-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AtoMG5Vv+0ViijhvfBKNbWimFnU1jC2ugtb4Q2oMEc7CcKDi3I6OeYwE4KdxLwkG p1uspzxaRitkiWTn8ifs5g== 0000839759-97-000003.txt : 19971117 0000839759-97-000003.hdr.sgml : 19971117 ACCESSION NUMBER: 0000839759-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLSTATE LIFE INSURANCE CO OF NEW YORK CENTRAL INDEX KEY: 0000839759 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 362608394 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-47245 FILM NUMBER: 97718299 BUSINESS ADDRESS: STREET 1: ONE ALLSTATE DR STREET 2: PO BOX 9095 CITY: FARMINGVILLE STATE: NY ZIP: 11738 BUSINESS PHONE: 5164515300 MAIL ADDRESS: STREET 1: ONE ALLSTATE DR STREET 2: PO BOX 9095 CITY: FARMINGVILLE STATE: NY ZIP: 11738 10-Q 1 FORM 10-Q 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: September 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 33-47245 33-65381 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK (Exact name of registrant as specified in its charter) NEW YORK 36-2608394 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Allstate Drive P.O. Box 9095 Farmingville, New York 11738 (Address of principal executive offices) (Zip Code) 516/451-5300 (Registrant's telephone number, including area code) 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 September 30, 1997; there were 80,000 shares of common capital stock outstanding, par value $25 per share all of which shares are held by Allstate Life Insurance Company. PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Statements of Financial Position September 30, 1997(Unaudited)and December 31, 1996................3 Statements of Operations Three Months Ended September 30, 1997 and September 30, 1996 and Nine Months Ended September 30, 1997 and September 30, 1996 (Unaudited).......................................................4 Statements of Cash Flows Nine Months Ended September 30, 1997 and September 30, 1996 (Unaudited)................................5 Notes to Financial Statements(Unaudited)..........................6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS......................7 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.*.................................................N/A PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS..................................................11 Item 2. CHANGES IN SECURITIES*............................................N/A Item 3. DEFAULTS UPON SENIOR SECURITIES*..................................N/A Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS*..............N/A Item 5. OTHER INFORMATION .................................................11 Item 6. EXHIBITS AND REPORTS ON FORM 8-K...................................11 SIGNATURE PAGE...............................................................13 *Omitted pursuant to General Instruction H(2) of Form 10-Q. -2- PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK STATEMENTS OF FINANCIAL POSITION
September 30, December 31, ($ in thousands) 1997 1996 ------- -------- (Unaudited) ASSETS Investments Fixed income securities, at fair value (amortized cost $1,481,444 and $1,378,155) $1,658,316 $1,500,783 Mortgage loans 101,343 84,657 Policy loans 26,971 25,359 Short-term 10,905 25,855 ---------- ---------- Total investments 1,797,535 1,636,654 Deferred policy acquisition costs 68,546 61,559 Accrued investment income 19,110 20,321 Reinsurance recoverables 2,132 2,566 Cash 15,985 1,027 Income taxes receivable - 105 Other assets 4,491 7,384 Separate Accounts 308,716 260,668 ---------- ---------- Total assets $2,216,515 $1,990,284 ========== ========== LIABILITIES Reserve for life-contingent contract benefits $1,018,752 $ 911,457 Contractholder funds 593,829 572,480 Income taxes payable 2,861 - Deferred income taxes 8,245 3,692 Other liabilities and accrued expenses 19,648 6,405 Net payable to affiliates 1,211 2,515 Separate Accounts 308,716 260,668 ---------- ---------- Total liabilities 1,953,262 1,757,217 ---------- ---------- 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 Unrealized net capital gains 48,081 36,852 Retained income 167,385 148,428 ---------- ---------- Total shareholder's equity 263,253 233,067 ---------- ---------- Total liabilities and shareholder's equity $2,216,515 $1,990,284 ========== ==========
See notes to financial statements. -3- ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------ ($ in thousands) 1997 1996 1997 1996 ---- ---- ---- ---- (Unaudited) REVENUES Life and annuity premiums (net of reinsurance ceded of $793 and $626; $2,243 and $1,820) $ 21,075 $ 20,990 $ 67,882 $ 65,906 Contract charges 7,146 6,567 21,128 18,872 Net investment income 31,629 28,528 92,871 83,952 Realized capital gains and losses 817 (2,575) 742 (2,224) -------- -------- -------- -------- 60,667 53,510 182,623 166,506 -------- -------- -------- -------- COSTS AND EXPENSES Life and annuity contract benefits (net of reinsurance recoverable of $950 and $523; $1,632 and $2,693) 43,081 40,298 132,946 125,687 Amortization of deferred policy acquisition costs 746 1,498 4,565 4,463 Operating costs and expenses 5,237 4,265 15,493 12,679 --------- --------- -------- -------- 49,064 46,061 153,004 142,829 --------- --------- -------- -------- INCOME BEFORE INCOME TAX EXPENSE 11,603 7,449 29,619 23,677 INCOME TAX EXPENSE 4,207 2,609 10,662 8,599 --------- --------- --------- --------- NET INCOME $ 7,396 $ 4,840 $ 18,957 $ 15,078 ========= ========= ========= =========
See notes to financial statements. -4- ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, ----------------- 1997 1996 ---- ---- ($ in thousands) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 18,957 $ 15,078 Adjustments to reconcile net income to net cash provided by operating activities Depreciation, amortization and other non-cash items (23,167) (19,375) Realized capital gains and losses (742) 2,224 Interest credited to contractholder funds 22,862 18,178 Increase in reserve for life-contingent contract benefits and contractholder funds 52,221 53,962 Increase in deferred policy acquisition costs (7,222) (4,957) Decrease in accrued investment income 1,211 1,580 Change in deferred income taxes (1,492) (3,212) Change in other operating assets and liabilities 18,840 1,879 --------- --------- Net cash provided by operating activities 81,468 65,357 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales of fixed income securities 14,776 20,810 Investment collections Fixed income securities 80,621 50,223 Mortgage loans 1,899 7,702 Investment purchases Fixed income securities (175,460) (122,232) Mortgage loans (18,500) (1,825) Change in short-term investments, net 14,950 (32,032) Change in policy loans, net (1,612) (1,772) --------- ---------- Net cash used in investing activities (83,326) (79,126) --------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Contractholder fund deposits 54,965 49,254 Contractholder fund withdrawals (38,149) (34,695) --------- ---------- Net cash provided by financing activities 16,816 14,559 --------- ---------- NET INCREASE IN CASH 14,958 790 CASH AT BEGINNING OF PERIOD 1,027 1,472 --------- ---------- CASH AT END OF PERIOD $ 15,985 $ 2,262 ========= ==========
See notes to financial statements. -5- 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 statements of financial position as of September 30, 1997, the statements of operations for the three-month and nine-month periods ended September 30, 1997 and 1996, and the statements of cash flows for the nine-month periods ended September 30, 1997 and 1996 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 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 10K for 1996. The results of operations for the interim periods should not be considered indicative of results to be expected for the full year. To conform with the 1997 presentation, certain items in the prior year's financial statements have been reclassified. -6- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS OF FINANCIAL CONDITION 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 discussion and analysis and financial statements and notes thereto found under Items 7 and 8 of Part II of the Allstate Life Insurance Company of New York Annual Report on Form 10-K. The Company is wholly owned by a wholly owned subsidiary of Allstate Insurance Company. The Company 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, including life specialists, banks and other financial institutions, brokers and direct response marketing. RESULTS OF OPERATIONS
Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------ ($ in thousands) 1997 1996 1997 1996 ---- ---- ---- ---- Statutory premiums and deposits $ 45,682 $ 44,523 $ 149,446 $ 133,882 ========== ========== ========== ========== Investments $1,797,535 $1,508,587 $1,797,535 $1,508,587 Separate Account assets 308,716 243,863 308,716 243,863 ---------- ---------- ---------- ---------- Investments including Separate Account assets $2,106,251 $1,752,450 $2,106,251 $1,752,450 ========== ========== ========== ========== Premiums and contract charges (net of reinsurance) $ 28,221 $ 27,557 $ 89,010 $ 84,778 Net investment income 31,629 28,528 92,871 83,952 Life and annuity contract benefits 43,081 40,298 132,946 125,687 Operating costs and expenses 5,983 5,763 20,058 17,142 ------------ ------------ ----------- ----------- Income from operations 10,786 10,024 28,877 25,901 Income tax expense on operations 3,921 3,510 10,402 9,377 ------------ ------------ ----------- ----------- Net Operating income 6,865 6,514 18,475 16,524 Realized capital gains and losses, after tax 531 (1,674) 482 (1,446) ------------ ------------- ----------- ----------- Net income $ 7,396 $ 4,840 $ 18,957 $ 15,078 ============ ============= =========== ===========
-7- Premium, deposits and contract charges Statutory premiums and deposits, which include premiums and deposits for all products, increased $1.2 million or 2.6% and $15.6 million or 11.6% for the third quarter and the nine-month period ending September 30, 1997, respectively, compared to the same periods in 1996. The increase for the quarter is primarily due to increased sales of variable annuities and interest-sensitive life insurance products partially offset by lower sales of structured settlement annuities. The increase for the nine-month period is due to increased renewal premiums on life insurance products, increased sales of structured settlement annuities and increased sales of variable annuities. Premiums and contract charges under generally accepted accounting principles ("GAAP") increased $664 thousand or 2.4% and $4.2 million or 5.0% for the three-month and nine-month periods ending September 30, 1997, respectively when compared to the same periods last year. Under GAAP, revenues exclude deposits on most annuities and premiums on universal life insurance policies. GAAP premium and contract charges will vary with the mix of products sold during the period. The increase for the quarter was due to a higher level of renewal premiums on life products offset in part by lower sales of structured settlement annuities with life contingencies. The increase for the nine-month period is due to increased renewal premiums on life insurance products, higher sales of structured settlement annuities and increased contract charges associated with increased sales of variable annuities. Net operating income Pretax net investment income increased 10.9% and 10.6% for the three-month and nine-month periods ended September 30, 1997, respectively, compared with the same periods in 1996 primarily due to the investment of positive cash flows from operations. Operating expenses, which includes the amortization of deferred policy acquisition costs, increased $220 thousand or 3.8% and $2.9 million or 17.0% for the three-month and nine-month periods ended September 30, 1997. The increase for the three-month period ended September 30, 1997 in operating expenses was due to increased general expenses and was offset in part by decreased amortization of deferred policy acquisition costs. The increase in operating expenses for the nine-month period ended September 30, 1997 is related to growth in the number of customer policies and increased general expenses. In both the three and nine month period ended September 30, 1997, the amortization of the deferred acquisition costs was reduced due to the revised estimates of future gross profits on interest sensitive life products. Net operating income increased 5.4% for the third quarter and 11.9% for the nine-month period ending September 30, 1997 compared with the same periods in 1996. Net operating income for the three-month period increased primarily due to higher investment margins. Net operating income for the nine-month period increased primarily due to favorable mortality margins on the structured settlement annuity business and higher investment margins due to additional sales of structured settlement annuities. Realized capital gains and losses Net realized capital gains after tax were $531 thousand and $482 thousand for the three-month and the nine-month periods, respectively. During both periods ended September 30, 1997, gains realized from the sales of fixed income securities were partially offset by losses on mortgage loans. Net realized capital losses after tax were $1,674 and $1,446 for the three-month and the nine-month periods, respectively. During both periods ended September 30, 1996, losses were realized on mortgage loans and fixed income securities. -8- INVESTMENTS The composition of the investment portfolio at September 30, 1997 is presented at carrying value in the table below.
Percentage ($ in thousands) of portfolio Fixed income securities $1,658,316 92.3% Mortgage loans 101,343 5.6 Policy loans 26,971 1.5 Short-term 10,905 0.6 ---------- ------ Total $1,797,535 100.0% ========== ======
The Company's fixed income securities portfolio consists of tax-exempt municipal bonds, publicly traded corporate bonds, privately-placed securities, mortgage-backed securities, asset-backed securities, and U.S. government 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. Total investments increased to $1.80 billion at September 30, 1997 from $1.64 billion at December 31, 1996 due to the investment of positive cash flows generated from operating activities and a $54.3 million increase in unrealized gains on the fixed income securities portfolio. The increase in the unrealized gain position is primarily attributable to lower interest rates. The Company's fixed income securities portfolio is 99.4% rated investment grade. Investment grade 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. LIQUIDITY AND CAPITAL RESOURCES Liquidity Cash provided by operating activities, investment collections and part of the short term investment balance was used to purchase fixed income securities and mortgage loans. Cash at the end of the period increased as cash from operations and financing activities were partially offset by the purchase of investments. Cash from operations increased due to increased sales and lower federal income tax payments offset in part by higher benefits and expenses. -9- PENDING ACCOUNTING STANDARDS In January 1997, the Securities and Exchange Commission issued Financial Reporting Release No. 48 ("FRR 48") "Disclosure of Accounting Policies for Derivative Financial Instruments and Derivative Commodity Instruments and Disclosure of Quantitative and Qualitative Information about Market Risk Inherent in Derivative Financial Instruments, Other Financial Instruments, and Derivative Commodity Instruments." Among other things, FRR 48 requires annual disclosure of quantitative and qualitative information about the market risk inherent in the Company's market risk sensitive instruments, including but not limited to, the Company's fixed income securities. The quantitative and qualitative disclosures are effective for the Company's year-end 1998 reporting, but recent Congressional events may ultimately impact the nature and effective date of FRR 48. Effective in the second quarter of 1997, FRR 48 requires additional disclosures in the footnotes to the financial statements about the Company's accounting policies for derivative financial instruments. The Company substantially adopted this requirement at December 31, 1996. In addition, FRR 48 requires annual disclosure of quantitative and qualitative information about the market risk inherent in the Company's market risk sensitive instruments, including but not limited to, equity and fixed income securities and derivative financial instruments. The quantitative and qualitative disclosures are effective for the Company's year-end 1997 reporting. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards "SFAS" No. 130 "Reporting Comprehensive Income" and SFAS No. 131 "Disclosures About Segments of an Enterprise and Related Information." SFAS No. 130 requires the presentation of comprehensive income in the financial statements. Comprehensive income is a measurement of all changes in equity that result from transactions and other economic events other than transactions with stockholders. The requirements of this statement will be adopted in January 1998. 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 how an enterprise makes operating decisions and assesses performance of its businesses. The requirements of this statement will be adopted in December 1998. 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. -10- 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)(i) Allstate Life Insurance Company of New York Single Premium Deferred Annuity Contract** (ii) 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 third quarter of 1997. * Previously filed in Form N-4 Registration Statement No.33-65381 dated September 20, 1996 and incorporated by reference. -11- ** Previously filed in Form S-1 Registration Statement No.33-47245 dated November 13, 1992 and incorporated by reference. *** Previously filed in Form S-1 Registration Statement No.33-47245 dated April 1, 1997 and incorporated by reference. Previously filed in Form S-1 Registration Statement No. 33-65355 dated April 1, 1997 and incorporated by reference. **** Previously filed in Form S-1 Registration Statement No.33-47245 dated November 13, 1992 and incorporated by reference. Previously filed in Form S-1 Registration Statement No. 33-65355 dated September 20, 1996 and incorporated by reference. -12- 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 11th day of November 1997. ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK (Registrant) /s/LOUIS G. LOWER, II CHAIRMAN OF THE BOARD OF DIRECTORS - --------------------- and PRESIDENT LOUIS G. LOWER, II (Principal Executive Officer) /s/KEITH A. HAUSCHILDT ASSISTANT VICE PRESIDENT AND CONTROLLER - ----------------------- (Chief Accounting Officer) KEITH A. HAUSCHILDT EX-27 2 FDS ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
7 THIS SCHEUDLE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS OF FINANCIAL POSITION AT SEPTEMBER 30, 1997; STATEMENTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 3O, 1997 AND SEPTEMBER 30, 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996; AND STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1997. 0000839759 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK 1,000 U.S. DOLLARS 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1 1,658,316 0 0 0 101,343 0 1,797,535 15,985 2,132 68,546 2,216,515 0 0 1,018,752 593,829 0 0 0 2,000 261,223 2,216,515 67,882 92,871 742 21,128 132,946 4,565 15,493 29,619 10,662 18,957 0 0 0 18,957 0 0 0 0 0 0 0 0 0
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