as follows:
<TABLE>
<CAPTION>

                                                                                                     Preacquisition
                                                                                                     ---------------
                                                                                     Four months      Eight months
                                                  Year ended        Year ended          ended             ended
                                                 December 31,      December 31,      December 31,       August 31,
  (Millions)                                         2002              2001              2000              2000
  ------------------------------------------------------------------------------------------------------------------
<S>                                            <C>               <C>              <C>                <C>
  Fixed maturities                             $        (2.5)    $      11.8      $          0.5     $      1.3
  Equity securities                                      0.2            (0.4)                -              -
  Other investments                                     (0.4)           (0.8)                -              -
  ------------------------------------------------------------------------------------------------------------------
  Pretax realized capital gains (losses)       $        (2.7)    $      10.6      $          0.5     $      1.3
  ==================================================================================================================
  After-tax realized capital gains (losses)    $        (1.8)    $        6.9     $          0.3     $      0.9
  ==================================================================================================================
</TABLE>

Proceeds from the sale of total fixed maturities and the related gross gains and
losses were as follows:
<TABLE>
<CAPTION>

                                                                                                     Preacquisition
                                                                                                     ---------------
                                                                                     Four months      Eight months
                                                  Year ended        Year ended          ended             ended
                                                 December 31,      December 31,      December 31,       August 31,
  (Millions)                                         2002              2001              2000              2000
  ------------------------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>                <C>                  <C>
  Proceeds on sales                            $    2,248.5     $     1,277.5      $          74.7      $      113.7
  Gross gains                                          39.7              24.8                  1.2               2.4
  Gross losses                                         42.2              13.0                  0.7               1.1
  ------------------------------------------------------------------------------------------------------------------
</TABLE>

Changes  in  shareholder's  equity  related  to  changes  in  accumulated  other
comprehensive   income  (unrealized  capital  gains  and  losses  on  securities
including securities pledged to creditors) were as follows:
<TABLE>
<CAPTION>

                                                                                                     Preacquisition
                                                                                                     ---------------
                                                   As of              As of                As of           As of
                                                December 31,       December 31,         December 31,     August 31,
  (Millions)                                        2002               2001                 2000           2000
  ------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                  <C>               <C>                <C>
  Fixed maturities                           $        33.6        $    15.7         $       47.9       $    (3.7)
  Equity securities                                    0.1              0.1                 (0.4)            -
  Other investments                                   11.4            (20.3)               (17.1)            2.1
  ------------------------------------------------------------------------------------------------------------------
                                                      45.1             (4.5)                30.4            (1.6)
  Less: Increase (decrease) in deferred
     income taxes                                     16.2             (1.6)                10.6            (0.6)
  ------------------------------------------------------------------------------------------------------------------
  Net changes in accumulated other
     comprehensive income (loss)             $        28.9        $    (2.9)        $       19.8       $    (1.0)
  ==================================================================================================================
</TABLE>


                                       36
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


Shareholder's  equity  included the following  accumulated  other  comprehensive
income (loss), at December 31:
<TABLE>
<CAPTION>

                                                                                                    Preacquistion
                                                                                                  ------------------
                                                                                    Four months      Eight months
                                                   Year ended       Year ended         ended            ended
                                                  December 31,     December 31,     December 31,      August 31,
   (Millions)                                          2002             2001             2000            2000
  ------------------------------------------------------------------------------------------------------------------
  Net unrealized capital gains (losses):
<S>                                              <C>              <C>              <C>             <C>
  Fixed maturities                               $    78.5        $    44.9        $    29.2       $     (18.7)
  Equity securities                                    -               (0.1)            (0.2)              0.2
  Other                                              (23.5)           (34.9)           (14.6)              2.5
  ------------------------------------------------------------------------------------------------------------------
                                                      55.0              9.9             14.4             (16.0)
  Less: Deferred income taxes                         19.6              3.4              5.0              (5.6)
  ------------------------------------------------------------------------------------------------------------------
  Net accumulated other comprehensive
     income (loss)                               $    35.4        $     6.5        $     9.4       $     (10.4)
  ==================================================================================================================
</TABLE>

Changes  in  accumulated  other  comprehensive  income  related  to  changes  in
unrealized  gains  (losses)  on  securities,  including  securities  pledged  to
creditors were as follows:
<TABLE>
<CAPTION>

                                                                                                   Preacquisition
                                                                                                 -------------------
                                                                                   Four months       Eight months
                                                  Year ended        Year ended        ended             ended
                                                 December 31,      December 31,    December 31,       August 30,
 (Millions)                                          2002              2001            2000              2000
--------------------------------------------------------------------------------------------------------------------
<S>                                           <C>               <C>              <C>               <C>
Unrealized holding gains (losses) arising
   the year (1)                               $      30.6       $       (9.7)    $     20.4        $        0.7
Less: reclassification adjustment for gains
  (losses) and other items included in net
   income (2)                                        (1.7)               6.8            0.6                 1.7
--------------------------------------------------------------------------------------------------------------------
Net unrealized gains (losses) on securities   $      28.9       $       (2.9)    $     19.8        $       (1.0)
===================================================================================================================
</TABLE>

     (1) Pretax  unrealized  holding gains (losses) arising during the year were
         $47.1 million,  $(14.9) million, $31.4 million and $1.1 million for the
         years ended  December 31, 2002 and 2001, the four months ended December
         31, 2000 and the eight months ended August 30, 2000, respectively.
     (2) Pretax reclassification  adjustments for gains (losses) and other items
         included in net income were $2.6 million,  $10.5 million, $0.9 and $2.6
         million for the years ended December 31, 2002 and 2001, the four months
         ended  December  31, 2000 and the eight  months  ended August 30, 2000,
         respectively.



                                       37
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


7. UNPAID ACCIDENT AND HEALTH CLAIMS

The change in the  liability  for unpaid  accident  and health  claims and claim
adjustment epenses is summarized as follows:
<TABLE>
<CAPTION>

      (Millions)                                              2002       2001        2000
     ----------------------------------------------------------------------------------------
<S>                                                       <C>         <C>         <C>
        Balance at January 1                              $   14.5    $  14.1     $  15.8
        Less reinsurance recoverables                         13.4       11.1        10.9
     ----------------------------------------------------------------------------------------
        Net balance at January 1                               1.1        3.0         4.9
        Incurred related to:
           Current year                                        1.1        0.6         1.0
           Prior years                                         1.2        0.5        (0.8)
     ----------------------------------------------------------------------------------------
        Total incurred                                         2.3        1.1         0.2
        Paid related to:
          Current year                                        (0.2)       0.5         0.4
          Prior years                                          0.3        2.5         1.7
     ----------------------------------------------------------------------------------------
        Total Paid                                             0.1        3.0         2.1
     ----------------------------------------------------------------------------------------
        Net balance at December 31                             3.3        1.1         3.0
        Plus reinsurance recoverables                         14.2       13.4        11.1
     ----------------------------------------------------------------------------------------
        Balance at December 31                             $  17.5    $  14.5     $  14.1
     ----------------------------------------------------------------------------------------
</TABLE>

8. INCOME TAXES

The Company files a  consolidated  federal income tax return with ReliaStar Life
Insurance Company, Northern Life Insurance Company and Security-Connecticut Life
Insurance Company.  The Company is allocated an amount approximating the tax the
member  would have  incurred  were it not a member of a  consolidated  group and
shall  receive  benefit  for the use of its tax  saving  attributes  used in the
consolidated return.


Income taxes from continuing operations consist of the following:
<TABLE>
<CAPTION>

                                                                                                  Preacquisition
                                                                                                  --------------
                                                                                   Four months     Eight months
                                                  Year ended       Year ended         ended           ended
                                                 December 31,     December 31,     December 31,      August 31,
     (Millions)                                      2002            2001              2000             2000
     ------------------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>                <C>              <C>
       Current taxes (benefits):
           Federal                              $    14.3       $      23.7        $   (5.4)        $   14.4
     ------------------------------------------------------------------------------------------------------------
              Total current taxes (benefits)         14.3              23.7            (5.4)            14.4
     ------------------------------------------------------------------------------------------------------------
       Deferred taxes (benefits):
           Federal                                    3.5               2.4            12.8             (2.4)
     ------------------------------------------------------------------------------------------------------------
              Total deferred taxes (benefits)         3.5               2.4            12.8             (2.4)
     ------------------------------------------------------------------------------------------------------------
       Total                                    $    17.8         $    26.1        $    7.4         $   12.0
     ============================================================================================================
</TABLE>




                                       38
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


Income  taxes were  different  from the amount  computed by applying the federal
income tax rate to income from continuing operations before income taxes for the
following reasons:
<TABLE>
<CAPTION>
                                                                                                   Preacquisition
                                                                                                   --------------
                                                                                   Four months      Eights months
                                                  Year ended       Year ended         ended             ended
                                                 December 31,     December 31,     December 31,       August 31,
     (Millions)                                      2002            2001              2000              2000
     --------------------------------------------------------------------------------------------------------------
<S>                                               <C>           <C>             <C>                 <C>
       Income from continuing operations
          before income taxes                     $   50.4      $     51.9      $     14.4          $    34.8
       Tax rate                                        35%             35%             35%                35%
     --------------------------------------------------------------------------------------------------------------
       Application of the tax rate                    17.6            18.2             5.0               12.2
       Tax effect of:
          Goodwill amortization                        -               7.9             2.6                0.2
          Other                                        0.2             -              (0.2)              (0.4)
     --------------------------------------------------------------------------------------------------------------
        Income taxes                              $   17.8      $     26.1      $      7.4          $    12.0
     --------------------------------------------------------------------------------------------------------------
</TABLE>

The tax effects of temporary  differences  that give rise to deferred tax assets
and deferred tax liabilities at December 31 are presented below:
<TABLE>
<CAPTION>

     (Millions)                                                       2002             2001
     --------------------------------------------------------------------------------------------
<S>                                                             <C>             <C>
     Deferred tax assets:
     Deferred policy acquisition costs                          $      4.8      $      12.2
     Insurance reserves                                               53.9             25.2
     Investment losses                                                 3.7             12.7
     Legal reserve                                                     5.3             10.9
     Other                                                             4.6             18.7
     --------------------------------------------------------------------------------------------
            Total gross assets                                        72.3             79.7
     --------------------------------------------------------------------------------------------

     Deferred tax liabilities:
     Present value of future profits                                 (24.9)           (24.7)
     Net unrealized capital gains                                    (19.6)            (3.4)
     Other                                                            (1.7)            (5.1)
     --------------------------------------------------------------------------------------------
            Total gross liabilities                                  (46.2)           (33.2)
     --------------------------------------------------------------------------------------------
     Net deferred tax asset                                     $     26.1      $      46.5
     ============================================================================================
</TABLE>


Net unrealized  capital gains and losses are presented in  shareholder's  equity
net of deferred taxes. As of December 31, 2002 and 2001, no valuation  allowance
was required for unrealized capital gains and losses.

The  "Policyholders'  Surplus  Account,"  which  arose  under  prior tax law, is
generally that portion of a life insurance  company's  statutory income that has
not been subject to taxation.  As of December  31,  1983,  no further  additions
could be made to the  Policyholders'  Surplus  Account  for tax return  purposes
under the  Deficit  Reduction  Act of 1984.  The  balance  in such  account  was
approximately  $11.3  million at December 31,  2002.  This amount would be taxed
only under certain conditions. No income taxes have been provided on this amount
since management  believes under current tax law the conditions under which such
taxes would become payable are remote.


                                       39
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


The Internal  Revenue Service (the "Service") has completed  examinations of the
federal income tax returns of the Company for all years through 1999. There were
no material  adjustments made as a result of the  examinations.  The Service has
commenced its examinations for the years 2000 and 2001.

9. EMPLOYEE BENEFIT PLANS

PENSION PLANS

Prior to December  31, 2001,  the  Company's  employees  were covered by the ING
Retirement  Plan  for  Employees  of  Reliastar  Financial  Corporation  and its
Subsidiaries ("Reliastar Plan"), a qualified, defined contribution pension plan.
The Companies were  allocated  their share of the pension  liability  associated
with their  employees.  Costs charged to expense for the Reliastar  Plan for the
year ended  December  31, 2001,  four months  ended  December 31, 2000 and eight
months  ended  August  31,  2000 were $0.6  million,  $0.08  million,  and $0.02
million, respectively.

As of December 31, 2001, the qualified  pension  benefit plans of certain United
States  subsidiaries of ING AIH,  including the Reliastar Plan, were merged into
the ING  Americas  Retirement  Plan.  Each  subsidiary  transferred  its pension
liabilities to the Parent at that date. In exchange for these  liabilities,  the
subsidiaries  capital  contributions,  net of taxes, from the Parent.  The costs
allocated to the Company for its members'  participation in the ING Pension Plan
were $0.5 million for 2002.

ING SAVINGS PLAN AND ESOP

Substantially  all employees of the Company are eligible to  participate  in The
ING Savings Plan and ESOP, a qualified  profit sharing and stock bonus plan. The
ING Savings Plan allows designated contributions,  which are matched up to 5% of
compensation  by ING,  to be  invested  in a variety of  financial  instruments.
Pretax  charges of  operations of the Company for the ING Savings plan were $0.3
million, in 2002; $0.4 million in 2001 for charges from the ING Savings Plan and
the  predecessor  plan,  and $0.16 million and $0.04 million for the four months
ended  December 31, 2000 and eight  months ended August 31, 2000,  respectively,
for charges from the predecessor plan.

OTHER POSTRETIREMENT BENEFITS

Through a plan sponsored by an affiliate,  the Company  provides  certain health
care and life  insurance  benefits  to  retired  employees  and  their  eligible
dependents  ("Postretirement  Plan").  The  postretirement  health  care plan is
contributory,  with retiree  contribution  levels  adjusted  annually;  the life
insurance plan provides a flat amount of  noncontributory  coverage and optional
contributory coverage.

A credit totaling $105,000,  $26,000, $11,000, and $21,000 were allocated to the
Company  for its portion of the cost of the  Postretirement  Plan for the period
ended  December 31, 2002 and 2001,  the four months ended December 31, 2000, and
eight months ended August 31, 2000, respectively.


                                       40
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


STOCK INCENTIVE PLAN

Prior to the  acquisition by ING of the Company's then ultimate  parent company,
ReliaStar  Financial Corp., on September 1, 2000,  officers and key employees of
the  Company  participated  in the  stock  incentive  plans  of  ReliaStar  Life
Insurance Company.  No compensation  expense for stock-based  compensation plans
has been allocated to the Company.

10. RELATED PARTY TRANSACTIONS

INVESTMENT ADVISORY

The Company  entered  into an asset  management  agreement  with ING  Investment
Management, LLC ("IIM"), an affiliate, January 1, 2001, under which IIM provides
asset  management and  accounting  services.  Under the  agreement,  the Company
records a fee  based on the value of the  assets  under  management.  The fee is
payable  quarterly.  For the years ended December 31, 2002 and 2001, the Company
incurred  fees of  $2.2  million  and  2.1  million,  respectively,  under  this
agreement.

RECIPROCAL LOAN AGREEMENT

RLNY maintains a reciprocal loan agreement with ING AIH, a Delaware  corporation
and  affiliate,  to  facilitate  the  handling of unusual  and/or  unanticipated
short-term cash  requirements.  Under this agreement,  which expires January 27,
2003, RNLY and ING AIH can borrow up to $97.4 million from one another.

Interest  on any RNLY  borrowings  is  charged  at the rate of ING AIH's cost of
funds for the interest period plus 0.15%.  Interest on any ING AIH borrowings is
charged at a rate based on the prevailing interest rate of U.S. commercial paper
available  for purchase with a similar  duration.  Under this  agreement,  which
commenced in 2002, RNLY incurred  interest expense of $0.05 million and interest
income of $0.3 million for the period ended December 31, 2002.

11. REINSURANCE

The Company  utilizes  excess or quota share  treaties to reduce its exposure to
large losses.  The Company will only retain  amounts not exceeding the Company's
retention limits as stated below.

At December 31, 2002, RLNY had reinsurance treaties with fifty-four unaffiliated
reinsurers and three affiliated reinsurers covering a significant portion of the
mortality  risks and guaranteed  death and living  benefits under its contracts.
The  Company  remains  liable to the  extent  its  reinsurers  do not meet their
obligations under the reinsurance agreements.

The  Company's  retention  limit is $300,000 per insurable  life for  individual
retail coverage.  For group coverage and individual payroll deduction  coverage,
the  retention  is $300,000  (prior to July 1, 2002) or $500,000  (after July 1,
2002) per life with per  occurrence  limitations,  subject to certain  maximums.
Reinsurance  premiums,   commissions  and  expense   reimbursements  related  to
reinsured  business are  accounted  for on bases  consistent  with those used in
accounting  for the original  policies  issued and the terms of the  reinsurance
contracts. Reserves are based on the terms of the reinsurance contracts and are


                                       41
<PAGE>

RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK
(A WHOLLY-OWNED SUBSIDIARY OF SECURITY-CONNECTICUT LIFE INSURANCE COMPANY)
NOTES TO FINANCIAL STATEMENTS


consistent with the risk assumed. RLNY obtained letters of credit in the amounts
of $3.0 million from Fleet Bank,  $0.8 million from U.S. Bank, $3.8 million from
Bank One and $0.5 from Mellon Bank.

The effect of reinsurance on premiums and recoveries was as follows:
<TABLE>
<CAPTION>

                                                                                                  Preacquisition
                                                                                                  --------------
                                                                                   Four months     Eight months
                                                  Year ended       Year ended         ended           ended
                                                 December 31,     December 31,     December 31,     August 31,
     (Millions)                                      2002            2001              2000            2000
     ------------------------------------------------------------------------------------------------------------
<S>                                             <C>               <C>              <C>              <C>
     Direct Premiums                            $      100.6      $    87.3        $    30.9        $    54.5
     Federal
     Reinsurance assumed                                 4.0            3.3              1.3              1.6
     Reinsurance ceded                                 (38.4)         (30.4)           (12.4)           (28.0)
     ------------------------------------------------------------------------------------------------------------
     Net Premiums                                       66.2           60.2             19.8             28.1
     ------------------------------------------------------------------------------------------------------------
     Reinsurance Recoveries                     $       21.3      $    29.2        $     3.0        $    15.4
     ============================================================================================================
</TABLE>

12. COMMITMENTS AND CONTINGENT LIABILITIES

LEASES

For the year ended December 31, 2002,  rent expense for leases was $0.3 million.
The future net minimum payments under  noncancelable  leases for the years ended
December 31, 2003 through 2007 are estimated to be $0.2  million,  $0.1 million,
$0.1  million,  $0.1 million and $0.1 million,  respectively,  and $0.0 million,
thereafter.  The Company pays  substantially  all expenses  associated  with its
leased and  subleased  office  properties.  Expenses  not paid  directly  by the
Company are paid for by an affiliate and allocated back to the Company.

COMMITMENTS

Through the normal  course of  investment  operations,  the  Company  commits to
either purchase or sell  securities,  commercial  mortgage loans or money market
instruments at a specified  future date and at a specified  price or yield.  The
inability  of  counterparties  to honor these  commitments  may result in either
higher or lower  replacement  cost.  Also, there is likely to be a change in the
value  of  the  securities   underlying  the  commitments.   The  Company  makes
investments in limited  partnerships  on a subscription  basis.  At December 31,
2002 and 2001, the Company had to fund  subscriptions of $26.2 million and $17.6
million, respectively.

LITIGATION

The Company is a party to threatened or pending lawsuits arising from the normal
conduct of business.  Due to the climate in insurance  and business  litigation,
suits against the Company sometimes include claims for substantial compensatory,
consequential or punitive damages and other types of relief.  Moreover,  certain
claims  are  asserted  as class  actions,  purporting  to  represent  a group of
similarly situated individuals. While it is not possible to forecast the outcome
of such lawsuits,  in light of existing  insurance,  reinsurance and established
reserves,  it is the opinion of management that the disposition of such lawsuits
will not  have a  materially  adverse  effect  on the  Company's  operations  or
financial position.

                                       42
<PAGE>
<TABLE>
<CAPTION>


QUARTERLY DATA (UNAUDITED)

     2002 (Millions)                                  First         Second         Third        Fourth
     ----------------------------------------------------------------------------------------------------

<S>                                             <C>            <C>           <C>           <C>
       Total Revenue                            $      63.1    $      82.0   $      84.7   $      70.5
     ----------------------------------------------------------------------------------------------------
       Income (loss) before income taxes               (1.7)          30.3          19.0           2.8
       Less: Income tax expense  (benefit)             (0.8)          10.6           6.9           1.1
     ----------------------------------------------------------------------------------------------------
       Income (loss) before cumulative
        effect of change in accounting                 (0.9)          19.7          12.1           1.7
        principle
       Cumulative effect of change in
        accounting principle                            -              -             -          (865.0)
     ----------------------------------------------------------------------------------------------------
       Net income (loss)                        $      (0.9)   $      19.7   $      12.1   $    (863.3)
     ====================================================================================================

     2001 (Millions)                                  First         Second         Third        Fourth
     ----------------------------------------------------------------------------------------------------

       Total Revenue                            $      78.0    $      77.2   $      78.1   $      77.8
     ----------------------------------------------------------------------------------------------------
       Income before income taxes                       7.5           11.6           3.9          28.9
       Less: Income tax expense                         4.6            6.0           3.3          12.2
     ----------------------------------------------------------------------------------------------------
       Net income                               $       2.9    $       5.6   $       0.6   $      16.7
     ====================================================================================================
</TABLE>











                                       43
<PAGE>


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

None.


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 14.  CONTROLS AND PROCEDURES

a)   Within the 90-day  period prior to the filing of this  report,  the Company
     carried out an evaluation, under the supervision and with the participation
     of  its  management,  including  its  Chief  Executive  Officer  and  Chief
     Financial Officer,  of the effectiveness of the design and operation of the
     Company's  disclosure controls and procedures (as defined in Rule 13a-14 of
     the Securities  Exchange Act of 1934). Based on that evaluation,  the Chief
     Executive  Officer and the Chief Financial  Officer have concluded that the
     Company's  current  disclosure  controls and  procedures  are  effective in
     ensuring that material  information  relating to the Company required to be
     disclosed in the Company's  periodic SEC filings is made known to them in a
     timely manner.

b)   There have not been any significant changes in the internal controls of the
     Company or other  factors that could  significantly  affect these  internal
     controls subsequent to the date the Company carried out its evaluation.



                                       44
<PAGE>


                                     PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

     1.   Financial statements. See Item 8 on Page 14.
     2.   Financial  statement  schedules.  See  Index  to  Financial  Statement
          Schedules on Page 49.

EXHIBITS:


1.        Underwriting Agreement Between ReliaStar Life Insurance Company of New
          York and  Directed  Services,  Inc  (incorporated  by  reference  from
          Exhibit  1  to  a  Pre-Effective   Amendment  No.  1  of  Registrant's
          Registration  Statement  on Form  S-1  filed  with the SEC on or about
          April 1, 2002 (File No. 333-75938)

3.   (i)  Articles of Incorporation  of ReliaStar Life Insurance  Company of New
          York  (incorporated by reference from Exhibit 3 (a) to a Pre-Effective
          Amendment  No. 1 of  Registrant's  Registration  Statement on Form S-1
          filed with the SEC on or about April 1, 2002 (File No. 333-75938)

     (ii) By-laws of ReliaStar Life Insurance Company of New York  (incorporated
          by reference from Exhibit 3(b) to a  Pre-Effective  Amendment No. 1 of
          Registrant's  Registration Statement on Form S-1 filed with the SEC on
          or about April 1, 2002 (File No. 333-75938)

4.   (a)  Individual   Deferred   Combination   Variable   and   Fixed   Annuity
          Contract(incorporated   by   reference   from   Exhibit   4(a)   to  a
          Pre-Effective  Amendment No. 1 of Registrant's  Registration Statement
          on Form S-1 filed  with the SEC on or about  April 1,  2002  (File No.
          333-75938)

     (b)  Deferred  Combination Variable and Fixed Annuity Group Master Contract
          (incorporated  by  reference  from  Exhibit  4(b)  to a  Pre-Effective
          Amendment  No. 1 of  Registrant's  Registration  Statement on Form S-1
          filed with the SEC on or about April 1, 2002 (File No. 333-75938)

     (c)  Individual  Retirement  Annuity Rider Page  (incorporated by reference
          from Exhibit 4(c) to a  Pre-Effective  Amendment No. 1 of Registrant's
          Registration  Statement  on Form  S-1  filed  with the SEC on or about
          April 1, 2002 (File No. 333-75938)

     (d)  Schedule  Page to the DVA Plus NY  Contract  featuring  The Galaxy VIP
          Fund  (incorporated  by reference from Exhibit 4(d) to a Pre-Effective
          Amendment  No. 1 of  Registrant's  Registration  Statement on Form S-1
          filed with the SEC on or about April 1, 2002 (File No. 333-75938)

     (e)  Section 72 Rider Fund  (incorporated by reference from Exhibit 4(e) to
          a Pre-Effective Amendment No. 1 of Registrant's Registration Statement
          on Form S-1 filed  with the SEC on or about  April 1,  2002  (File No.
          333-75938)


                                       45
<PAGE>


     (f)  Change  of Name  Endorsement  Fund  (incorporated  by  reference  from
          Exhibit  4(f)  to a  Pre-Effective  Amendment  No.  1 of  Registrant's
          Registration  Statement  on Form  S-1  filed  with the SEC on or about
          April 1, 2002 (File No. 333-75938)

     (g)  Deferred  Combination  Variable and Fixed Annuity  Certificate (Group)
          Fund  (incorporated  by reference from Exhibit 4(g) to a Pre-Effective
          Amendment  No. 1 of  Registrant's  Registration  Statement on Form S-1
          filed with the SEC on or about April 1, 2002 (File No. 333-75938)

     (h)  Section 72 Rider (Group) Fund  (incorporated by reference from Exhibit
          4(h) to a Pre-Effective  Amendment No. 1 of Registrant's  Registration
          Statement  on Form S-1  filed  with the SEC on or about  April 1, 2002
          (File No. 333-75938)

     (i)  Individual  Retirement  Annuity  Rider (Group) Fund  (incorporated  by
          reference  from Exhibit  4(i) to a  Pre-Effective  Amendment  No. 1 of
          Registrant's  Registration Statement on Form S-1 filed with the SEC on
          or about April 1, 2002 (File No. 333-75938)

     (j)  Simple Individual  Retirement Annuity Rider (Group) Fund (incorporated
          by reference from Exhibit 4(j) to a  Pre-Effective  Amendment No. 1 of
          Registrant's  Registration Statement on Form S-1 filed with the SEC on
          or about April 1, 2002 (File No. 333-75938)

     (k)  403(b) Rider (Group) Fund (incorporated by reference from Exhibit 4(k)
          to  a  Pre-Effective  Amendment  No.  1 of  Registrant's  Registration
          Statement  on Form S-1  filed  with the SEC on or about  April 1, 2002
          (File No. 333-75938)

     (l)  Roth Individual Retirement Annuity Rider (Group) Fund (incorporated by
          reference  from Exhibit  4(l) to a  Pre-Effective  Amendment  No. 1 of
          Registrant's  Registration Statement on Form S-1 filed with the SEC on
          or about April 1, 2002 (File No. 333-75938)

     (m)  Deferred Combination Variable and Fixed Annuity Contract  (Individual)
          Fund  (incorporated  by reference from Exhibit 4(m) to a Pre-Effective
          Amendment  No. 1 of  Registrant's  Registration  Statement on Form S-1
          filed with the SEC on or about April 1, 2002 (File No. 333-75938)

     (n)  Section 72 Rider  (Individual)  Fund  (incorporated  by reference from
          Exhibit  4(n)  to a  Pre-Effective  Amendment  No.  1 of  Registrant's
          Registration  Statement  on Form  S-1  filed  with the SEC on or about
          April 1, 2002 (File No. 333-75938)

     (o)  Individual Retirement Annuity Rider (Individual) Fund (incorporated by
          reference  from Exhibit  4(o) to a  Pre-Effective  Amendment  No. 1 of
          Registrant's  Registration Statement on Form S-1 filed with the SEC on
          or about April 1, 2002 (File No. 333-75938)

     (p)  Simple   Individual   Retirement   Annuity  Rider   (Individual)  Fund
          (incorporated  by  reference  from  Exhibit  4(p)  to a  Pre-Effective
          Amendment  No. 1 of  Registrant's  Registration  Statement on Form S-1
          filed with the SEC on or about April 1, 2002 (File No. 333-75938)


                                       46
<PAGE>


     (q)  403(b) Rider (Individual) Fund (incorporated by reference from Exhibit
          4(q) to a Pre-Effective  Amendment No. 1 of Registrant's  Registration
          Statement  on Form S-1  filed  with the SEC on or about  April 1, 2002
          (File No. 333-75938)

     (r)  Roth   Individual   Retirement   Annuity   Rider   (Individual)   Fund
          (incorporated  by  reference  from  Exhibit  4(r)  to a  Pre-Effective
          Amendment  No. 1 of  Registrant's  Registration  Statement on Form S-1
          filed with the SEC on or about April 1, 2002 (File No. 333-75938)

     (s)  Individual Deferred Combination Variable and Fixed Annuity Application
          (Old)  Fund   (incorporated  by  reference  from  Exhibit  4(s)  to  a
          Pre-Effective  Amendment No. 1 of Registrant's  Registration Statement
          on Form S-1 filed  with the SEC on or about  April 1,  2002  (File No.
          333-75938)

     (t)  Individual Deferred Combination Variable and Fixed Annuity Application
          (PE)  Fund   (incorporated   by  reference  from  Exhibit  4(t)  to  a
          Pre-Effective  Amendment No. 1 of Registrant's  Registration Statement
          on Form S-1 filed  with the SEC on or about  April 1,  2002  (File No.
          333-75938)

     (u)  Individual Deferred Combination Variable and Fixed Annuity Application
          (New)  Fund   (incorporated  by  reference  from  Exhibit  4(u)  to  a
          Pre-Effective  Amendment No. 1 of Registrant's  Registration Statement
          on Form S-1 filed  with the SEC on or about  April 1,  2002  (File No.
          333-75938)

     (v)  Enrollment Form Fund (incorporated by reference from Exhibit 4(v) to a
          Pre-Effective  Amendment No. 1 of Registrant's  Registration Statement
          on Form S-1 filed  with the SEC on or about  April 1,  2002  (File No.
          333-75938)

10.  (a)  Form  of  Services  Agreement  between  Directed  Services,  Inc.  and
          ReliaStar Life  Insurance  Company of New York Fund  (incorporated  by
          reference  from Exhibit  10(a) to a  Pre-Effective  Amendment No. 1 of
          Registrant's  Registration Statement on Form S-1 filed with the SEC on
          or about April 1, 2002 (File No. 333-75938)

     (b)  Form of  Administrative  Services  Agreement  between  ReliaStar  Life
          Insurance  Company  of New York and  Golden  American  Life  Insurance
          Company  Fund  (incorporated  by  reference  from  Exhibit  10(b) to a
          Pre-Effective  Amendment No. 1 of Registrant's  Registration Statement
          on Form S-1 filed  with the SEC on or about  April 1,  2002  (File No.
          333-75938)

     (c)  Form of  Administrative  Services  Agreement  between  ReliaStar  Life
          Insurance  Company of New York and Equitable Life Insurance Company of
          Iowa  Fund   (incorporated  by  reference  from  Exhibit  10(c)  to  a
          Pre-Effective  Amendment No. 1 of Registrant's  Registration Statement
          on Form S-1 filed  with the SEC on or about  April 1,  2002  (File No.
          333-75938)

     (d)  Form of Asset Management  Agreement  between  ReliaStar Life Insurance
          Company  of  New  York  and  ING   Investment   Management   LLC  Fund
          (incorporated  by  reference  from  Exhibit  10(i) to a  Pre-Effective
          Amendment  No. 1 of  Registrant's  Registration  Statement on Form S-1
          filed with the SEC on or about April 1, 2002 (File No. 333-75938)


                                       47
<PAGE>


     (e)  Form of Participation  between ReliaStar Life Insurance Company of New
          York and ING Variable  Insurance Trust Fund (incorporated by reference
          from Exhibit 10(k) to a Pre-Effective  Amendment No. 1 of Registrant's
          Registration  Statement  on Form  S-1  filed  with the SEC on or about
          April 1, 2002 (File No. 333-75938)

     (f)  Form of Participation  between ReliaStar Life Insurance Company of New
          York and ING Variable  Insurance Trust Fund (incorporated by reference
          from Exhibit 10(l) to a Pre-Effective  Amendment No. 1 of Registrant's
          Registration  Statement  on Form  S-1  filed  with the SEC on or about
          April 1, 2002 (File No. 333-75938)

     (g)  Federal Tax Sharing  Agreement by and between ReliaStar Life Insurance
          Company of New York,  ReliaStar Life  Insurance  Company and ReliaStar
          Financial Corp., effective 5/1/02.

     (h)  Management  Services Agreement by and between ReliaStar Life Insurance
          Company of New York and ReliaStar Financial Corp., effective 1/1/98.

     (i)  Management  Services Agreement by and between ReliaStar Life Insurance
          Company of New York and ReliaStar  Life Insurance  Company,  effective
          6/1/99.

     (j)  Intercompany  Credit Agreement by and between ReliaStar Life Insurance
          Company  of New  York and  affiliated  companies  of  RLNY,  effective
          2/1/00.

     (k)  Management  Services Agreement by and between ReliaStar Life Insurance
          Company of New York and  Security-Connecticut  Life Insurance Company,
          effective 6/1/99.

               First Amendment to Management  Services  Agreement by and between
               ReliaStar    Life    Insurance    Company   of   New   York   and
               Security-Connecticut Life Insurance Company, effective 2/5/01

(b)  Reports on form 8-K.

     None.




                                       48
<PAGE>


                     INDEX TO FINANCIAL STATEMENT SCHEDULES

                                                                          Page
                                                                        -------

Report of Independent Auditors........................................     50

I.   Summary of Investments - Other than Investments in Affiliates
     as of December 31, 2002..........................................     51

IV.  Reinsurance as of and for the years ended December 31, 2002,
     2001 and 2000....................................................     52

Schedules  other  than  those  listed  above are  omitted  because  they are not
required or not applicable.










                                       49
<PAGE>



                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors
ReliaStar Life Insurance Company of New York

We have audited the financial  statements of ReliaStar Life Insurance Company of
New York as of December  31, 2002 and 2001  ("Successor  Company"),  and for the
years then ended, and for the period from September 1, 2000 to December 31, 2000
("Successor  Company"),  and for the period  from  January 1, 2000 to August 31,
2000 ("Preacquisition  Company"), and have issued our report thereon dated March
21, 2003. Our audits also included the financial  statement  schedules listed in
Item 15. These schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.

In our  opinion,  the  financial  statement  schedules  referred to above,  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/ Ernst & Young LLP

Atlanta, Georgia
March 21, 2003







                                       50
<PAGE>
<TABLE>
<CAPTION>





                                                       SCHEDULE I
                              Summary of Investments - Other than Investments in Affiliates
                                                 As of December 31, 2002
                                                       (Millions)


                                                                                                         Amount
                                                                                                        shown on
Type of Investment                                                        Cost           Value*       Balance Sheet
-------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>             <C>            <C>
Fixed maturities:
    U.S. government and government agencies and authorities           $      96.6     $      98.4    $      98.4
    States, municipalities and political subdivisions                         1.7             1.8            1.8
    U.S. corporate securities                                               909.6           973.7          973.7
    Foreign securities (1)                                                    3.4             3.8            3.8
    Mortgage-backed securities                                              367.4           375.5          375.5
    Other asset-backed securities                                           145.2           149.2          149.2
    Less: Fixed maturities pledged to creditors                               0.9             0.9            0.9
                                                                    -----------------------------------------------
       Total fixed maturities securities                                  1,523.0         1,601.5        1,601.5
                                                                    -----------------------------------------------

Equity securities:
                                                                    -----------------------------------------------
       Total equity securities                                                4.4             4.4            4.4
                                                                    -----------------------------------------------

Short term investments                                                       55.6            55.6           55.6
Mortgage loans                                                              243.6           275.6          243.6
Policy loans                                                                 85.2            85.2           85.2
Other investments                                                            11.9            11.9           11.9
Securities pledged to creditors                                               0.9             0.9            0.9
                                                                    -----------------------------------------------
       Total investments                                              $   1,924.6     $   2,035.1    $   2,003.1
===================================================================================================================

*    See Notes 2 and 3 of Notes to Financial Statements.
(1)  The  term  "foreign"  includes  foreign   governments,   foreign  political
     subdivisions,  foreign  public  utilities  and all other  bonds of  foreign
     issuers.   Substantially  all  of  the  Company's  foreign  securities  are
     denominated in U.S. dollars.
</TABLE>








                                                       51
<PAGE>
<TABLE>
<CAPTION>



                                                 SCHEDULE IV
                                           Reinsurance Information
                       As of and for the years ended December 31, 2002, 2001 and 2000
                                                 (Millions)
                                                                                              Percentage of
  (Millions)                                  Gross       Ceded      Assumed        Net      assumed to net
--------------------------------------------------------------------------------------------------------------
<S>                                         <C>         <C>           <C>       <C>               <C>
  YEAR ENDED DECEMBER 31, 2002
  Life insurance in Force                   $  40.6     $  12.7       $  4.2    $  32.1           13.2 %

  Premiums:
    Life insurance                            221.1        36.2          4.0      188.9
    Accident and health insurance              20.4        15.0          -          5.4
    Annuities                                   6.6         0.1          -          6.5
                                        ------------------------------------------------------
  Total Premiums                            $ 248.1     $  51.3       $  4.0    $ 200.8
                                        ======================================================

  YEAR ENDED DECEMBER 31, 2001
  Life insurance in Force                   $  38.4     $  10.7       $  4.3    $  31.9           13.3 %

  Premiums:
    Life insurance                            217.1        32.2          3.3      188.2
    Accident and health insurance              16.6        12.4          -          4.2
    Annuities                                   4.2         -            -          4.2
                                        ------------------------------------------------------
  Total Premiums                            $ 237.9     $  44.6       $  3.3    $ 196.6
                                        ======================================================

  YEAR ENDED DECEMBER 31, 2000
  Life insurance in Force                   $  36.1     $   9.1       $  2.9    $  30.0           10.0 %

  Premiums:
    Life insurance                            204.0        28.8          2.9      178.1
    Accident and health insurance              14.7        11.6          -          3.1
    Annuities                                   9.1         -            -          9.1
                                        ------------------------------------------------------
  Total Premiums                            $ 227.8     $  40.4       $  2.9    $ 190.3
                                        ======================================================
</TABLE>

                                                      52
<PAGE>



                                   SIGNATURES

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

                                    ReliaStar Life Insurance Company of New York
                                    --------------------------------------------
                                                       (Registrant)

March 24, 2003                      By      /s/ Cheryl L. Price
---------------                         ----------------------------------------
   (Date)                                Cheryl L. Price
                                         Vice President, Chief Financial Officer
                                         and Chief Accounting Officer
                                         (Duly Authorized Officer and
                                         Principal Financial Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities indicated on or before March 27, 2003

         SIGNATURES                                        TITLE

/s/  Cheryl L. Price                                Vice President,
-----------------------------                       Chief Financial Officer
     Cheryl L. Price                                and Chief Accounting Officer


/s/  James R. Gelder                                Director, President
-----------------------------                       & Chief Executive Officer
     James R. Gelder


/s/  Allan Baker                                    Director and
-----------------------------                       Senior Vice President
     Allan Baker

/s/  R. Michael Conley                              Director
-----------------------------
     R. Michael Conley


/s/  Robert W. Crispin                              Director
-----------------------------
     Robert W. Crispin


/s/  Keith Gubbay                                   Director
-----------------------------
     Keith Gubbay


/s/  Ulric Haynes, Jr.                              Director
-----------------------------
     Ulric Haynes, Jr.


                                       53


<PAGE>


         SIGNATURES                                       TITLE


/s/  P. Randall Lowery                              Director
------------------------------
     P. Randall Lowery


/s/  Fioravante G. Perrotta                         Director
------------------------------
     Fioravante G. Perrotta


/s/  Stephen J. Preston                             Director and
------------------------------                      Senior Vice President
     Stephen J. Preston


/s/  Mark A. Tullis                                 Director
------------------------------
     Mark A. Tullis


/s/  Charles B. Updike                              Director
------------------------------
     Charles B. Updike


/s/  Ross M. Weale                                  Director
------------------------------
     Ross M. Weale




                                       54
<PAGE>



                                  CERTIFICATION

I, Cheryl L. Price, certify that:

1.   I have reviewed this annual report on Form 10-K of ReliaStar of New York.

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

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

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

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;
     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and
     c)   presented in this annual report our conclusion about the effectiveness
          of the disclosure  controls and procedures  based on our evaluation as
          of the Evaluation Date;

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

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

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

Date:    March 24, 2003
         --------------

By       /s/ Cheryl L. Price
         -------------------------------------
         Cheryl L. Price
         Vice President, Chief Financial Officer and Chief Accounting Officer
         (Duly Authorized Officer and Principal Financial Officer)



                                       55
<PAGE>


                                  CERTIFICATION

I, James R. Gelder, certify that:

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

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

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

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

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is being prepared;
     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and
     c)   presented in this annual report our conclusion about the effectiveness
          of the disclosure  controls and procedures  based on our evaluation as
          of the Evaluation Date;

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

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

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

Date     March 24, 2003
         --------------

By       /s/ James R. Gelder
         ------------------------------------
         James R. Gelder
         Chief Executive Officer




                                       56