-----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, QE9cV6M0CUvonEn+O96xYy13JGwXwzmTCzvMUpWTY/xjH3fMEZS8Lzh9stXquW2l u5hkHbgTGlXg00KzdoNLng== 0000945094-00-000270.txt : 20000515 0000945094-00-000270.hdr.sgml : 20000515 ACCESSION NUMBER: 0000945094-00-000270 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 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: 629293 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: March 31, 2000 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 March 31, 2000; there were 100,000 shares of common capital stock outstanding, par value $25 per share all of which shares are held by Allstate Life Insurance Company. PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Statements of Financial Position March 31, 2000 (Unaudited) and December 31, 1999................. 3 Statements of Operations Three Months Ended March 31, 2000 and March 31, 1999 (Unaudited)....................................... 4 Statements of Cash Flows Three Months Ended March 31, 2000 and March 31, 1999 (Unaudited)................................. 5 Notes to Financial Statements.................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .................... 9 Item 3. Quantitative and Qualitative Disclosure about Market Risk* N/A Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................... 10 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK*..................................................N/A PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS..................................................17 Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS*........................N/A Item 3. DEFAULTS UPON SENIOR SECURITIES*..................................N/A Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS*..............N/A Item 5. OTHER INFORMATION..................................................17 Item 6. EXHIBITS AND REPORTS ON FORM 8-K...................................17 SIGNATURE PAGE...............................................................18 *Omitted pursuant to General Instruction H(2) of Form 10-Q.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK STATEMENTS OF FINANCIAL POSITION March 31, December 31, 2000 1999 ----------------- ----------------- ----------------- ----------------- (Unaudited) ($ in thousands, except par value data) Assets Investments Fixed income securities, at fair value (amortized cost $1,999,892 and $1,858,216) $ 2,114,350 $ 1,912,545 Mortgage loans 195,917 166,997 Policy loans 31,355 31,109 Short-term 4,326 46,037 ----------- ------------ Total investments 2,345,948 2,156,688 Cash 1,681 1,135 Deferred policy acquisition costs 118,332 106,932 Accrued investment income 23,674 25,712 Reinsurance recoverables 1,852 1,949 Other assets 11,795 7,803 Separate Accounts 481,167 443,705 ------------ ------------ Total assets $ 2,984,449 $ 2,743,924 ============ ============ Liabilities Reserve for life-contingent contract benefits $ 1,179,756 $ 1,098,016 Contractholder funds 949,715 839,157 Current income taxes payable 11,362 10,132 Deferred income taxes 9,485 3,077 Other liabilities and accrued expenses 31,097 41,218 Payable to affiliates, net 2,959 4,731 Separate Accounts 481,167 443,705 ------------ ------------ Total liabilities 2,665,541 2,440,036 ------------ ------------ Commitments and Contingent Liabilities (Note 3) Shareholder's equity Common stock, $25 par value, 100,000 shares authorized, issued and outstanding 2,500 2,500 Additional capital paid-in 45,787 45,787 Retained income 231,722 225,367 Accumulated other comprehensive income: Unrealized net capital gains 38,899 30,234 ------------ ------------ Total accumulated other comprehensive income 38,899 30,234 ------------ ------------ Total shareholder's equity 318,908 303,888 ------------ ------------ Total liabilities and shareholder's equity $ 2,984,449 $ 2,743,924 ============ ============ See notes to financial statements.
3 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK STATEMENTS OF OPERATIONS
Three Months Ended March 31, ---------------------------------------- ---------------------------------------- ($ in thousands) 2000 1999 ------------------ ------------------ ---------------------------------------- (Unaudited) Revenues Premiums (net of reinsurance ceded of $1,370 and $1,164 ) $ 27,580 $ 22,044 Contract charges 10,822 9,207 Net investment income 40,566 35,560 Realized capital gains and losses (700) 353 -------- -------- 78,268 67,164 -------- -------- Costs and expenses Contract benefits (net of reinsurance recoveries of $373 and $569) 59,520 48,480 Amortization of deferred policy acquisition costs 2,533 2,179 Operating costs and expenses 6,500 6,141 -------- -------- 68,553 56,800 -------- -------- Income from operations before income tax expense 9,715 10,364 Income tax expense 3,360 3,679 -------- -------- Net income $ 6,355 $ 6,685 ======== ========
See notes to financial statements. 4 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK STATEMENTS OF CASH FLOWS
Three Months Ended March 31, ---------------------------------------- ---------------------------------------- ($ in thousands) 2000 1999 ------------------ ------------------ ---------------------------------------- (Unaudited) Cash flows from operating activities Net income $ 6,355 $ 6,685 Adjustments to reconcile net income to net cash provided by operating activities Amortization and other non-cash items (9,940) (9,127) Realized capital gains and losses 700 (353) Interest credited to contractholder funds 8,043 13,289 Changes in: Life-contingent contract benefits and contractholder funds 25,538 11,935 Deferred policy acquisition costs (11,400) (2,770) Income taxes payable 2,972 3,291 Other operating assets and liabilities (15,209) 5,860 --------- --------- Net cash provided by operating activities 7,059 28,810 --------- --------- Cash flows from investing activities Proceeds from sales of fixed income securities 58,539 12,436 Investment collections Fixed income securities 11,999 14,263 Mortgage loans 1,233 1,018 Investment purchases Fixed income securities (203,844) (117,658) Mortgage loans (30,482) (16,870) Change in short-term investments, net 44,369 54,740 Change in policy loans, net (246) (365) --------- --------- Net cash used in investing activities (118,432) (52,436) --------- --------- Cash flows from financing activities Contractholder fund deposits 135,784 35,571 Contractholder fund withdrawals (23,865) (14,476) --------- --------- Net cash provided by financing activities 111,919 21,095 --------- --------- Net increase (decrease) in cash 546 (2,531) Cash at the beginning of period 1,135 3,117 --------- --------- Cash at end of period $ 1,681 $ 586 ========= ========= See notes to financial statements.
5 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK NOTES TO FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying financial statements include the accounts of Allstate Life Insurance Company of New York (the "Company"), a wholly owned subsidiary of Allstate Life Insurance Company ("ALIC"), which is wholly owned by Allstate Insurance Company ("AIC"), a wholly owned subsidiary of The Allstate Corporation (the "Corporation"). These financial statements have been prepared in conformity with generally accepted accounting principles. The financial statements and notes as of March 31, 2000 and for the three month periods ended March 31, 2000 and 1999 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. The 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 1999. 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 2000 presentation, certain amounts in the prior years' financial statements and notes have been reclassified. 2. Comprehensive Income The components of other comprehensive income on a pretax and after-tax basis for the three months ended March 31, are as follows:
($ in thousands) 2000 1999 ------------------------------------------------------------------------------- After- After- Pretax Tax tax Pretax Tax tax Unrealized capital gains and and losses: --------------------------------------- Unrealized holding gains (losses) arising during the period $ 12,565 $ (4,397) $ 8,168 $ (40,237) $ 14,083 $ (26,154) Less: reclassification adjustments (765) 268 (497) 354 (124) 230 ---------- ----------- ----------- ---------- ----------- ----------- Other comprehensive income (loss) $ 13,330 $ (4,665) 8,665 $ (40,591) $ 14,207 (26,384) ========== =========== ========== =========== Net income 6,355 6,685 ------------ ----------- Comprehensive income (loss) $ 15,020 $ (19,699) ============ ===========
6 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK NOTES TO FINANCIAL STATEMENTS (Unaudited) 3. Commitments and Contingent Liabilities 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 regulations, 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 and the tax treatment of insurance products and its impact on the relative desirability of various personal investment vehicles. 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. 7 Allstate Life Insurance Company of New York Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion highlights significant factors influencing results of operations and changes in financial position of Allstate Life Insurance Company of New York (the "Company"). It should be read in conjunction with the financial statements and related notes 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 for the year ended December 31, 1999. The Company, a wholly owned subsidiary of Allstate Life Insurance Company ("ALIC"), which is a wholly owned subsidiary of Allstate Insurance Company ("AIC"), a wholly owned subsidiary of The Allstate Corporation (the "Corporation"), markets a broad line of life insurance and savings products in the state of New York through a combination of exclusive agencies, securities firms, banks, specialized brokers and direct response marketing. Life insurance consists of traditional products, including term and whole life, interest-sensitive life and immediate annuities with life contingencies. Savings products include deferred annuities and immediate annuities without life contingencies. Deferred annuities include fixed rate, market value adjusted and variable annuities. Group pension savings products include immediate annuities also referred to as retirement annuities. The Company has identified itself as a single segment entity.
Financial Highlights ($ in thousands) Three Months Ended March 31, ------------------------------------------ 2000 1999 ------------------- ------------------- Statutory premiums and deposits $ 194,149 $ 62,922 =============== =============== Investments $ 2,345,948 $ 2,153,988 Separate Account assets 481,167 374,545 --------------- --------------- Investments, including Separate Account assets $ 2,827,115 $ 2,528,533 =============== =============== GAAP Premiums $ 27,580 $ 22,044 Contract charges 10,822 9,207 Net investment income 40,566 35,560 Contract benefits 59,520 48,480 Operating costs and expenses 9,033 8,320 --------------- --------------- Operating income before tax 10,415 10,011 Income tax expense 3,618 3,556 --------------- --------------- Operating income (1) 6,797 6,455 Realized capital gains and losses, net of tax (442) 230 --------------- --------------- Net income $ 6,355 $ 6,685 =============== ===============
(1) The supplemental operating information presented above allows for a more complete analysis of results of operations. The net effects of gains and losses have been excluded due to the volatility between periods and because such data is often excluded when evaluating the overall financial performance of insurers. Operating income should not be considered as a substitute for any GAAP measure of performance. Our method of calculating operating income may be different from the method used by other companies and therefore comparability may be limited. 8 Allstate Life Insurance Company of New York Management's Discussion and Analysis of Financial Condition and Results of Operations Statutory premiums and deposits Statutory premiums and deposits, which include premiums and deposits for all products, are used to analyze sales trends. Statutory premiums and deposits increased $131.2 million or 208.6% for the first quarter of 2000 compared with the same period last year. The increase was primarily due to higher fixed and variable annuity sales. The increase in fixed annuity sales was primarily due to new distribution outlets in the banking distribution channel. Increases in variable annuities were primarily driven by sales from the new Putnam Allstate Advisor variable annuity product which was launched in New York in January 2000. GAAP premiums and contract charges Under generally accepted accounting principles ("GAAP"), premiums represent revenue generated from traditional life products with significant mortality risks. Revenues for interest-sensitive life insurance and fixed and variable annuity contracts, for which deposits are treated as liabilities, are reflected as contract charges. Immediate annuities may be purchased with a life contingency whereby mortality risk is a significant factor. For this reason the GAAP revenues generated on these contracts are recognized as premiums. Total premiums increased $5.5 million to $27.6 million for the first quarter of 2000 compared with the same period last year due to higher sales of immediate annuities with life contingencies. Contract charges increased 17.5% to $10.8 million in the first three months of 2000 compared with the same period last year. The increase was primarily due to higher interest-sensitive life contract charges which were the result of growth in interest-sensitive life policies in force. Net investment income Pretax net investment income for the three month period ended March 31, 2000 increased 14.1% to $40.6 million due to higher investment balances. Investments at March 31, 2000, excluding Separate Accounts and unrealized gains on fixed income securities, grew 16.1% from the same period last year. Operating income Operating income increased 5.3% to $6.8 million during the first three months of 2000 compared to the same period last year. Increases in premiums, net investment income and contract charges were partially offset by higher contract benefits and expenses as well as less favorable mortality experience. Realized capital gains and losses Realized capital losses, after-tax, were $442 thousand for the first quarter of 2000 compared to realized capital gains, after-tax, of $230 thousand for the first quarter of 1999. Realized capital losses were generated primarily from the sale of publicly-traded corporate securities. 9 Allstate Life Insurance Company of New York Management's Discussion and Analysis of Financial Condition and Results of Operations Investments The composition of the investment portfolio at March 31, 2000 is presented in the table below: Percent ($ in thousands) to total -------- Fixed income securities (1) $ 2,114,350 90.1% Mortgage loans 195,917 8.4 Policy loans 31,355 1.3 Short-term 4,326 .2 ------------------ ------- Total $ 2,345,948 100.0% ================== ======= (1) Fixed income securities are carried at fair value. Amortized cost for these securities was $1,999,892 at March 31, 2000. Total investments were $2.35 billion at March 31, 2000 compared to $2.16 billion at December 31, 1999. The increase was due to positive cash flows generated from operations and increases in unrealized gains on fixed income securities. At March 31, 2000, unrealized capital gains on the fixed income securities portfolio were $114.5 million compared to $54.3 million at December 31, 1999. At March 31, 2000, 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 ("NAIC") rating of 1 or 2, a Moody's rating of Aaa, Aa, A or Baa, or a comparable Company internal rating. Separate Accounts Separate Accounts assets and liabilities increased 8.4% to $481.2 million at March 31, 2000. The increases were primarily attributable to sales of variable annuity contracts. Liquidity and Capital Resources The Company's principal sources of funds are collections of principal, interest and dividends from the investment portfolio and the receipt of premiums and deposits. The primary uses of these funds are to purchase investments and pay policyholder claims, benefits, contract maturities, contract surrenders and withdrawals and operating costs. The maturity structure of the Company's fixed income securities, which represent 90.1% of the Company's total investments, is managed to meet the anticipated cash flow requirements of the underlying liabilities. A portion of the Company's diversified product portfolio, primarily fixed deferred annuity and interest-sensitive life insurance products, is subject to discretionary surrender and withdrawal by contractholders. Total surrenders and withdrawals were $18.9 million for the first quarter of 2000 compared with $11.3 million for the same period last year. As the Company's interest-sensitive life policies and annuity contracts in force grow and age, the dollar amount of surrenders and withdrawals could increase. Management believes its assets are sufficiently liquid to meet future obligations to its life and annuity contractholders under various interest rate scenarios. 10 Allstate Life Insurance Company of New York Management's Discussion and Analysis of Financial Condition and Results of Operations Pending Accounting Standards In June 1999, the Financial Accounting Standards Board delayed the effective date of Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 133 replaces existing pronouncements and practices with a single, integrated accounting framework for derivatives and hedging activities. This statement requires that all derivatives be recognized on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in the fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Additionally, the change in fair value of a derivative which is not effective as a hedge will be immediately recognized in earnings. The delay was effected through the issuance of SFAS No. 137, which extends the SFAS No. 133 requirements to fiscal years beginning after June 15, 2000. As such, the Company expects to adopt the provisions of SFAS No. 133 as of January 1, 2001. The impact of this statement is dependent upon the Company's derivative positions and market conditions existing at the date of adoption. Based on existing interpretations of the requirements of SFAS No. 133, the impact of the adoption is not expected to be material to the results of operations or financial position of the Company. Forward-looking Statements The statements contained in this Management's Discussion and Analysis that are not historical information are forward-looking statements that are based on management's estimates, assumptions and projections. The Private Securities Litigation Reform Act of 1995 provides a safe harbor under The Securities Act of 1933 and The Securities Exchange Act of 1934 for forward-looking statements. 11 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) Restated Certificate of Incorporation of Allstate Life Insurance Company of New York (Incorporated herein by reference to the Company's Form 10-K Annual Report for the year ended December 31, 1998) (3)(ii) Amended By-laws of Allstate Life Insurance Company of New York (Incorporated herein by reference to the Company's Form 10-K Annual Report for the year ended December 31, 1998) (4) None (10) None (11) Not Required (15) None (18) None (19) None (22) None (23) Not required (24) None (27) Financial Data Schedule (b) Reports on 8-K No reports on Form 8-K were filed during the first quarter of 1999. 17 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 12th day of May, 2000. ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK ------------------------------------------- (Registrant) /s/ THOMAS J. WILSON, II PRESIDENT - ------------------------ (Principal Executive Officer) THOMAS J. WILSON, II /s/ SAMUEL H. PILCH CONTROLLER - ------------------------ (Chief Accounting Officer) SAMUEL H. PILCH 18 Exhibit Index Exhibit No. Exhibit (27) Financial Data Schedule EX-27 2 FDS --
7 THIS SCHEUDLE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS OF FINANCIAL POSITION AT MARCH 31, 2000; STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2000; AND STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2000. 0000839759 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK 1,000 U.S. DOLLARS 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 1 2,114,350 0 0 0 195,917 0 2,345,948 1,681 1,852 118,332 2,984,449 0 0 1,179,756 949,715 0 0 0 2,500 36,399 2,984,449 38,402 40,566 (700) 0 59,520 2,533 6,500 9,715 3,360 6,355 0 0 0 6,355 0 0 0 0 0 0 0 0 0
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