FORM 10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

The 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.

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

                 For the quarterly period ended: June 30, 1998

                                       OR

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


Commission file number: 33-47245
                        33-65355


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


      NEW YORK                                        35-2608394
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                      Identification No.)

                                One Allstate Drive
                             Farmingville, New York  11738
               (Address of principal executive offices)(Zip Code)

                                  800/256-9392
              (Registrant's telephone number, including area code)

                                 Not Applicable
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

Yes../X/..      No


     Indicate  the  number of shares of each of the  issuer's  classes of common
stock,  as of June 30, 1998;  there were 80,000  shares of common  capital stock
outstanding,  par value $25 per share all of which  shares are held by  Allstate
Life Insurance Company.

<PAGE>


                         PART I - FINANCIAL INFORMATION


Item  1.   FINANCIAL STATEMENTS

            Statements of Financial Position
            June 30, 1998(Unaudited) and December 31, 1997.................. 3

            Statements of Operations
            Three Months Ended June 30, 1998 and and June 30, 1997 and
            Six Months Ended June 30, 1998 and June 30, 1997 (Unaudited).... 4

            Statements of Cash Flows
            Six Months Ended June 30, 1998 and
                  June 30, 1997 (Unaudited)................................. 5

            Notes to Financial Statements................................... 6

Item  2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................... 9

Item  3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
              MARKET RISK*..................................................N/A


                           PART II - OTHER INFORMATION


Item 1.   LEGAL PROCEEDINGS..................................................14

Item 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS*........................N/A

Item 3.   DEFAULTS UPON SENIOR SECURITIES*..................................N/A

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS*..............N/A

Item 5.   OTHER INFORMATION..................................................14

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K...................................14

SIGNATURE PAGE...............................................................15





*Omitted pursuant to General Instruction H(2) of Form 10-Q.

                                      -2-
<PAGE>


                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                        STATEMENTS OF FINANCIAL POSITION


<TABLE>
<CAPTION>
                                                                            June 30,                December 31,
($ in thousands)                                                              1998                      1997
                                                                       --------------------     ---------------------
                                                                           (Unaudited)
<S>                                                                        <C>                      <C>
ASSETS
Investments
   Fixed income securities, at fair value (amortized cost
     $1,555,273 and $1,510,110)                                             $1,841,260                $1,756,257
Mortgage loans                                                                 133,654                   114,627
Policy loans                                                                    28,450                    27,600
Short-term                                                                      70,678                     9,513
                                                                            ----------                ----------
          Total investments                                                  2,074,042                 1,907,997

Deferred acquisition costs                                                      75,581                    71,946
Accrued investment income                                                       21,641                    21,725
Reinsurance recoverables                                                         1,939                     1,726
Cash                                                                               612                       393
Other assets                                                                    12,402                     6,167
Separate Accounts                                                              346,605                   308,595
                                                                            ----------                ----------
          Total assets                                                      $2,532,822                $2,318,549
                                                                            ==========                ==========

LIABILITIES
Reserve for life-contingent contract benefits                               $1,146,870                $1,084,409
Contractholder funds                                                           648,565                   607,474
Income taxes payable                                                             8,287                     1,419
Deferred income taxes                                                           19,237                    16,990
Other liabilities and accrued expenses                                          51,862                    10,985
Net payable to affiliates                                                        2,496                     5,267
Separate Accounts                                                              346,605                   308,595
                                                                            ----------                ----------
          Total liabilities                                                  2,223,922                 2,035,139
                                                                            ----------                ----------

Commitments and Contingent Liabilities (Note 4)

SHAREHOLDER'S EQUITY
Common stock, $25 par value, 80,000 shares
   authorized, issued and outstanding                                            2,000                     2,000
Additional capital paid-in                                                      45,787                    45,787
Retained income                                                                187,126                   171,144
Accumulated other comprehensive income:
        Unrealized net capital gains                                            73,987                    64,479
                                                                            ----------                ----------
    Total accumulated other comprehensive income                                73,987                    64,479
                                                                            ----------                ----------

          Total shareholder's equity                                           308,900                   283,410
                                                                            ----------                ----------

          Total liabilities and shareholder's equity                        $2,532,822                $2,318,549
                                                                            ==========                ==========

</TABLE>


See notes to financial statements.

                                      -3-
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                                        Three months ended                      Six months ended
                                                           June 30,                               June 30,
                                              -----------------------------------    -----------------------------------
($ in thousands)                                   1998                1997               1998                1997
                                              ----------------    ---------------    ----------------    ---------------
                                                         (Unaudited)                            (Unaudited)

<S>                                              <C>                 <C>                <C>               <C>  
REVENUES
   Premiums (net of reinsurance
      ceded of $848 and $691)                     $  24,670          $  26,146           $  43,253         $   46,807
   Contract charges                                   8,331              7,114              16,419             13,982
   Net investment income                             33,691             31,042              66,260             61,242
   Realized capital gains and losses                  2,873                (26)              4,104                (75)
                                                  ---------          ---------           ---------         ----------
                                                     69,565             64,276             130,036            121,956
                                                  ---------          ---------           ---------         ----------

COSTS AND EXPENSES
   Contract benefits (net of reinsurance
      recoveries of $359 and $298)                   47,561             47,899              88,821             89,865
   Amortization of deferred acquisition
      costs                                           2,120              1,849               4,205              3,819
   Operating costs and expenses                       6,154              5,430              12,165             10,256
                                                  ---------          ---------           ---------         ----------
                                                     55,835             55,178             105,191            103,940
                                                  ---------          ---------           ---------         ----------

INCOME FROM OPERATIONS
    BEFORE INCOME TAX EXPENSE                        13,730              9,098              24,845             18,016

INCOME TAX EXPENSE                                    4,884              3,246               8,863              6,455
                                                  ---------          ---------           ---------         ----------

NET INCOME                                        $   8,846          $   5,852           $  15,982         $   11,561
                                                  =========          =========           =========         ==========

</TABLE>

See notes to financial statements.


                                      -4-
<PAGE>

                   ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                      Six months ended
                                                                                          June 30,
                                                                        ----------------------------------------------
                                                                                 1998                     1997
                                                                        ---------------------    ---------------------
($ in thousands)                                                                         (Unaudited)

<S>                                                                           <C>                       <C> 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                     $ 15,982                 $  11,561
Adjustments to reconcile net income to net cash
       provided by operating activities
           Depreciation, amortization and other non-cash items                  (17,177)                  (15,086)
           Realized capital gains and losses                                     (4,104)                       75
           Interest credited to contractholder funds                             27,813                    16,382
           Increase in reserve for life-contingent contract
               benefits and contractholder funds                                 23,270                    35,476
           Increase in deferred policy acquisition costs                         (4,205)                   (4,153)
           Change in accrued investment income                                       84                    (1,207)
           Change in deferred income taxes                                        7,367                      (283)
           Change in other operating assets and
               liabilities                                                       (8,572)                   14,100
                                                                               --------                 ---------
                 Net cash provided by operating activities                       40,458                    56,865
                                                                               --------                 ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of fixed income securities                                   53,721                    11,455
Investment collections
        Fixed income securities                                                  78,609                    61,096
        Mortgage loans                                                            2,824                     1,204
Investment purchases
        Fixed income securities                                                (157,249)                 (139,472)
        Mortgage loans                                                          (21,794)                  (15,500)
Change in short-term investments, net                                           (22,867)                   16,776
Change in policy loans, net                                                        (850)                     (868)
                                                                               --------                 ---------
                 Net cash used in investing activities                          (67,606)                  (65,309)
                                                                               --------                 ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Contractholder fund deposits                                                     60,743                    39,434
Contractholder fund withdrawals                                                 (33,376)                  (24,681)
                                                                               --------                 ---------
                 Net cash provided by financing activities                       27,367                    14,753
                                                                               --------                 ---------

NET INCREASE IN CASH                                                                219                     6,309
CASH AT BEGINNING OF PERIOD                                                         393                     1,027
                                                                               --------                 ---------
CASH AT END OF PERIOD                                                          $    612                 $   7,336
                                                                               ========                 =========


</TABLE>

See notes to financial statements.


                                      -5-
<PAGE>

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


1.   Basis of Presentation

          Allstate Life Insurance  Company of New York (the "Company") is wholly
     owned by a wholly owned subsidiary of Allstate  Insurance Company, a wholly
     owned subsidiary of The Allstate Corporation.

          The  financial  statements  and notes as of June 30,  1998 and for the
     three-month  and  six-month  periods  ended  June  30,  1998  and  1997 are
     unaudited.   The  interim  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
     financial  statements  and  notes  should be read in  conjunction  with the
     financial  statements  and notes  thereto  included  in the  Allstate  Life
     Insurance  Company  of New York  Annual  Report on Form 10-K for 1997.  The
     results of  operations  for the interim  periods  should not be  considered
     indicative of results to be expected for the full year.

          Effective  January 1, 1998, the Company adopted Statement of Financial
     Accounting  Standards  ("SFAS")  No. 125,  "Accounting  for  Transfers  and
     Servicing of Financial Assets and  Extinguishment of Liabilities" under the
     guidance  of SFAS No.  127,  "Deferral  of the  Effective  Date of  Certain
     Provisions of FASB  Statement No. 125." As a result of this  adoption,  the
     Company has recorded an asset and corresponding  liability representing the
     collateral  received in connection  with the Company's  securities  lending
     program. The cash collateral received is recorded in short-term investments
     with the offsetting  liability being reflected in other  liabilities in the
     statements  of financial  position.  In  accordance  with SFAS No. 127, the
     statements of financial position for prior periods have not been restated.

          Effective   January  1,  1998,  the  Company  adopted  SFAS  No.  130,
     "Reporting  Comprehensive Income." Comprehensive Income is a measurement of
     certain changes in shareholder's  equity that result from  transactions and
     other economic events other than  transactions with  shareholders.  For the
     Company,  these  consist of changes in  unrealized  gains and losses on the
     investment portfolio,  adjusted for deferred acquisition costs and reserves
     for life  insurance  policy  benefits.  These  amounts,  presented as other
     comprehensive  income,  net of related taxes, are added to net income which
     results in comprehensive  income. The cumulative amount of these changes is
     reported in the  statements  of  financial  position as  accumulated  other
     comprehensive income. The required disclosures are presented in Note 2.

          In March 1998, the  Accounting  Standards  Executive  Committee of the
     American  Institute of Certified  Public  Accountants  issued  Statement of
     Position  ("SOP")  98-1,  "Accounting  for the Costs of  Computer  Software
     Developed  or Obtained  for  Internal  Use." The SOP  provides  guidance on
     accounting  for the costs of computer  software  developed  or obtained for
     internal use. Specifically,  certain external,  payroll and payroll related
     costs should be capitalized  during the application  development stage of a
     software  development  project and depreciated over the computer software's
     useful life. The Company has adopted the SOP effective January 1, 1998.


2.   Comprehensive Income

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

                                      -6-
<PAGE>


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

<TABLE>
<CAPTION>


                                                                      Three months ended June 30,
                                          -------------------------------------------------------------------------------------
   ($ in thousands)                                       1998                                       1997
                                          --------------------------------------  ---------------------------------------------
                                                         Income                                     Income
                                                           tax        After-                          tax          After-
                                            Pretax       effect         tax           Pretax        effect           tax
                                            ------       ------       ------          ------        ------         ------
<S>                                         <C>          <C>          <C>             <C>           <C>            <C>

   Unrealized capital gains and losses:

   Unrealized holding gains
       (losses) arising during
       the period                         $  45,402   $  (15,890)    $29,512      $    62,202    $  (21,772)   $    40,430
   Adjustments to unrealized capital 
      gains and losses arising during 
      the period:
         Deferred acquisition                  (313)         110        (203)            (441)          155           (286)
           costs
         Reserves for life insur-
           ance policy benefits             (34,575)      12,101     (22,474)         (42,130)       14,746        (27,384)
                                          ---------   ----------    --------      -----------    ----------    -----------
          Net  unrealized holding
           gains (losses) arising
           during the period                 10,514       (3,679)      6,835           19,631        (6,871)        12,760
                                          ---------   ----------    --------      -----------    ----------    -----------
   Less:  reclassification adjust-
       ment for realized net
       capital gains included in
       net income                               (75)          27         (48)            (185)           65           (120)
                                          ---------   ----------    --------      -----------    ----------    -----------

   Other comprehensive income             $  10,589   $   (3,706)   $  6,883      $    19,816    $   (6,936)   $    12,880
                                          =========   ==========    --------      ===========    ==========    -----------
   Net income                                                          8,846                                         5,852
                                                                    --------                                   -----------
   Comprehensive income                                             $ 15,729                                   $    18,732
                                                                    ========                                   ===========
</TABLE>

                                      -7-
<PAGE>

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

<TABLE>
<CAPTION>


                                                                       Six months ended June 30,
                                          -------------------------------------------------------------------------------------
   ($ in thousands)                                       1998                                       1997
                                          --------------------------------------  ---------------------------------------------
                                                         Income                                     Income
                                                           tax        After-                          tax          After-
                                            Pretax       effect         tax           Pretax        effect           tax
                                            ------       ------       ------          ------        ------         ------

   Unrealized capital gains and losses:

<S>                                       <C>          <C>           <C>            <C>            <C>           <C>
   Unrealized holding gains
       (losses) arising during
       the period                         $ 41,507     $  (14,528)   $  26,979      $  (13,263)   $    4,641    $    (8,622)
   Adjustments to unrealized capital 
      gains and losses arising 
      during the period:
         Deferred acquisition                 (571)           200         (371)             84           (29)            55
           costs
         Reserves for life insur-
           ance policy benefits            (25,102)         8,786      (16,316)          8,070        (2,824)         5,246
                                          --------     ----------    ---------      ----------    ----------    -----------
          Net  unrealized holding
           gains (losses) arising
           during the period                15,834         (5,542)      10,292          (5,109)        1,788         (3,321)
                                         ---------     ----------    ---------     -----------    ----------    -----------
   Less:  reclassification adjust-
       ment for realized net
       capital gains included in
       net income                            1,206           (422)         784            (182)           64           (118)
                                         ---------     ----------    ---------     -----------    ----------    -----------

   Other comprehensive income            $  14,628     $   (5,120)   $   9,508     $    (4,927)   $    1,724    $    (3,203)
                                         =========     ==========    ---------      ==========    ==========    -----------
   Net income                                                           15,982                                       11,561
                                                                     ---------                                  -----------
   Comprehensive income                                              $  25,490                                  $     8,358
                                                                     =========                                  ===========
</TABLE>


4.   Regulation and Legal Proceedings

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

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


                                      -8-
<PAGE>

                   Allstate Life Insurance Company of New York
                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations



     The following discussion highlights significant factors influencing results
of  operations  and changes in  financial  position of Allstate  Life  Insurance
Company of New York (the  "Company").  It should be read in conjunction with the
financial  statements  and notes  thereto  found  under Part I. Item 1 contained
herein and the financial  statements and notes thereto found under Part II. Item
8, with the  discussion and analysis found under Part II. Item 7 of the Allstate
Life Insurance Company of New York Annual Report on Form 10-K for 1997.

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


FINANCIAL HIGHLIGHTS
($ in thousands)
<TABLE>
<CAPTION>

                                                 Three months ended                       Six months ended
                                                       June 30,                                June 30,
                                         -----------------------------------    ------------------------------------
                                              1998               1997                 1998                1997
                                         ---------------    ----------------    ----------------    ----------------

<S>                                       <C>                 <C>                 <C>              <C> 
Statutory premiums
   and deposits                            $    70,434        $     57,552        $    128,560        $   103,764
                                           ===========        ============        ============        ===========

Investments                                $ 2,074,042        $  1,703,824        $  2,074,042        $ 1,703,824
Separate Account assets                        346,605             290,425             346,605            290,425
                                           -----------        ------------        ------------        -----------
Investments including
   Separate Account assets                 $ 2,420,647        $  1,994,249        $  2,420,647        $ 1,994,249
                                           ===========        ============        ============        ===========

Premiums and contract charges              $    33,001        $     33,260        $     59,672        $    60,789
Net investment income                           33,691              31,042              66,260             61,242
Contract benefits                               47,561              47,899              88,821             89,865
Operating costs and expenses                     7,862               7,279              15,946             14,075
                                           -----------        ------------        ------------        -----------
Income from operations                          11,269               9,124              21,165             18,091
Income tax expense on
   operations                                    4,023               3,255               7,575              6,481
                                           -----------        ------------        ------------        -----------
Operating income                                 7,246               5,869              13,590             11,610
Net realized capital gains
   and losses, after-tax (1)                     1,600                 (17)              2,392                (49)
                                           -----------        ------------        ------------        -----------
Net income                                 $     8,846        $      5,852        $     15,982        $    11,561
                                           ===========        ============        ============        ===========

</TABLE>

(1)  Net  of  the  effect  of  the  related   amortization  of  deferred  policy
acquisitions costs in 1998.

                                      -9-
<PAGE>

                   Allstate Life Insurance Company of New York
                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations


Premiums, deposits, contract charges and contract benefits

     Statutory  premiums and deposits,  which include  premiums and deposits for
all products,  increased 22.4% in the second quarter and 23.9% for the first six
months of 1998  compared  with the same  periods last year.  Increased  sales of
fixed annuities,  variable  annuities and life insurance policies were partially
offset by reduced sales of structured settlement annuities.

     Premiums  and  contract   charges  under  generally   accepted   accounting
principles  ("GAAP")  decreased  slightly  in the second  quarter  and first six
months of 1998 from the comparable 1997 periods.  Under GAAP,  revenues  exclude
deposits on most annuity  contracts  and premiums on  universal  life  insurance
policies and will vary with the mix of products sold during the period. In 1998,
increased revenues from universal life and fixed annuity products were more than
offset by lower sales of life-contingent structured settlement annuities.

Operating income

     Pretax net investment  income increased 8.5% and 8.2% in the second quarter
and the  first  six  months  of 1998,  respectively,  from the  comparable  1997
periods,  primarily due to higher investment  balances partially offset by lower
investment yields. Investments, excluding Separate Account assets and unrealized
gains on fixed income  securities,  grew by 7.6%.  The overall  portfolio  yield
declined  slightly,  as proceeds  from calls and  maturities as well as positive
cash flows from operating  activities were invested in securities  yielding less
than the average  portfolio rate. In relatively low interest rate  environments,
funds from maturing  investments  may be reinvested at lower interest rates than
those which prevailed when the funds were previously invested.

     Operating costs and expenses increased 8.0% in the second quarter and 13.3%
in the  first  half of 1998  from the  comparable  1997  periods  as a result of
increased  policy  administration  costs due to growth in the number of customer
policies and contracts, and increased general expenses.

     Operating income increased 23.5% during the second quarter and 17.1% during
the first six months of 1998  compared  with the same periods in 1997, as income
generated from new and existing life insurance and structured settlement annuity
business was partially offset by increased operating costs and expenses.

Realized capital gains and losses

     Net realized  capital  gains,  after-tax,  increased to $1.6 million in the
second quarter and $2.4 million for the first six months of 1998,  primarily due
to gains arising from the receipt of prepayments of fixed income securities.


                                      -10-
<PAGE>

                   Allstate Life Insurance Company of New York
                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations



INVESTMENTS

     The composition of the investment  portfolio at June 30, 1998, at financial
statement carrying values, is presented in the table below.

                                                                   Percent
($ in thousands)                                                   to total
                                                                   --------
Fixed income securities (1)         $        1,841,260                88.8%
Mortgage loans                                 133,654                 6.4
Policy loans                                    28,450                 1.4
Short-term                                      70,678                 3.4
                                    ------------------              ------

    Total                           $        2,074,042               100.0%
                                    ==================              ======


(1)  Fixed income securities are carried at fair value. Amortized cost for these
     securities was $1,555,273.

     Total  investments  increased to $2.07  billion at June 30, 1998 from $1.91
billion at December 31, 1997.  The increase in  investments  is primarily due to
amounts invested from positive cash flows generated from operations, an increase
in unrealized  net capital gains on fixed income  securities and the addition to
short-term  investments  of $38.3 million of  collateral  in  connection  with a
change in accounting  treatment for  securities  lending  programs.  At June 30,
1998, unrealized net capital gains on the fixed income securities portfolio were
$286.0 million compared to $246.1 million at December 31, 1997.

Fixed income securities

     The   Company's   fixed   income   securities    portfolio    consists   of
privately-placed  securities,  U.S. government bonds,  publicly traded corporate
bonds, mortgage-backed securities,  asset-backed securities and municipal bonds.
The Company  generally holds its fixed income  securities for the long term, but
has  classified  all of these  securities as available for sale to allow maximum
flexibility in portfolio management.

     At  June  30,  1998,  substantially  all  of  the  Company's  fixed  income
securities  portfolio is rated investment grade, which is defined by the Company
as a security having a National Association of Insurance Commissioners rating of
1 or 2, a Moody's rating of Aaa, Aa, A or Baa, or a comparable  Company internal
rating.

Short-term investments

     The Company's  short-term  investment  portfolio was $70.7 million and $9.5
million at June 30,  1998 and  December  31,  1997,  respectively.  The  Company
invests available cash balances in taxable short-term  securities having a final
maturity  date or  redemption  date of one year or less.  Included in short-term
investments  is $38.3 million at June 30, 1998 of collateral in connection  with
securities lending programs.


                                      -11-
<PAGE>

                   Allstate Life Insurance Company of New York
                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations


SEPARATE ACCOUNTS

     Separate Account assets and liabilities increased 12.3% from $308.6 million
at  December  31,  1997 to $346.6  million  at June 30,  1998 due  primarily  to
favorable investment  performance of the Separate Account investment  portfolios
and sales of flexible premium deferred  variable  annuity  contracts,  partially
offset by variable annuity contract surrenders and withdrawals.


LIQUIDITY AND CAPITAL RESOURCES

Liquidity

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

     The maturity  structure of the  Company's  fixed income  securities,  which
represent  88.8% of the  Company's  total  investments,  is  managed to meet the
anticipated cash flow requirements of the underlying  liabilities.  A portion of
the Company's product portfolio,  primarily fixed deferred annuity and universal
life insurance products, is subject to discretionary surrender and withdrawal by
contractholders.  Management believes its assets are sufficiently liquid to meet
future  obligations  to its  life  and  annuity  contractholders  under  various
interest rate scenarios.


YEAR 2000

     The Company is heavily  dependent  upon  complex  computer  systems for all
phases of its operations, including customer service, insurance processing, risk
analysis,  reserve  valuation  and  investment  processing.  Since  many  of the
Company's older computer software programs recognize only the last two digits of
the year in any date, some software may fail to operate properly in or after the
year 1999, if the software is not  reprogrammed,  remediated or replaced  ("Year
2000 Issue"). The Company believes that many of its counterparties and suppliers
also have Year  2000  Issues  which  could  affect  the  Company.  In 1995,  the
Corporation  commenced a plan  intended to mitigate  and/or  prevent the adverse
effects of Year 2000 Issues.  These  strategies  include normal  development and
enhancement of new and existing  systems,  upgrades to operating systems already
covered by maintenance  agreements and modifications to existing systems to make
them Year 2000 compliant.  The plan also includes the Company  actively  working
with its major external  counterparties and suppliers to assess their compliance
efforts and the  Company's  exposure  to them.  The Company is in the process of
developing a contingency plan that will address possibly adverse scenarios.  The
Company presently  believes that it will resolve the Year 2000 Issue in a timely
manner,  and the  financial  impact  will not  materially  affect its results of
operations, liquidity or financial position. The Company is working closely with
its  business  partners,  counterparties  and  suppliers  in an  effort to bring
communications, facilities, software and systems into Year 2000 compliance. Year
2000 costs are expensed as incurred.


                                      -12-
<PAGE>

                   Allstate Life Insurance Company of New York
                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations



PENDING ACCOUNTING STANDARDS

     In June 1997, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about
Segments of an Enterprise and Related  Information."  SFAS No. 131 redefines how
segments are determined and requires  additional  segment  disclosures  for both
annual and quarterly  reporting.  Under this statement,  segments are determined
using  the  "management   approach"  for  financial  statement  reporting.   The
management  approach is based on the way an enterprise makes operating decisions
and assesses  performance of its businesses.  The Company is currently reviewing
the  requirements  of this  Statement and has not  determined  the impact on its
current reporting.  The requirements of this statement will be adopted effective
December 31, 1998.

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments   and  Hedging   Activities."   SFAS  No.  133   replaces   existing
pronouncements and practices with a single,  integrated accounting framework for
derivatives  and hedging  activities.  The  requirements  of the  Statement  are
effective for fiscal years beginning after June 15, 1999. Earlier application of
this  Statement is encouraged  but is only  permitted as of the beginning of any
fiscal  quarter  after  issuance.   The  Company  is  currently   reviewing  the
requirements of this Statement and the feasibility of early adoption.

     In December  1997,  the  Accounting  Standards  Executive  Committee of the
American  Institute of Certified Public Accountants issued Statement of Position
("SOP")   97-3,   "Accounting   by   Insurance   and   Other   Enterprises   for
Insurance-Related  Assessments."  The SOP provides  guidance  concerning when to
recognize  a  liability  for   insurance-related   assessments   and  how  those
liabilities  should be  measured.  Specifically,  insurance-related  assessments
should be recognized as liabilities when all of the following criteria have been
met: 1) an assessment has been imposed or it is probable that an assessment will
be imposed,  2) the event obligating an entity to pay an assessment has occurred
and  3)  the  amount  of  the  assessment  can  be  reasonably  estimated.   The
requirements  of this  standard  are  expected to be adopted in 1999 and are not
expected to have a material  impact on the results of operations,  cash flows or
financial position of the Company.


FORWARD-LOOKING STATEMENTS

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

                                      -13-
<PAGE>



                      PART II - OTHER INFORMATION



Item 1.  LEGAL PROCEEDINGS

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


Item 5.  OTHER INFORMATION

         Not applicable.


Item 6. EXHIBITS AND REPORTS ON FORM 8-K

  (a) Exhibits required by Item 601 of Regulation S-K

      (2)    None
      (3)(i) Articles of Incorporation*
        (ii) By-laws*
      (4)    Allstate Life Insurance Company of New York Single Premium Deferred
             Annuity  Contract**  Allstate  Life  Insurance  Company of New York
             Flexible Premium Deferred Annuity Contract*
     (10)    None 
     (11)    None 
     (15)    None 
     (18)    None 
     (19)    None 
     (22)    None
     (23)(a) Consent of Independent Public Accountants***
         (b) Consent of Attorneys****
     (24)    None
     (27)    Financial Data Schedule
     (99)    None

 (b) Reports on 8-K

          No reports on Form 8-K were filed during the second quarter of 1998.


* Previously  filed in Form N-4  Registration  Statement No. 33-65381 dated June
28, 1996 and incorporated by reference.

** Previously filed in Form S-1 Registration Statement No. 33-47245 dated May 4,
1995 and incorporated by reference.

*** Previously filed in Form S-1  Registration  Statement No. 33-47245 dated May
1, 1997 and Form S-1 Registration Statement No. 33-65355 dated April 1, 1997 and
incorporated by reference.

****  Previously  filed  Form S-1  Registration  Statement  No.  33-47245  dated
November  13,  1992  abd  Form  S-1  Registration  Statement  No.33-65355  dated
September 20,1996 and incorporated by reference.


                                      -14-
<PAGE>


                              SIGNATURES



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, on the 14th day of August 1998.



                           ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
                           -------------------------------------------
                                  (Registrant)






/s/ LOUIS G. LOWER, II               CHAIRMAN OF THE BOARD OF DIRECTORS
------------------------               AND CHIEF EXECUTIVE OFFICER
 LOUIS G. LOWER, II                  (Principal Executive Officer)



/s/ KEITH A. HAUSCHILDT              ASSISTANT VICE PRESIDENT AND CONTROLLER
------------------------              (Chief Accounting Officer)
 KEITH A. HAUSCHILDT