UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

Registrant meets the conditions set forth in General Instruction H (1)(a) and (b) of Form 10-Q and is therefore filing this Form with
the reduced disclosure format.

|ý                                            | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|-------------------------------------------- | ----------------------------------------------------------------------------------------
|FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004
|OR                                          
|o                                            | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 333-100029

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ALLSTATE LIFE INSURANCE COMPANY
OF
NEW YORK(Exact name of registrant as specified in its charter)

|New York                                         |  | 36-2608394                          
|------------------------------------------------ |  | ------------------------------------
|(State of Incorporation)                         |  | (I.R.S. Employer Identification No.)
|100 Motor Parkway, Suite 132
Hauppauge, New York |  | 11788                               
|(Address of principal executive offices)         |  | (Zip Code)                          

Registrant's
telephone number, including area code:631-357-8920

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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  ý        No  o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  o        No  ý

As of July 31, 2004 the Registrant had 100,000 common shares, $25 par value, outstanding, all of which are held by Allstate Life Insurance Company.



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ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 2004

|         |                                                                                                                       |  |   
|-------- | --------------------------------------------------------------------------------------------------------------------- |  | --
|PART I.  | FINANCIAL INFORMATION                                                                                                 |  |   
|Item 1.  | Financial Statements                                                                                                  |  |   
|         | Condensed Statements of Operations for the Three-Month and Six-Month Periods Ended June 30, 2004 and 2003 (unaudited) |  | 3 
|         | Condensed Statements of Financial Position as of June 30, 2004 (unaudited) and December 31, 2003                      |  | 4 
|         | Condensed Statements of Cash Flows for the Six-Month Periods Ended June 30, 2004 and 2003 (unaudited)                 |  | 5 
|         | Notes to Condensed Financial Statements (unaudited)                                                                   |  | 6 
|         | Report of Independent Registered Public Accounting Firm                                                               |  | 14
|Item 2.  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                 |  | 15
|Item 4.  | Controls and Procedures                                                                                               |  | 27
|PART II. | OTHER INFORMATION                                                                                                     |  |   
|Item 1.  | Legal Proceedings                                                                                                     |  | 27
|Item 6.  | Exhibits and Reports on Form 8-K                                                                                      |  | 27

2

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
CONDENSED STATEMENTS OF OPERATIONS

|                                                                                                                    |                                                   | Three Months Ended
June 30, |         | Six Months Ended
June 30, |  
|------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | --------------------------- | ------- | ------------------------- | -
|
|
|Revenues                                                                                                            |                                                   |                             |         |                           |  
|                                                                                                                    | Premiums                                          |                             | $       | 19,969                    |  
|                                                                                                                    | Contract charges                                  |                             |         | 14,576                    |  
|                                                                                                                    | Net investment income                             |                             |         | 72,676                    |  
|                                                                                                                    | Realized capital gains and losses                 |                             |         | (2,886                    | )
|                                                                                                                    |                                                   |                             |         |                           |  
|                                                                                                                    |                                                   |                             | 104,335 |                           |  
|                                                                                                                    |                                                   |                             |         |                           |  
|Costs and expenses                                                                                                  |                                                   |                             |         |                           |  
|                                                                                                                    | Contract benefits                                 |                             |         | 44,916                    |  
|                                                                                                                    | Interest credited to contractholder funds         |                             |         | 30,535                    |  
|                                                                                                                    | Amortization of deferred policy acquisition costs |                             |         | 8,817                     |  
|                                                                                                                    | Operating costs and expenses                      |                             |         | 10,300                    |  
|                                                                                                                    |                                                   |                             |         |                           |  
|                                                                                                                    |                                                   |                             | 94,568  |                           |  
|                                                                                                                    |                                                   |                             |         |                           |  
|Gain on disposition of operations                                                                                   |                                                   |                             |        |                           |  
|Income from operations before income tax expense and cumulative effect of change in accounting principle, after-tax |                                                   |                             | 9,767   |                           |  
|Income tax expense                                                                                                  |                                                   |                             | 3,592   |                           |  
|                                                                                                                    |                                                   |                             |         |                           |  
|Income before cumulative effect of change in accounting principle, after-tax                                        |                                                   |                             | 6,175   |                           |  
|Cumulative effect of change in accounting principle, after-tax                                                      |                                                   |                             |        |                           |  
|                                                                                                                    |                                                   |                             |         |                           |  
|Net income                                                                                                          |                                                   | $                           | 6,175   |                           | $
|                                                                                                                    |                                                   |                             |         |                           |  

See
notes to condensed financial statements.

3

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ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
CONDENSED STATEMENTS OF FINANCIAL POSITION

|(in thousands, except par value data)                                       |                                                                                                      | June 30,
2004     |                                              | December 31,
2003
|--------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ----------------- | -------------------------------------------- | -----------------
|
|Assets                                                                      |                                                                                                      |                   |                                              |                  
|Investments                                                                 |                                                                                                      |                   |                                              |                  
|                                                                            | Fixed income securities, at fair value (amortized cost $4,365,670 and $3,935,447)                    |                   | $                                            | 4,694,455        
|                                                                            | Mortgage loans                                                                                       |                   |                                              | 403,725          
|                                                                            | Short-term                                                                                           |                   |                                              | 76,104           
|                                                                            | Policy loans                                                                                         |                   |                                              | 34,336           
|                                                                            | Other                                                                                                |                   |                                              | 7,285            
|                                                                            |                                                                                                      |                   |                                              |                  
|                                                                            |                                                                                                      | Total investments |                                              |                  
|Cash                                                                        |                                                                                                      |                   | 14,148                                       |                  
|Deferred policy acquisition costs                                           |                                                                                                      |                   | 243,019                                      |                  
|Accrued investment income                                                   |                                                                                                      |                   | 51,291                                       |                  
|Reinsurance recoverables                                                    |                                                                                                      |                   | 5,228                                        |                  
|Current income taxes receivable                                             |                                                                                                      |                   | 8,624                                        |                  
|Other assets                                                                |                                                                                                      |                   | 51,580                                       |                  
|Separate Accounts                                                           |                                                                                                      |                   | 710,363                                      |                  
|                                                                            |                                                                                                      |                   |                                              |                  
|                                                                            |                                                                                                      |                   | Total assets                                 |                  
|                                                                            |                                                                                                      |                   |                                              |                  
|Liabilities                                                                 |                                                                                                      |                   |                                              |                  
|Reserve for life-contingent contract benefits                               |                                                                                                      | $                 | 1,659,453                                    |                  
|Contractholder funds                                                        |                                                                                                      |                   | 3,084,086                                    |                  
|Deferred income taxes                                                       |                                                                                                      |                   | 64,924                                       |                  
|Other liabilities and accrued expenses                                      |                                                                                                      |                   | 259,257                                      |                  
|Payable to affiliates, net                                                  |                                                                                                      |                   | 6,839                                        |                  
|Reinsurance payable to parent                                               |                                                                                                      |                   | 1,082                                        |                  
|Separate Accounts                                                           |                                                                                                      |                   | 710,363                                      |                  
|                                                                            |                                                                                                      |                   |                                              |                  
|                                                                            |                                                                                                      |                   | Total liabilities                            |                  
|                                                                            |                                                                                                      |                   |                                              |                  
|Commitments and Contingent Liabilities (Note 4)                             |                                                                                                      |                   |                                              |                  
|Shareholder's equity                                                        |                                                                                                      |                   |                                              |                  
|Common stock, $25 par value, 100 thousand shares authorized and outstanding |                                                                                                      |                   | 2,500                                        |                  
|Additional capital paid-in                                                  |                                                                                                      |                   | 55,787                                       |                  
|Retained income                                                             |                                                                                                      |                   | 348,789                                      |                  
|Accumulated other comprehensive income:                                     |                                                                                                      |                   |                                              |                  
|                                                                            | Unrealized net capital gains and losses and net gains and losses on derivative financial instruments |                   |                                              | 107,078          
|                                                                            |                                                                                                      |                   |                                              |                  
|                                                                            |                                                                                                      |                   | Total accumulated other comprehensive income |                  
|                                                                            |                                                                                                      |                   |                                              |                  
|                                                                            |                                                                                                      |                   | Total shareholder's equity                   |                  
|                                                                            |                                                                                                      |                   |                                              |                  
|                                                                            |                                                                                                      |                   | Total liabilities and shareholder's equity   |                  
|                                                                            |                                                                                                      |                   |                                              |                  

See
notes to condensed financial statements.

4

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ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
CONDENSED STATEMENTS OF CASH FLOWS

|                                                                                  |                                                     | Six Months Ended
June 30,                                  |                                          
|--------------------------------------------------------------------------------- | --------------------------------------------------- | ---------------------------------------------------------- | -----------------------------------------
|
|
|Cash flows from operating activities                                              |                                                     |                                                            |                                          
|Net income                                                                        |                                                     | $                                                          | 12,226                                   
|Adjustments to reconcile net income to net cash provided by operating activities: |                                                     |                                                            |                                          
|                                                                                  | Amortization and other non-cash items               |                                                            |                                          
|                                                                                  | Realized capital gains and losses                   |                                                            |                                          
|                                                                                  | Gain on disposition of operations                   |                                                            |                                          
|                                                                                  | Cumulative effect of change in accounting principle |                                                            |                                          
|                                                                                  | Interest credited to contractholder funds           |                                                            |                                          
|                                                                                  | Changes in:                                         |                                                            |                                          
|                                                                                  |                                                     | Life-contingent contract benefits and contractholder funds |                                          
|                                                                                  |                                                     | Deferred policy acquisition costs                          |                                          
|                                                                                  |                                                     | Income taxes payable                                       |                                          
|                                                                                  |                                                     | Other operating assets and liabilities                     |                                          
|                                                                                  |                                                     |                                                            |                                          
|                                                                                  |                                                     |                                                            | Net cash provided by operating activities
|                                                                                  |                                                     |                                                            |                                          
|Cash flows from investing activities                                              |                                                     |                                                            |                                          
|Proceeds from sales of fixed income securities                                    |                                                     |                                                            | 233,910                                  
|Investment collections                                                            |                                                     |                                                            |                                          
|                                                                                  |                                                     | Fixed income securities                                    |                                          
|                                                                                  |                                                     | Mortgage loans                                             |                                          
|Investment purchases                                                              |                                                     |                                                            |                                          
|                                                                                  |                                                     | Fixed income securities                                    |                                          
|                                                                                  |                                                     | Mortgage loans                                             |                                          
|Change in short-term investments, net                                             |                                                     |                                                            | 4,884                                    
|Change in other investments, net                                                  |                                                     |                                                            | 379                                      
|                                                                                  |                                                     |                                                            |                                          
|                                                                                  |                                                     |                                                            | Net cash used in investing activities    
|                                                                                  |                                                     |                                                            |                                          
|Cash flows from financing activities                                              |                                                     |                                                            |                                          
|Contractholder fund deposits                                                      |                                                     |                                                            | 510,088                                  
|Contractholder fund withdrawals                                                   |                                                     |                                                            | (124,958                                 
|                                                                                  |                                                     |                                                            |                                          
|                                                                                  |                                                     |                                                            | Net cash provided by financing activities
|                                                                                  |                                                     |                                                            |                                          
|Net increase (decrease) in cash                                                   |                                                     |                                                            | 3,417                                    
|Cash at beginning of period                                                       |                                                     |                                                            | 10,731                                   
|                                                                                  |                                                     |                                                            |                                          
|Cash at end of period                                                             |                                                     | $                                                          | 14,148                                   
|                                                                                  |                                                     |                                                            |                                          

See
notes to condensed financial statements.

5

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ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)

1.     Basis of Presentation

The accompanying condensed financial statements include the accounts of Allstate Life Insurance Company of New York (the "Company"), a wholly owned subsidiary of
Allstate Life Insurance Company ("ALIC"), which is wholly-owned by Allstate Insurance Company ("AIC"), a wholly-owned subsidiary of The Allstate Corporation (the "Corporation").

The
condensed financial statements and notes as of June 30, 2004, and for the three-month and six-month periods ended June 30, 2004 and 2003 are unaudited. The
condensed financial statements reflect all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the financial
position, results of operations and cash flows for the interim periods. These condensed financial statements and notes should be read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003. The results of operations for the interim periods should not be considered
indicative of results to be expected for the full year.

To
conform to the 2004 and year-end 2003 presentations, certain amounts in the prior year's condensed financial statements have been reclassified.

Adopted accounting standard

Statement of Position 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration 
    Contracts and for Separate Accounts" ("SOP 03-1")

On January 1, 2004, the Company adopted SOP 03-1. The major provisions of the SOP affecting the Company require:



The cumulative effect of the change in accounting principle from implementing SOP 03-1 was a loss of $7.6 million, after-tax
($11.7 million, pre-tax). It was comprised of an increase in contractholder funds and benefits reserves (primarily for variable annuity contracts) of $942 thousand,
pre-tax, and a reduction in DAC and deferred sales inducements ("DSI") of $10.7 million, pre-tax.

The
SOP requires consideration of a range of potential results to estimate the cost of variable annuity death benefits and income benefits, which generally necessitates the use of
stochastic modeling techniques. To maintain consistency with the assumptions used in the establishment of reserves for variable annuity guarantees, the Company utilized the results of this stochastic
modeling to estimate expected gross profits, which form the basis for determining the amortization of DAC and DSI. This new modeling approach resulted in a lower estimate of expected gross profits,
and therefore resulted in a write-down of DAC and DSI.

In
2004, DSI and related amortization is classified within the Condensed Statements of Financial Position and Operations as other assets and interest credited to contractholder funds,
respectively. The amounts are provided below.



The Company offers various guarantees to variable contractholders including a return of no less than (a) total deposits made on the contract less any
customer withdrawals, (b) total deposits made on the contract less any customer withdrawals plus a minimum return or (c) the highest contract value on a specified anniversary date minus
any customer withdrawals following the contract anniversary. These guarantees include benefits that are payable in the event of death (death benefits), upon annuitization (income benefits), or at
specified dates during the accumulation period (accumulation benefits). The Company hedges accumulation benefits for all contracts issued.

6

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The
table below presents information regarding the Company's variable contracts with guarantees. The Company's variable annuity contracts may offer more than one type of guarantee in
each contract; therefore, the sum of amounts listed exceeds the total account balances of variable annuity contracts' separate accounts with guarantees.

|($ in millions)                 |                                                                       | June 30, 2004
|------------------------------- | --------------------------------------------------------------------- | -------------
|In the event of death           |                                                                       |              
|                                | Account value                                                         |              
|                                | Net amount at risk(1)                                                 |              
|                                | Average attained age of contractholders                               |              
|At annuitization                |                                                                       |              
|                                | Account value                                                         |              
|                                | Net amount at risk(2)                                                 |              
|                                | Weighted average waiting period until annuitization options available |              
|Accumulation at specified dates |                                                                       |              
|                                | Account value                                                         |              
|                                | Net amount at risk(3)                                                 |              
|                                | Weighted average waiting period until guarantee date                  |              

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Account
balances of variable contracts' separate accounts with guarantees were invested as follows:

|(in millions)                                                     |  | June 30, 2004
|----------------------------------------------------------------- |  | -------------
|Equity securities (including mutual funds)                        |  | $            
|Cash and cash equivalents                                         |  |              
|                                                                  |  |              
|Total variable contracts' separate account assets with guarantees |  | $            
|                                                                  |  |              

The
following summarizes the liabilities for guarantees:

|(in thousands)               |  | Liability for
guarantees
related to
death benefits |      | Liability for
guarantees
related to
income benefits |   | Total | 
|---------------------------- |  | -------------------------------------------------- | ---- | --------------------------------------------------- | - | ----- | 
|Balance, January 1, 2004     |  | $                                                  | 868  |                                                     | $ | 74    | 
|Incurred guaranteed benefits |  |                                                    | 910  |                                                     |   | 3     | 
|Paid guarantee benefits      |  |                                                    | (969 | )                                                   |   |      | 
|                             |  |                                                    |      |                                                     |   |       | 
|Balance, June 30, 2004(1)    |  | $                                                  | 809  |                                                     | $ | 77    | 
|                             |  |                                                    |      |                                                     |   |       | 

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The
liability for death and income benefit guarantees is established equal to a benefit ratio multiplied by the cumulative contract charges earned, plus accrued interest less contract
benefit payments. The benefit ratio is calculated as the estimated present value of all expected contract benefits divided by the present value of all expected contract charges. For guarantees in the
event of death, benefits represent the current guaranteed minimum death payments in excess of the current account balance. For guarantees at annuitization, benefits represent the present value of the
minimum guaranteed annuity benefits in excess of the current account balance.

7

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Projected
benefits and contract charges used in determining the liability for guarantees are developed using models and stochastic scenarios that are also used in the development of
estimated expected gross profits. Underlying assumptions for the liability related to income benefits include assumed future annuitization elections based on factors such as the extent of benefit to
the potential annuitant, eligibility conditions and the annuitant's attained age.

The
liability for guarantees will be re-evaluated periodically, and adjustments will be made to the liability balance through a charge or credit to contract benefits.



Costs related to sales inducements offered on sales to new customers, principally on investment contracts and primarily in the form of additional credits to the
customer's account value or enhancements to interest credited for a specified period, which are beyond amounts currently being credited to existing contracts, are deferred and recorded as other
assets. All other sales inducements are expensed as incurred and included in interest credited to contractholder funds on the Condensed Statements of Operations. DSI is amortized to income using the
same methodology and assumptions as DAC, and included in interest credited to contractholder funds. DSI is periodically reviewed for recoverability and written down when necessary.

DSI
activity for the six months ended June 30, 2004 was as follows:

|(in thousands)                         |  |   |      
|-------------------------------------- |  | - | -----
|Balance, January 1, 2004               |  | $ | 2,369
|Sales inducements deferred             |  |   | 867  
|Amortization charged to income         |  |   | (384 
|Effects of unrealized gains and losses |  |   | 465  
|                                       |  |   |      
|Balance, June 30, 2004                 |  | $ | 3,317
|                                       |  |   |      

Pending accounting standard

Emerging Issues Task Force Topic No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to 
    Certain Investments" ("EITF No. 03-1")

In March 2004, the Emerging Issues Task Force ("EITF") reached a final consensus on EITF No. 03-1, which is effective for fiscal periods
beginning after June 15, 2004. EITF No. 03-1 requires that when the fair value of an investment security is less than its carrying value an impairment exists for which a
determination must be made as to whether the impairment is other-than-temporary. An impairment loss should be recognized equal to the difference between the investment's
carrying value and its fair value when an impairment is other-than-temporary. Subsequent to an other-than temporary impairment loss, a debt security should be
accounted for in accordance with Statement of Position No. 03-3, "Accounting for Loans and Certain Debt Securities Acquired in a Transfer", which allows the accretion of the
discount between the carrying value and expected value of a security if the amount and timing of the recognition of that difference in cash is reasonably estimable. EITF 03-1 also
indicates that although not presumptive a pattern of selling investments prior to the forecasted recovery may call into question an investor's intent to hold the security until it recovers in value.

The
EITF 03-1 impairment model applies to all investment securities accounted for under Statement of Financial Accounting Standard ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" and to investment securities accounted for under the cost method to the extent an impairment indicator exists or the reporting entity has estimated
the fair value of the investment security in connection with SFAS No. 107, "Disclosures about Fair Value of Financial Instruments".

The
final consensus on EITF 03-1 included additional disclosure requirements incremental to those adopted by the Company effective December 31, 2003 that are effective
for fiscal years ending after June 15, 2004.

The
Company is currently evaluating the impact of EITF 03-1 on its process for determining other-than-temporary impairment for the affected
securities. More specifically, the Company is analyzing whether subsequent to adoption its portfolio management practices for certain securities classified as

8

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available-for-sale
pursuant to SFAS No. 115 could be interpreted as a pattern of selling thereby affecting its designated intent to hold such investments for the period
necessary to allow for the forecasted recovery of fair value pursuant to the requirements of EITF 03-1. As a result of this analysis, the Company may potentially reclassify to realized
capital gains and losses the unrealized net capital gains and losses associated with certain securities classified as available-for-sale.

Adoption
of this standard may:



Adoption
of this standard is not expected to have a material impact on shareholder's equity since fluctuations in fair value are already recorded in accumulated other comprehensive
income.

2.     Other Investments

In 2004, the Company entered into interest rate cap agreements, financial futures contracts and foreign currency swap agreements that are used to reduce exposure
to rising or falling interest rates relative to certain annuity contracts or to change the interest rate characteristics of existing assets or liabilities. All are used for asset-liability management.

In
exchange for a premium, interest rate cap agreements provide the holder with the right to receive at a future date, the amount, if any, by which a specified market interest rate
exceeds the fixed cap rate applied to a notional amount. Hedge accounting is not applied to these derivative contracts. The fair values of the instruments are reported as other investments and the
related gains and losses from the changes in fair value and the accrued periodic settlements are recognized in realized capital gains and losses.

Financial
futures contracts are commitments to purchase or sell designated financial instruments at a future date for a specified price or yield. Hedge accounting is not applied to these
derivative contracts. The fair values of the instruments are reported as other investments and the related gains and losses from the changes in fair value, some of which are recognized through daily
cash settlements, are classified consistent with the risks being economically hedged and are reported as realized capital gains and losses or contract benefits.

Under
cash flow hedge accounting, the Company designates its foreign currency swap agreements as cash flow hedges when the hedging instrument is highly effective in offsetting the
exposure of variations in cash flows for the hedged risk that could affect net income. The Company's cash flow exposure is associated with an existing asset. The fair value of the instruments is
reported as other liabilities and accrued expenses and the changes in fair value of the instruments are reported in accumulated other comprehensive income on the Condensed Statements of Financial
Position. Amounts are reclassified to net investment income or realized capital gains and losses as the hedge transaction affects net income. Accrued periodic settlements on instruments used in cash
flow hedges are reported in net investment income.

|                                 |  | June 30, 2004
|-------------------------------- |  | -------------
|
|Interest rate cap agreements     |  | $            
|Financial futures contracts      |  |              
|Foreign currency swap agreements |  |              

9

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3.     Reinsurance

The effects of reinsurance on premiums and contract charges are as follows:

|                              |               | Three Months Ended
June 30,                       |        | Six Months Ended
June 30, |       
|----------------------------- | ------------- | ------------------------------------------------- | ------ | ------------------------- | ------
|
|Premiums and contract charges |               |                                                   |        |                           |       
|Direct                        |               | $                                                 | 38,677 |                           | $     
|Assumednon-affiliate         |               |                                                   | 117    |                           |       
|Ceded                         |               |                                                   |        |                           |       
|                              | Affiliate     |                                                   |        | (1,086                    | )     
|                              | Non-affiliate |                                                   |        | (3,163                    | )     
|                              |               |                                                   |        |                           |       
|                              |               | Premiums and contract charges, net of reinsurance |        | $                         | 34,545
|                              |               |                                                   |        |                           |       

The
effects of reinsurance on contract benefits are as follows:

|                      |               | Three Months Ended
June 30,           |        | Six Months Ended
June 30, |       
|--------------------- | ------------- | ------------------------------------- | ------ | ------------------------- | ------
|
|Contract benefits     |               |                                       |        |                           |       
|Direct                |               | $                                     | 46,370 |                           | $     
|Assumednon-affiliate |               |                                       | 45     |                           |       
|Ceded                 |               |                                       |        |                           |       
|                      | Affiliate     |                                       |        | (1,034                    | )     
|                      | Non-affiliate |                                       |        | (465                      | )     
|                      |               |                                       |        |                           |       
|                      |               | Contract benefits, net of reinsurance |        | $                         | 44,916
|                      |               |                                       |        |                           |       

4.     Guarantees and Contingent Liabilities

Guarantees

In the normal course of business, the Company provides standard indemnifications to counterparties in contracts in connection with numerous transactions,
including indemnifications for breaches of representations and warranties, taxes and certain other liabilities, such as third party lawsuits. The indemnification clauses are often standard contractual
terms and were entered into in the normal course of business based on an assessment that the risk of loss would be remote. The terms of the indemnifications vary in duration and nature. In many cases,
the maximum obligation is not explicitly stated and the contingencies triggering the obligation to indemnify have not occurred and are not expected to occur. Because the obligated amounts of the
indemnifications are not explicitly stated in many cases, the maximum amount of the obligation under such indemnifications is not determinable. Historically, the Company has not made any material
payments pursuant to these obligations.

The
aggregate liability balance related to all guarantees was not material as of June 30, 2004.

Regulation

The Company is subject to changing social, economic and regulatory conditions. Recent state and federal regulatory initiatives and proceedings have included
efforts to remove barriers preventing banks from engaging in the securities and insurance businesses, change tax laws affecting the taxation of insurance companies and the tax treatment of insurance
products or competing non-insurance products that may impact the relative desirability of various personal investment products and otherwise expand overall regulation of insurance products
and the insurance industry. The ultimate changes and eventual effects of these initiatives on the Company's business, if any, are uncertain.

10

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Regulatory
bodies have contacted the parent of the Company and have requested information relating to variable insurance products, including such areas as market timing and late trading
and sales practices. The Company believes that these inquiries are similar to those made to many financial services companies as part of an industry-wide investigation by various
regulatory agencies into the practices, policies and procedures relating to variable insurance products sales and subaccount trading practices. The Company's parent has and will continue to respond to
these information requests and investigations. The Company at the present time is not aware of any systemic problems with respect to such matters that may have a material adverse effect on the
Company's financial position.

Legal Proceedings

Background

The Company and certain of its affiliates are named as defendants in a number of lawsuits and other legal proceedings arising out of various aspects of its
business. As background to the "Proceedings" described below, please note the following:

Proceedings

Legal proceedings involving Allstate agencies and AIC may impact the Company, even when the Company is not directly involved, because the Company sells its
products through a variety of distribution channels including Allstate agencies. Consequently, information about the more significant of these proceedings is provided below.

AIC
is defending various lawsuits involving worker classification issues. A putative nationwide class action filed by former employee agents includes a worker classification issue; these
agents are challenging certain amendments to the Agents Pension Plan and are seeking to have exclusive agent independent contractors treated as employees for benefit purposes. AIC has been vigorously
defending this and various other worker classification lawsuits. The outcome of these disputes is currently uncertain.

AIC
is also defending certain matters relating to its agency program reorganization announced in 1999. These matters include an investigation by the U.S. Department of Labor, a lawsuit
filed in December 2001

11

---



by
the U.S. Equal Employment Opportunity Commission ("EEOC") alleging retaliation under federal civil rights laws and a class action filed in August 2001 by former employee agents alleging
retaliation and age discrimination under the Age Discrimination in Employment Act, breach of contract and ERISA violations.    In April 2004, the U.S. Department of Labor notified
AIC that it has closed its investigation and contemplates no further action on this matter at this time. In March 2004, in the EEOC and class action lawsuits, the trial court issued a
memorandum and order that, among other things, certified classes of agents, including a mandatory class of agents who had signed a release, for purposes of effecting the court's declaratory judgment
that the release is voidable at the option of the release signer. The court also ordered that an agent who voids the release must return to AIC "any and all benefits received by the
[agent] in exchange for signing the release." The court also "concluded that, on the undisputed facts of record, there is no basis for claims of age discrimination." The EEOC
and plaintiffs have asked the court to clarify and/or reconsider its memorandum and order. The case otherwise remains pending. A putative nationwide class action has
also been filed by former employee agents alleging various violations of ERISA. This matter was dismissed with prejudice in March 2004 by the trial court but may still be subject to further
proceedings on appeal. In these matters, plaintiffs seek compensatory and punitive damages, and equitable relief. AIC has been vigorously defending these lawsuits and other matters related to its
agency program reorganization. The outcome of these disputes is currently uncertain.

Other actions

Various other legal and regulatory actions are currently pending that involve the Company and specific aspects of its conduct of business. Like other members of
the insurance industry, the Company is the target of an increasing number of lawsuits, some of which involve claims for substantial and/or indeterminate amounts. This litigation is based on a variety
of issues including insurance and claim settlement practices. The outcome of these disputes is currently unpredictable.    However, at this time, based on their present status, it is the
opinion of management that the ultimate liability, if any, in one or more of these other actions in excess of amounts currently reserved is not expected to have a material effect on the results of
operations, liquidity or financial position of the Company.

5.     Other Comprehensive Income

The components of other comprehensive income on a pretax and after-tax basis are as follows:

|                                                                                 |  | Three Months Ended June 30,
|-------------------------------------------------------------------------------- |  | ---------------------------
|
|
|Unrealized capital gains and losses                                              |  |                            
|Unrealized holding gains (losses) arising during the period                      |  | $                          
|Less: reclassification adjustments                                               |  |                            
|                                                                                 |  |                            
|Unrealized net capital gains (losses)                                            |  |                            
|Net gains (losses) on derivative financial instruments arising during the period |  |                            
|Less: reclassification adjustments                                               |  |                            
|                                                                                 |  |                            
|Unrealized net gains (losses) on derivative financial instruments                |  |                            
|                                                                                 |  |                            
|Other comprehensive income (loss)                                                |  | $                          
|                                                                                 |  |                            
|Net income                                                                       |  |                            
|                                                                                 |  |                            
|Comprehensive income (loss)                                                      |  |                            
|                                                                                 |  |                            

12

---



|                                                                                 |  | Six Months Ended June 30, |        
|-------------------------------------------------------------------------------- |  | ------------------------- | -------
|
|
|Unrealized capital gains and losses                                              |  |                           |        
|Unrealized holding gains (losses) arising during the period                      |  | $                         | (51,087
|Less: reclassification adjustments                                               |  |                           | (2,160 
|                                                                                 |  |                           |        
|Unrealized net capital gains (losses)                                            |  |                           | (48,927
|Net gains (losses) on derivative financial instruments arising during the period |  |                           |       
|Less: reclassification adjustments                                               |  |                           | (240   
|                                                                                 |  |                           |        
|Unrealized net gains (losses) on derivative financial instruments                |  |                           | 240    
|                                                                                 |  |                           |        
|Other comprehensive income (loss)                                                |  | $                         | (48,687
|                                                                                 |  |                           |        
|Net income                                                                       |  |                           |        
|                                                                                 |  |                           |        
|Comprehensive income (loss)                                                      |  |                           |        
|                                                                                 |  |                           |        

13

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of
Allstate Life Insurance Company of New York:

We
have reviewed the accompanying condensed statement of financial position of Allstate Life Insurance Company of New York (the "Company", an affiliate of The Allstate Corporation) as of
June 30, 2004, and the related condensed statements of operations for the three-month and six-month periods ended June 30, 2004 and 2003, and the condensed statements of cash
flows for the six-month periods ended June 30, 2004 and 2003. These interim financial statements are the responsibility of the Company's management.

We
conducted our reviews in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards
of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.

Based
on our reviews, we are not aware of any material modifications that should be made to such condensed interim financial statements for them to be in conformity with accounting
principles generally accepted in the United States of America.

We
have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the statement of financial position of Allstate Life
Insurance Company of New York as of December 31, 2003, and the related statements of operations and comprehensive income, shareholder's equity, and cash flows for the year then ended, not
presented herein. In our report dated February 4, 2004, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying
condensed statement of financial position as of December 31, 2003 is fairly stated, in all material respects, in relation to the statement of financial position from which it has been derived.

/s/
Deloitte & Touche LLP

Chicago,
Illinois
August 10, 2004

14

---



Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2004
AND 2003

OVERVIEW

The following discussion highlights significant factors influencing the financial position and results of operations of Allstate Life Insurance Company of New
York (referred to in this document as "we", "our", "us" or the "Company"). It should be read in conjunction with the condensed financial statements and notes thereto found under Part I. Item 1.
contained herein, and with the discussion, analysis, financial statements and notes thereto in Part I. Item 1. and Part II. Item 7. and Item 8. of the Allstate Life Insurance Company of
New York Annual Report on Form 10-K for 2003. We operate as a single segment entity, consistent with the way in which we use financial information to evaluate business performance
and to determine the allocation of resources.

RESULTS OF OPERATIONS

Premiumsrepresent revenues generated from traditional life, immediate annuities with life contingencies and other
insurance products that have significant mortality or morbidity risk.

Contract chargesare revenues generated from interest-sensitive life products, variable annuities, fixed annuities and other investment
products for which deposits are classified as contractholder funds or separate accounts liabilities on the Condensed Statements of Financial Position. Contract charges are assessed against the
contractholder account values for maintenance, administration, cost of insurance and surrender prior to the contractually specified dates. As a result, changes in contractholder funds and separate
accounts liabilities are considered in the evaluation of growth and as indicators of future levels of revenues.

The
following table summarizes premiums and contract charges by product.

|                                            |  | Three Months Ended
June 30, |        | Six Months Ended
June 30,
|------------------------------------------- |  | --------------------------- | ------ | -------------------------
|
|Premiums                                    |  |                             |        |                          
|Traditional life                            |  | $                           | 5,746  |                          
|Immediate annuities with life contingencies |  |                             | 13,597 |                          
|Other                                       |  |                             | 626    |                          
|                                            |  |                             |        |                          
|Total premiums                              |  |                             | 19,969 |                          
|Contract charges                            |  |                             |        |                          
|Interest-sensitive life                     |  |                             | 9,982  |                          
|Fixed annuities                             |  |                             | 1,495  |                          
|Variable annuities                          |  |                             | 3,099  |                          
|                                            |  |                             |        |                          
|Total contract charges                      |  |                             | 14,576 |                          
|                                            |  |                             |        |                          
|Premiums and contract charges               |  | $                           | 34,545 |                          
|                                            |  |                             |        |                          

15

---



The
following table summarizes premiums and contract charges by distribution channel.

|                                          |  | Three Months Ended
June 30, |        | Six Months Ended
June 30,
|----------------------------------------- |  | --------------------------- | ------ | -------------------------
|
|Premiums                                  |  |                             |        |                          
|Allstate agencies                         |  | $                           | 5,654  |                          
|Financial institutions and broker/dealers |  |                             |       |                          
|Specialized brokers                       |  |                             | 13,597 |                          
|Independent agents                        |  |                             | 786    |                          
|Direct response                           |  |                             | (68    | )                        
|                                          |  |                             |        |                          
|Total Premiums                            |  |                             | 19,969 |                          
|Contract charges                          |  |                             |        |                          
|Allstate agencies                         |  |                             | 10,073 |                          
|Financial institutions and broker/dealers |  |                             | 3,513  |                          
|Specialized brokers                       |  |                             | 934    |                          
|Independent agents                        |  |                             | 56     |                          
|                                          |  |                             |        |                          
|Total contract charges                    |  |                             | 14,576 |                          
|                                          |  |                             |        |                          
|Premiums and contract charges             |  | $                           | 34,545 |                          
|                                          |  |                             |        |                          

Total
premiums increased 43.3% to $20.0 million in the second quarter of 2004 and 21.0% to $36.6 million in the first six months of 2004 compared to the same periods of
2003. The increases in both periods were the result of increased premiums on immediate annuities with life contingencies partially offset by decreased premiums resulting from the disposal of the
majority of our direct response distribution business.

Contract
charges increased 6.5% to $14.6 million in the second quarter of 2004 and 7.6% to $28.7 million in the first six months of 2004 compared to the same periods of
2003. The increases in both periods were primarily attributable to higher contract charges on variable annuities as a result of average higher account values in the current periods from new business
and investment returns.

Contractholder fundsrepresent interest-bearing liabilities arising from the sale of individual products, such as interest-sensitive life
and fixed annuities. The balance of contractholder funds is equal to the cumulative deposits received and interest credited to the contractholder less cumulative contract maturities, benefits,
surrenders, withdrawals and contract charges for mortality or administrative expenses.

16

---



The
following table shows the changes in contractholder funds.

|                                                               |  | Three Months Ended
June 30, |           | Six Months Ended
June 30, |  
|-------------------------------------------------------------- |  | --------------------------- | --------- | ------------------------- | -
|
|Contractholder funds, beginning balance                        |  | $                           | 2,814,594 |                           | $
|Impact of adoption of SOP 03-1(1)                              |  |                             |          |                           |  
|Deposits:                                                      |  |                             |           |                           |  
|Fixed annuities (immediate and deferred)                       |  |                             | 257,012   |                           |  
|Interest-sensitive life                                        |  |                             | 26,210    |                           |  
|Variable annuity and life deposits allocated to fixed accounts |  |                             | 31,098    |                           |  
|                                                               |  |                             |           |                           |  
|Total deposits                                                 |  |                             | 314,320   |                           |  
|Interest credited                                              |  |                             | 30,235    |                           |  
|Benefits, withdrawals and other adjustments                    |  |                             |           |                           |  
|Benefits and withdrawals                                       |  |                             | (56,205   | )                         |  
|Contract charges                                               |  |                             | (10,446   | )                         |  
|Net transfers to separate accounts                             |  |                             | (9,927    | )                         |  
|Other adjustments                                              |  |                             | 1,515     |                           |  
|                                                               |  |                             |           |                           |  
|Total benefits, withdrawals and other adjustments              |  |                             | (75,063   | )                         |  
|Contractholder funds, ending balance                           |  | $                           | 3,084,086 |                           | $
|                                                               |  |                             |           |                           |  

---

Contractholder
funds deposits increased 27.4% in the second quarter and 25.8% in the first six months of 2004 compared to the same periods in 2003, and average contractholder funds,
excluding the impact of adopting SOP 03-1, increased 28.3% in the second quarter and 28.8% in the first six months of 2004 compared to the same periods in 2003 due to significant increases
in fixed annuity deposits. Fixed annuity deposits increased 31.5% and 32.9% in the second quarter and first six months of 2004, respectively, compared to the same periods in 2003. The increases were
attributable to higher consumer demand resulting from increasing interest rates.

Benefits
and withdrawals increased 37.5% in the second quarter and 32.7% in the first six months of 2004 compared to the same periods in 2003. Benefits and withdrawals for the second
quarter and first six months of 2004 represent an annualized withdrawal rate of 8.0% and 7.8%, respectively, based on the beginning of period contractholder funds balance compared to 7.5% and 7.7% for
the second quarter and first six months of 2003, respectively. Surrenders and withdrawals have been comparable to our pricing assumptions.

Separate accounts liabilitiesrepresent contractholders' claims to the related legally segregated separate accounts assets. Separate
accounts liabilities primarily arise from the sale of variable annuity contracts and variable life insurance policies. The following table shows the changes in separate accounts liabilities.

17

---



|                                                               |  | Three Months Ended
June 30, |         | Six Months Ended
June 30, |  
|-------------------------------------------------------------- |  | --------------------------- | ------- | ------------------------- | -
|
|Separate accounts liabilities, beginning balance               |  | $                           | 686,639 |                           | $
|Variable annuity and life deposits                             |  |                             | 59,943  |                           |  
|Variable annuity and life deposits allocated to fixed accounts |  |                             | (31,098 | )                         |  
|                                                               |  |                             |         |                           |  
|Net deposits                                                   |  |                             | 28,845  |                           |  
|Investment results                                             |  |                             | 2,223   |                           |  
|Contract charges                                               |  |                             | (2,466  | )                         |  
|Net transfers from fixed accounts                              |  |                             | 9,927   |                           |  
|Surrenders and benefits                                        |  |                             | (14,805 | )                         |  
|                                                               |  |                             |         |                           |  
|Separate accounts liabilities, ending balance                  |  | $                           | 710,363 |                           | $
|                                                               |  |                             |         |                           |  

Separate
accounts liabilities increased $23.7 million and $44.5 million during the second quarter and first six months of 2004, respectively, compared to
$60.3 million and $38.5 million during the second quarter and first six months of 2003, respectively, as a result of net deposits, transfers from fixed accounts and positive investment
results, partially offset by surrenders, benefits paid to contractholders and contract charges.    Variable annuity contractholders often allocate a significant portion of their initial
variable annuity deposits into a fixed rate investment option. The level of this activity is reflected above in the deposits allocated to the fixed accounts, while all other transfer activity between
the fixed and separate accounts investments options is reflected in net transfers from fixed accounts. The liability for the fixed portion of variable annuity contracts is reflected in contractholder
funds.

Net investment incomeincreased 11.2% in both the second quarter and in the first six months of 2004 compared to the same periods in 2003,
primarily due to the effect of higher portfolio balances partially offset by lower portfolio yields. Higher portfolio balances resulted from the investment of cash flows from operating and financing
activities. Total investments as of June 30, 2004 increased 8.9% from June 30, 2003 due primarily to contractholder deposits, partially offset by a decline in unrealized capital gains on
fixed income securities.

18

---



Net incomeanalysis is presented in the following table.

|                                                                                                     |  | Three Months Ended
June 30, |         | Six Months Ended
June 30, |  
|---------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | ------------------------- | -
|
|Premiums                                                                                             |  | $                           | 19,969  |                           | $
|Contract charges(1)                                                                                  |  |                             | 14,570  |                           |  
|Net investment income                                                                                |  |                             | 72,676  |                           |  
|Periodic settlements and accruals on non-hedge derivative instruments                                |  |                             | 69      |                           |  
|Contract benefits                                                                                    |  |                             | (44,916 | )                         |  
|Interest credited to contractholder funds(2)                                                         |  |                             | (30,152 | )                         |  
|                                                                                                     |  |                             |         |                           |  
|Gross margin                                                                                         |  |                             | 32,216  |                           |  
|Amortization of DAC and DSI                                                                          |  |                             | (8,401  | )                         |  
|Operating costs and expenses                                                                         |  |                             | (10,300 | )                         |  
|Income tax expense                                                                                   |  |                             | (5,046  | )                         |  
|Realized capital gains and losses, after-tax                                                         |  |                             | (1,797  | )                         |  
|DAC and DSI amortization expense on realized capital gains and losses, after-tax                     |  |                             | (454    | )                         |  
|Reclassification of periodic settlements and accruals on non-hedge derivative instruments, after-tax |  |                             | (43     | )                         |  
|Gain on disposition of operations, after-tax                                                         |  |                             |        |                           |  
|Cumulative effect of change in accounting principle, after-tax                                       |  |                             |        |                           |  
|                                                                                                     |  |                             |         |                           |  
|Net income                                                                                           |  | $                           | 6,175   |                           | $
|                                                                                                     |  |                             |         |                           |  

---

Gross margin, a non-GAAP measure, represents premiums, contract charges and net investment income, less contract benefits and
interest credited to contractholder funds. We use gross margin as a component of our evaluation of the profitability of our life insurance and financial product portfolio. Additionally, for many of
our products, including fixed annuities, variable contracts, and interest-sensitive life insurance, the amortization of DAC and DSI is determined based on actual and expected gross margin. Gross
margin is comprised of four components that are utilized to further analyze the business: investment margin, benefit margin, maintenance charges and surrender charges. We believe gross margin and its
components are useful to investors because they allow for the evaluation of income components separately and in the aggregate when reviewing performance. Gross margin, investment margin and benefit
margin should not be considered as a substitute for net income and do not reflect the overall profitability of the business. Net income is the GAAP measure that is most directly comparable to these
margins. Gross margin is reconciled to GAAP net income in the table above. The components of gross margin are reconciled to the corresponding financial statement line items in the following table.

19

---



|                                                                         |  | Three Months Ended June 30, |        
|------------------------------------------------------------------------ |  | --------------------------- | -------
|
|
|Premiums                                                                 |  | $                           |       
|Contract charges(1)                                                      |  |                             |       
|Net investment income                                                    |  |                             | 72,676 
|Periodic settlements and accruals on non-hedge derivative instruments(2) |  |                             | 69     
|Contract benefits                                                        |  |                             | (23,908
|Interest credited to contractholder funds(3)                             |  |                             | (30,152
|                                                                         |  |                             |        
|                                                                         |  | $                           | 18,685 
|                                                                         |  |                             |        

|                                                                         |  | Six Months Ended June 30, |        
|------------------------------------------------------------------------ |  | ------------------------- | -------
|
|
|Premiums                                                                 |  | $                         |       
|Contract charges(1)                                                      |  |                           |       
|Net investment income                                                    |  |                           | 143,071
|Periodic settlements and accruals on non-hedge derivative instruments(2) |  |                           | 76     
|Contract benefits                                                        |  |                           | (48,581
|Interest credited to contractholder funds(3)                             |  |                           | (57,802
|                                                                         |  |                           |        
|                                                                         |  | $                         | 36,764 
|                                                                         |  |                           |        

---

20

---



Gross margin increased 42.2% in the second quarter and 19.9% in the first six months of 2004 compared to the same periods of 2003 due to increased benefit margin, investment margin, and
higher maintenance charges.

Investment marginis a component of gross margin, both of which are non-GAAP measures. Investment margin represents the excess
of net investment income over interest credited to contractholder funds and the implied interest on life-contingent immediate annuities included in reserve for life-contingent
contract benefits. We use investment margin to evaluate profitability related to the difference between investment returns on assets supporting certain products and amounts credited to customers
("spread") during the fiscal period.

Investment
margin by product group is shown in the following table.

|                        |  | Three Months Ended
June 30, |        | Six Months Ended
June 30,
|----------------------- |  | --------------------------- | ------ | -------------------------
|
|Life insurance          |  | $                           | 2,782  |                          
|Annuities               |  |                             | 15,903 |                          
|                        |  |                             |        |                          
|Total investment margin |  | $                           | 18,685 |                          
|                        |  |                             |        |                          

Investment
margin increased 16.6% in the second quarter and 17.9% in the first six months of 2004 compared to the same periods of 2003 due to an increase in contractholder funds and
improved yields on investments supporting capital, traditional life and other products. The increases in both periods were partially offset by a decline in the interest-sensitive life investment
spread, as investment yield declines were not fully offset by crediting rate reductions.

The
following table summarizes the weighted average investment yield, interest crediting rates and investment spreads for the three months ended June 30.

|                                                                    |  | Weighted Average
Investment Yield |   | Weighted Average
Interest Crediting Rate |   | Weighted Average
Investment Spread |  
|------------------------------------------------------------------- |  | --------------------------------- | - | ---------------------------------------- | - | ---------------------------------- | -
|
|Interest-sensitive life                                             |  | 6.1                               | % | 6.5                                      | % | 4.8                                | %
|Fixed annuitiesdeferred                                            |  | 5.6                               |   | 6.1                                      |   | 3.4                                |  
|Fixed annuitiesimmediate                                           |  | 7.6                               |   | 7.8                                      |   | 6.8                                |  
|Investments supporting capital, traditional life and other products |  | 5.9                               |   | 4.8                                      |   | n/a                                |  

The
following table summarizes the weighted average investment yield, interest crediting rates and investment spreads for the six months ended June 30.

|                                                                    |  | Weighted Average
Investment Yield |   | Weighted Average
Interest Crediting Rate |   | Weighted Average
Investment Spread |  
|------------------------------------------------------------------- |  | --------------------------------- | - | ---------------------------------------- | - | ---------------------------------- | -
|
|Interest-sensitive life                                             |  | 6.2                               | % | 6.7                                      | % | 4.8                                | %
|Fixed annuitiesdeferred                                            |  | 5.6                               |   | 6.2                                      |   | 3.4                                |  
|Fixed annuitiesimmediate                                           |  | 7.6                               |   | 7.8                                      |   | 6.8                                |  
|Investments supporting capital, traditional life and other products |  | 6.0                               |   | 4.7                                      |   | n/a                                |  

21

---



The
following table summarizes the liabilities for these contracts and policies.

|                                                                             |  | June 30,
|---------------------------------------------------------------------------- |  | --------
|
|Interest-sensitive life                                                      |  | $       
|Fixed annuitiesdeferred                                                     |  |         
|Fixed annuitiesimmediate                                                    |  |         
|                                                                             |  |         
|                                                                             |  |         
|FAS 115/133 market value adjustment                                          |  |         
|Life-contingent contracts and other                                          |  |         
|                                                                             |  |         
|Total contractholder funds and reserve for life-contingent contract benefits |  | $       
|                                                                             |  |         

Benefit marginis a component of gross margin, both of which are non-GAAP measures. Benefit margin represents premiums and
cost of insurance contract charges less contract benefits. Benefit margin excludes the implied interest on life-contingent immediate annuities, which is included in the calculation of
investment margin, and mortality charges on variable annuities, which are included as a component of maintenance charges. We use benefit margin to evaluate underwriting performance, as it reflects the
profitability of our products with respect to mortality or morbidity risk during a fiscal period.

Benefit
margin by product group is shown in the following table.

|                     |  | Three Months Ended
June 30, |        | Six Months Ended
June 30, |  
|-------------------- |  | --------------------------- | ------ | ------------------------- | -
|
|Life insurance       |  | $                           | 7,851  |                           | $
|Annuities            |  |                             | (1,427 | )                         |  
|                     |  |                             |        |                           |  
|Total benefit margin |  | $                           | 6,424  |                           | $
|                     |  |                             |        |                           |  

Benefit
margin increased $6.1 million in the second quarter of 2004 compared to the same period in 2003 due to strengthening of reserves for certain traditional life insurance
policies in the second quarter of 2003. For the first six months of 2004, the benefit margin increased $3.5 million or 40.8% from the first six months of 2003 due to the disposal of the
majority of our direct response distribution business and fewer deaths on our life-contingent immediate annuities as well as the effects of reserve strengthening in the second quarter of
2003.

As
required by SOP 03-1, as of January 1, 2004, a reserve was established for guaranteed minimum death benefits ("GMDBs") and guaranteed minimum income benefits
("GMIBs"), which in previous periods, in the case of GMDBs, were expensed as paid. Under the SOP, we anticipate that the benefit margin will be less volatile in the future, as contract benefit expense
pertaining to GMDBs and GMIBs will be proportionate to the related revenue rather than cash payments made during the period. Included in the benefit margin for the second quarter and first six months
of 2004 is an addition to the reserve for guarantees of $0.5 million and $0.9 million, respectively. Included in the benefit margin for the second quarter and first six months of 2003
are GMDB payments of $0.8 million and $2.0 million, respectively. For further explanation of the impacts of the adoption of this accounting guidance, see Note 1 to the Condensed
Financial Statements.

Amortization of DAC and DSIincreased 1.9% in the second quarter of 2004 compared to the same period of 2003 as higher gross margin on
fixed annuities and variable products resulted in increased amortization, which was partially offset by the elimination of DAC amortization on the direct response distribution business that was sold
in January of 2004. Amortization of DAC and DSI decreased 53.0% in the first six months of 2004 compared to the first six months of 2003 due to a deceleration of amortization (commonly called "DAC
unlocking") on interest-sensitive life and fixed annuities of $10.2 million in the

22

---



first
quarter of 2004 compared to an acceleration of amortization of $325 thousand in the same period of 2003.

The
adoption of SOP 03-1 required a new modeling approach for estimating expected future gross profits that are used when determining the amortization of DAC. Because of this
new modeling approach, effective January 1, 2004, the variable annuity DAC and DSI assets were reduced by $10.7 million. This reduction was recognized as a cumulative effect of a change
in accounting principle.

Operating costs and expensesincreased 83.6% in the second quarter and 32.1% for the first six months of 2004 compared to the same periods
of 2003. The increase in total operating costs and expenses reflects higher non-deferrable sales expenses in the second quarter of 2004 and reinsurance expense credits in the second
quarter of 2003. For the first six months of 2004 compared to 2003, higher trail commissions and employee expenses were partially offset by the disposal of the majority of our direct response
distribution business.

INVESTMENTS

An important component of our financial results is the return on our investment portfolio. The investment portfolio is managed based upon the business and its
corresponding liability structure. The composition of the investment portfolio at June 30, 2004 is presented in the table below.

|(in thousands)             |       | Carrying
value |           | Percent
of total |     
|-------------------------- | ----- | -------------- | --------- | ---------------- | ----
|Fixed income securities(1) |       | $              | 4,694,455 |                  | 90.0
|Mortgage loans             |       |                | 403,725   |                  | 7.7 
|Short-term                 |       |                | 76,104    |                  | 1.5 
|Policy loans               |       |                | 34,336    |                  | 0.7 
|Other                      |       |                | 7,285     |                  | 0.1 
|                           |       |                |           |                  |     
|                           | Total |                | $         | 5,215,905        |     
|                           |       |                |           |                  |     

---

Total
investments increased to $5.22 billion at June 30, 2004 from $4.86 billion at December 31, 2003 due to positive cash flows from operating and financing
activities and increased funds associated with securities lending partially offset by decreased unrealized gains on fixed income securities.

Total
investments at amortized costs related to collateral associated with securities lending increased to $176.0 million at June 30, 2004 from $134.5 million at
December 31, 2003.

At
June 30, 2004, 96.1% of the fixed income securities portfolio was rated investment grade, which is defined as a security having a rating from the National Association of
Insurance Commissioners ("NAIC") of 1 or 2, a Moody's equivalent rating of Aaa, Aa, A or Baa; an S&P equivalent rating of AAA, AA, A or BBB; or a comparable internal rating when an external rating is
not available.

The
unrealized net capital gains on fixed income securities at June 30, 2004 were $328.8 million, a decrease of $151.1 million or 31.5% since December 31,
2003. The net unrealized gain was comprised of $389.3 million of unrealized gains and $60.5 million of unrealized losses at June 30, 2004. This is compared to a net unrealized
gain for the fixed income portfolio totaling $479.9 million at December 31, 2003, comprised of $498.8 million of unrealized gains and $18.9 million of unrealized losses.
The total decrease in net unrealized gains for the fixed income portfolio was $151.1 million, of which $142.6 million or 94.4% was related to investment grade securities. The total
increase in gross unrealized losses for the fixed income portfolio was $41.5 million, of which $35.7 million or 86.1% was related to investment grade securities.

Of
the gross unrealized losses in the fixed income portfolio at June 30, 2004, $51.9 million or 85.8% were related to investment grade securities and are believed to be a
result of the interest rate environment. Of the remaining $8.6 million of losses in the fixed income portfolio, $6.5 million or 75.6% was

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concentrated
in the corporate fixed income portfolio and was primarily comprised of securities in the transportation, consumer goods and energy sectors. The gross unrealized losses in these sectors
were primarily company specific and interest rate related. Approximately $4.4 million of the gross unrealized losses in the corporate fixed income portfolio were associated with the airline
industry for which values were depressed due to company specific issues and economic issues related to fuel costs. We expect eventual recovery of these securities and the related sectors. Every
security was included in our portfolio monitoring process.

Our
portfolio monitoring process identifies and evaluates fixed income securities whose carrying value may be other than temporarily impaired. The process includes a quarterly review of
all securities using a screening process to identify those securities whose fair value compared to amortized cost for fixed income securities is below established thresholds for certain time periods,
or which are identified through other monitoring criteria such as ratings downgrades or payment defaults.

We
also monitor the quality of our fixed income portfolio by categorizing certain investments as "problem", "restructured" or "potential problem." Problem fixed income securities are
securities in default with respect to principal or interest and/or securities issued by companies that have gone into bankruptcy subsequent to our acquisition of the security. Restructured fixed
income securities have rates and terms that are not consistent with market rates or terms prevailing at the time of the restructuring. Potential problem fixed income securities are current with
respect to contractual principal and/or interest, but because of other facts and circumstances, we have serious concerns regarding the borrower's ability to pay future principal and interest, which
causes us to believe these securities may be classified as problem or restructured in the future.

The
following table summarizes problem, restructured and potential problem fixed income securities.

|                                  |  | June 30, 2004 |        | December 31, 2003 |  
|--------------------------------- |  | ------------- | ------ | ----------------- | -
|
|Problem                           |  | $             | 12,948 |                   | $
|Restructured                      |  |               | 5,399  |                   |  
|Potential problem                 |  |               | 15,709 |                   |  
|                                  |  |               |        |                   |  
|Total net carrying value          |  | $             | 34,056 |                   | $
|                                  |  |               |        |                   |  
|Cumulative write-downs recognized |  | $             | 5,061  |                   |  
|                                  |  |               |        |                   |  

We
have experienced a decrease in the amortized cost of fixed income securities categorized as problem, restructured and potential problem as of June 30, 2004 compared to
December 31, 2003. The decrease was primarily related to the sale of holdings in these categories due to specific developments causing a change in our outlook and intent to hold those
securities.

We
also evaluated each of these securities through our portfolio monitoring process and recorded write-downs when appropriate. We further concluded that any remaining unrealized losses
on these securities were temporary in nature. While these balances may increase in the future, particularly if economic conditions are unfavorable, we expect that the total amount of securities in
these categories will remain low relative to the total fixed income securities portfolio.

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Net Realized Capital Gains and LossesThe following table presents the components of realized capital gains and losses and
the related tax effect.

|                                             |  | Three Months Ended
June 30, |        | Six Months Ended
June 30, |  
|-------------------------------------------- |  | --------------------------- | ------ | ------------------------- | -
|
|Investment write-downs                       |  | $                           | (245   | )                         | $
|Dispositions                                 |  |                             | (5,866 | )                         |  
|Valuation of derivative instruments          |  |                             | 2,563  |                           |  
|Settlement of derivative instruments         |  |                             | 662    |                           |  
|                                             |  |                             |        |                           |  
|Realized capital gains and losses, pretax    |  |                             | (2,886 | )                         |  
|Income tax benefit (expense)                 |  |                             | 1,089  |                           |  
|                                             |  |                             |        |                           |  
|Realized capital gains and losses, after-tax |  | $                           | (1,797 | )                         | $
|                                             |  |                             |        |                           |  

Dispositions
in the above table also include sales and other transactions such as calls and prepayments. We may sell securities during the period in which fair value has declined below
amortized cost. Recognizing in certain situations new factors such as negative developments, subsequent credit deterioration, relative value opportunities, market liquidity concerns and portfolio
reallocations, we can subsequently change our previous intent to continue holding a security.

The
losses on dispositions in the second quarter of 2004 were related to sales of securities that were sold in recognition of relative value opportunities. The proceeds from these sales
were reinvested in higher yielding securities.

CAPITAL RESOURCES AND LIQUIDITY

Capital Resourcesconsist of shareholder's equity. The following table summarizes our capital resources.

|(in thousands)                                                       |                            | June 30, 2004 |         | December 31, 2003
|-------------------------------------------------------------------- | -------------------------- | ------------- | ------- | -----------------
|Common stock, retained earnings and other shareholder's equity items |                            | $             | 407,076 |                  
|Accumulated other comprehensive income                               |                            |               | 107,078 |                  
|                                                                     |                            |               |         |                  
|                                                                     | Total shareholder's equity |               | $       | 514,154          
|                                                                     |                            |               |         |                  

Shareholder's equitydecreased in the first six months of 2004 when compared to December 31, 2003 due to decreased unrealized gains
on fixed income securities partially offset by net income.

Financial Ratings and StrengthOur ratings are influenced by many factors including our operating and financial performance,
asset quality, liquidity, asset/liability management, overall portfolio mix, financial leverage (i.e., debt), exposure to risks and the current level of operating leverage. There have been no changes
to our insurance financial strength ratings since December 31, 2003. However, in February 2004, A.M. Best revised the outlook to stable from positive for the insurance financial
strength ratings of ALIC and certain rated ALIC subsidiaries and affiliates, including the Company.

Liquidity Sources and Uses

Increased operating cash flows in the first six months of 2004 when compared to the first six months of 2003 primarily relate to increases in premiums and
investment income. Cash flows used in investing activities increased in the first six months of 2004 as a result of the investment of higher financing cash flow and higher operating cash flows.

Higher
cash flow from financing activities during the first six months of 2004 when compared to the same period of 2003 reflects an increase in deposits received from contractholders,
partially offset by

25

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benefits
and withdrawals from contractholders' accounts. For quantification of the changes in contractholder funds, see the Results of Operations section of the MD&A.

We
have entered into an inter-company loan agreement with The Allstate Corporation (the "Corporation"). The amount of inter-company loans available to us is at the discretion of the
Corporation. The maximum amount of loans the Corporation will have outstanding to all its eligible subsidiaries at any given point in time is limited to $1.00 billion. We had no amounts
outstanding under the inter-company loan agreement at June 30, 2004 or December 31, 2003. The Corporation uses commercial paper borrowings and bank lines of credit to fund intercompany
borrowings.

FORWARD-LOOKING STATEMENTS

This document contains "forward-looking statements" that anticipate results based on our estimates, assumptions and plans that are subject to uncertainty. These
statements are made subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. We assume no obligation to update any forward-looking statements as a
result of new information or future events or developments.

These
forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like "plans," "seeks," "expects," "will," "should,"
"anticipates," "estimates," "intends," "believes," "likely," "targets" and other words with similar meanings. These statements may address, among other things, our strategy for growth, product
development, regulatory approvals, market position, expenses, financial results, litigation and reserves. We believe that these statements are based on reasonable estimates, assumptions and plans.
However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those
communicated in these forward-looking statements. Factors which could cause actual results to differ materially from those suggested by such forward-looking statements are incorporated in this
Part I, Item 2 by reference to the information set forth in our Annual Report on Form 10-K, Part II, Item 7, under the caption "Forward-Looking Statements and Risk
Factors."

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Item 4. Controls and Procedures

With the participation of our principal executive officer and principal financial officer, we carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, the principal executive officer and the principal financial officer
concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic reports filed with the Securities and
Exchange Commission. However, the design of any system of controls and procedures is based in part upon assumptions about the likelihood of future events and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Our disclosure controls and procedures are designed to provide reasonable assurance of
achieving their objectives and are effective at the "reasonable assurance" level.

During
the fiscal quarter ended June 30, 2004, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information required for this Part II, Item 1 is incorporated by reference to the discussion under the heading "Regulation" and under the heading "Legal
proceedings" in Note 4 of the Company's Condensed Financial Statements in Part I, Item 1, of this Form 10-Q.

Item 6. Exhibits and Reports on Form 8-K







SIGNATURE

Pursuant to the requirements 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.

|                | Allstate Life Insurance Company of New York
(Registrant)                                                                    
|--------------- | ----------------------------------------------------------------------------------------------------------------------------
|August 10, 2004 | By                                                                                                                          
|                | Samuel H. Pilch
Group Vice President and Controller
(chief accounting officer and duly
authorized officer of the Registrant)

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|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                            
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1        |  | Amended and Restated Service and Expense Agreement among Allstate Insurance Company. The Allstate Corporation and Certain Affiliates, effective January 1, 2004. (As of August 9, 2004, some regulatory approvals
and board approval are pending.) Incorporated herein by reference to Exhibit 10.1 to Allstate Life Insurance Company's Form 10-Q for the quarter ended June 30, 2004.
|10.2        |  | Automatic Annuity Reinsurance Agreement between Allstate Life Insurance Company of New York and Allstate Life Insurance Company, effective January 2, 2004.                                                                                                                                                                                                                            
|15          |  | Acknowledgement of awareness from Deloitte & Touche LLP dated August 10, 2004, concerning unaudited interim financial information.                                                                                                                                                                                                                                                     
|31.1        |  | Rule 15d-14(a) Certification of Principal Executive Officer                                                                                                                                                                                                                                                                                                                            
|31.2        |  | Rule 15d-14(a) Certification of Principal Financial Officer                                                                                                                                                                                                                                                                                                                            
|32          |  | Section 1350 Certifications                                                                                                                                                                                                                                                                                                                                                            

E-1

---