-----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, UqPfrLTKpWnzh0LwFKRRVoBlkEazeJiicNRih56iRLjiff4gyku0qIsSt2t8t2so jfJ1pw0WQhC5hFqm/w3MJQ== 0000945094-98-000144.txt : 19980817 0000945094-98-000144.hdr.sgml : 19980817 ACCESSION NUMBER: 0000945094-98-000144 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: 98687009 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: 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 $25 per share all of which shares are held by Allstate Life Insurance Company. PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Statements of Financial Position June 30, 1998(Unaudited) and December 31, 1997.................. 3 Statements of Operations Three Months Ended June 30, 1998 and and June 30, 1997 and Six Months Ended June 30, 1998 and June 30, 1997 (Unaudited).... 4 Statements of Cash Flows Six Months Ended June 30, 1998 and June 30, 1997 (Unaudited)................................. 5 Notes to Financial Statements................................... 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................... 9 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK*..................................................N/A PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS..................................................14 Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS*........................N/A Item 3. DEFAULTS UPON SENIOR SECURITIES*..................................N/A Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS*..............N/A Item 5. OTHER INFORMATION..................................................14 Item 6. EXHIBITS AND REPORTS ON FORM 8-K...................................14 SIGNATURE PAGE...............................................................15 *Omitted pursuant to General Instruction H(2) of Form 10-Q. -2- ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK STATEMENTS OF FINANCIAL POSITION
June 30, December 31, ($ in thousands) 1998 1997 -------------------- --------------------- (Unaudited) 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 $2,318,549 ========== ==========
See notes to financial statements. -3- ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK STATEMENTS OF OPERATIONS
Three months ended Six months ended June 30, June 30, ----------------------------------- ----------------------------------- ($ in thousands) 1998 1997 1998 1997 ---------------- --------------- ---------------- --------------- (Unaudited) (Unaudited) 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 ========= ========= ========= ==========
See notes to financial statements. -4- ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK STATEMENTS OF CASH FLOWS
Six months ended June 30, ---------------------------------------------- 1998 1997 --------------------- --------------------- ($ in thousands) (Unaudited) 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 ======== =========
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 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- ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK NOTES TO FINANCIAL STATEMENTS (Unaudited)
Three 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: 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 ======== ===========
-7- ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK NOTES TO FINANCIAL STATEMENTS (Unaudited)
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: 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 ========= ===========
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- 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)
Three months ended Six months ended June 30, June 30, ----------------------------------- ------------------------------------ 1998 1997 1998 1997 --------------- ---------------- ---------------- ---------------- 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 =========== ============ ============ ===========
(1) Net of the effect of the related amortization of deferred policy acquisitions costs in 1998. -9- 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 $2.4 million for the first six months of 1998, primarily due to gains arising from the receipt of prepayments of fixed income securities. -10- Allstate Life Insurance Company of New York Management's Discussion and Analysis of Financial Condition and Results of Operations INVESTMENTS The composition of the investment portfolio at June 30, 1998, at financial statement carrying values, is presented in the table below. Percent ($ 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- 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- 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- 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- 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 EX-27 2 FDS --
7 THIS SCHEUDLE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS OF FINANCIAL POSITION AT JUNE 30, 1998; STATEMENTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997 AND SIX MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997; AND STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1998. 0000839759 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK 1,000 U.S. DOLLARS 3-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 1 1,841,260 0 0 0 133,654 0 2,074,042 612 1,939 75,581 2,532,822 0 0 1,146,870 648,565 0 0 0 2,000 306,870 2,532,822 43,253 66,260 4,104 16,419 88,821 4,205 12,165 24,845 8,863 15,982 0 0 0 15,982 0 0 0 0 0 0 0 0 0
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