-----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, VKt2P7vNZg7xwj52Nq+yTIAKdQnA8+oT6fv2LGALgO7V4r/9E5koGWASSsoWCU4R eIKuBUR7c6DPew4V3yxbDQ== 0000950131-96-002311.txt : 19960517 0000950131-96-002311.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950131-96-002311 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 1934 Act SEC FILE NUMBER: 033-47245 FILM NUMBER: 96567266 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 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 33-47245 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 March 31, 1996; there were 80,000 shares of common capital stock outstanding, par value $25 per share all of which shares are held by Allstate Life Insurance Company. PART I - FINANCIAL INFORMATION Item 1. Financial Statements Statements of Financial Position March 31, 1996 (Unaudited) and December 31, 1995 3 Statements of Operations Three Months Ended March 31, 1996 and March 31, 1995 (Unaudited) 4 Statements of Cash Flows Three Months Ended March 31, 1996 and March 31, 1995 (Unaudited) 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION Item 1. Legal Proceedings 11 Item 2. Changes in Securities 11 Item 3. Defaults Upon Senior Securities 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 Signature Page 12 2 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK STATEMENTS OF FINANCIAL POSITION
March 31, December 31, ($ in thousands) 1996 1995 (Unaudited) Assets Investments Fixed income securities Available for sale, at fair value (amortized cost $1,248,287 and $1,219,418) $1,334,675 $1,424,893 Mortgage loans 85,454 86,394 Policy loans 23,415 22,785 Short-term 7,607 7,257 Total investments 1,451,151 1,541,329 Deferred acquisition costs 55,550 53,944 Accrued investment income 17,485 18,828 Reinsurance recoverable 3,548 3,331 Deferred income taxes 3,098 Cash 1,541 1,472 Other assets 3,452 3,924 Separate Accounts 230,800 220,141 Total assets $1,766,625 $1,842,969 Liabilities Reserve for life insurance policy benefits $ 811,450 $ 838,739 Contractholder funds 506,817 499,548 Deferred income taxes 23,659 Other liabilities and accrued expenses 6,486 8,950 Net payable to affiliates 746 1,865 Separate Accounts 230,800 220,141 Total liabilities 1,556,299 1,592,902 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 29,747 74,413 Retained income 132,792 127,867 Total shareholder's equity 210,326 250,067 Total liabilities and shareholder's equity $1,766,625 $1,842,969
See notes to financial statements. 3 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK STATEMENTS OF OPERATIONS
Three Months Ended March 31, ($ in thousands) 1996 1995 (Unaudited) Revenues Premium income (net of reinsurance ceded of $584 and $505) $23,103 $47,322 Contract charges 5,701 4,294 Net investment income 27,594 25,227 Realized capital losses (69) (1,615) 56,329 75,228 Costs and expenses Provision for policy benefits (net of reinsurance recoveries of $865 and $313) 43,017 62,907 Amortization of deferred acquisition costs 1,147 947 Operating costs and expenses 4,473 4,954 48,637 68,808 Income before income taxes 7,692 6,420 Income tax expense 2,767 2,159 Net income $ 4,925 $ 4,261
See notes to financial statements. 4 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS Three Months Ended March 31, ($ in thousands) 1996 1995 (Unaudited) Cash flows from operating activities Net income $ 4,925 $ 4,261 Adjustments to reconcile net income to net cash from operating activities Realized capital losses 69 1,615 Depreciation, amortization and other noncash items (6,230) (5,201) Interest credited to contractholder funds 7,548 5,827 Increase in reserve for policy benefits and contractholder funds 17,356 43,169 Increase in deferred acquisition costs (836) (2,216) Decrease in accrued investment income 1,343 1,524 Change in deferred income taxes (2,706) (2,235) Changes in other operating assets and liabilities (1,967) 3,764 Net cash from operating activities 19,502 50,508 Cash flows from investing activities Proceeds from sales Fixed income securities available for sale 3,463 Investment collections Fixed income securities available for sale 10,107 9,069 Fixed income securities held to maturity 2,305 Mortgage loans 888 1,833 Investment purchases Fixed income securities available for sale (34,124) (39,489) Fixed income securities held to maturity (6,849) Mortgage loans (2,895) Change in short-term investments, net (350) (10,546) Change in other investments (630) (441) Net cash from investing activities (24,109) (43,550) Cash flows from financing activities Contractholder fund deposits 15,487 23,404 Contractholder fund withdrawals (10,811) (29,655) Net cash from financing activities 4,676 (6,251) Net increase in cash 69 707 Cash at beginning of period 1,472 1,763 Cash at end of period $ 1,541 $ 2,470
See notes to financial statements. 5 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK NOTES TO FINANCIAL STATEMENTS (Unaudited) ($ in thousands) 1. Basis of Presentation Allstate Life Insurance Company of New York (the "Company") is wholly owned by a wholly-owned subsidiary ("Parent") of Allstate Insurance Company ("Allstate"), a wholly-owned subsidiary of The Allstate Corporation (the "Corporation"). The statements of financial position as of March 31, 1996, the statements of operations for the three-month periods ended March 31, 1996 and 1995, and the statements of cash flows for the three-month periods then ended 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 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 1995. 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 1996 presentation, certain items in the prior year's financial statements have been reclassified. 2. Accounting Change Effective January 1, 1995, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment of a Loan" and SFAS No. 118, "Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures." SFAS No. 114 defines impaired loans as loans in which it is probable that a creditor will be unable to collect all amounts contractually due under the terms of a loan agreement and requires that impaired loans be measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, at the loan's observable market price, or at the fair value of the collateral. SFAS No. 118 amends SFAS No. 114 to allow a creditor to use existing methods for recognizing interest income on impaired loans. The adoption of these statements did not have a material impact on net income or financial position. 6 ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The following 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 II. Item 8 along 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. The Company, which is wholly owned by a wholly-owned subsidiary ("Parent") of Allstate Insurance Company ("Allstate"), markets life insurance and group and individual annuities in the state of New York, with products consisting predominately of structured settlement annuities sold through independent brokers. The Company also utilizes Allstate agencies and direct marketing to distribute its traditional and universal life and accident and disability insurance products. Additionally, flexible premium deferred variable annuity contracts and certain single and flexible premium annuities are marketed to individuals through the account executives of Dean Witter Reynolds, Inc.
RESULTS OF OPERATIONS Three Months Ended March 31, 1996 1995 ---------- --------- ($ IN THOUSANDS) Statutory premiums and deposits.............. $ 44,818 $ 71,286 ========== ========== Invested assets (1).......................... 1,364,763 1,231,089 Separate Account assets (2).................. 230,800 182,734 ---------- ---------- Invested assets, including Separate Account assets...................................... 1,595,563 1,413,823 ========== ========== Premium income and contract charges.......... 28,804 51,616 Net investment income........................ 27,594 25,227 Policy benefits.............................. 43,017 62,907 Operating expenses........................... 5,620 5,901 ---------- ---------- Income from operations....................... 7,761 8,035 Income tax on operations..................... 2,791 2,724 ---------- ---------- Net operating income......................... 4,970 5,311 Realized capital gains and losses, after tax........................................ (45) (1,050) ---------- ---------- Net income................................... $ 4,925 $ 4,261 ========== ==========
7 (1) Fixed income securities are included in invested assets at amortized cost in the table above and at fair value in the statements of financial position. (2) Separate Accounts are included at fair value. STATUTORY PREMIUMS AND DEPOSITS Statutory premiums, which include premiums and deposits for all products, decreased $26.5 million or 37.1% for the three-month period ended March 31, 1996 from $71.3 million for the same period in 1995. The decrease is primarily due to lower sales of structured settlement annuities, partially offset by an increase in sales of variable annuities. PREMIUM INCOME, CONTRACT CHARGES AND PROVISION FOR POLICY BENEFITS Premium income and contract charges under generally accepted accounting principles ("GAAP") decreased 44.2% for the three-month period ended March 31, 1996 as compared to the same period in 1995. Under GAAP, revenues exclude deposits on most annuities and premiums on universal life insurance policies. The decrease in premium and contract charges in 1996 is primarily the result of lower sales of structured settlement annuities with life contingencies. Policy benefits decreased $19.9 million, or 31.6% during the first quarter of 1996, also reflecting the decrease in the level of sales of structured settlement annuities with life contingencies, partially offset by higher mortality costs. NET INVESTMENT INCOME Pre-tax net investment income increased 9.4% in the first quarter of 1996 as compared to the same period in 1995. The increase was related to the 10.9% or $133.7 million increase in invested assets resulting primarily from growth in new business, partially offset by surrenders and other benefits paid. OPERATING EXPENSES Operating expenses decreased by $281 thousand, or 4.8%, in the first quarter of 1996 as compared to the same period in 1995. The decrease is primarily attributable to reduced acquisition costs due to lower sales of structured settlements. First quarter 1995 operating expenses reflected a one-time $303 thousand benefit related to a reduced rate of amortization of deferred policy acquisition costs, due to favorable universal life insurance persistency. NET OPERATING INCOME Net operating income decreased by 6.4% in the first quarter of 1996 as compared to the same period in 1995. The decrease was primarily due to higher mortality losses, partially offset by the decrease in operating expenses, in the first quarter of 1996 and the nonrecurring benefit attributable to the amortization of deferred acquisition costs in the first quarter of 1995. 8 REALIZED CAPITAL GAINS AND LOSSES Realized capital losses after tax of $45 thousand during the first quarter of 1996 were lower than realized capital losses after tax of $1.05 million during the first quarter of 1995. The lower losses were attributable to commercial mortgage loans. INVESTMENTS FIXED INCOME SECURITIES The Company closely monitors its fixed income security portfolio for declines in value that are other than temporary. Securities are placed on non- accrual status when they are in default or when the receipt of interest payments is in doubt. The Company monitors the quality of its fixed income portfolio, in part, by categorizing certain investments as problem, restructured or potential problem investments. Problem fixed income securities are those in default with respect to principal and/or interest and/or securities issued by companies that went into bankruptcy subsequent to acquisition of the security. Restructured fixed income securities have modified terms and conditions that were not at current market rates or terms at the time of the restructuring. Potential problem fixed income securities are current with respect to contractual principal and/or interest, but because of other facts and circumstances, management has serious doubts regarding the borrower's ability to pay future interest and principal, which causes management to believe these securities may be classified as problem or restructured in the future. At March 31, 1996, problem, restructed, and potential problem fixed income investments were $3.9 million. There were no problem, restructured, and potential problem fixed income securities at December 31, 1995. MORTGAGE LOANS The Company defines problem commercial mortgage loans as loans that are in foreclosure, have a principal or interest payment over 60 days past due, or are current but considered in-substance foreclosed. Restructured commercial mortgage loans have modified terms and conditions that were not at prevailing market rates or terms at the time of the restructuring. Potential problem commercial mortgage loans are current or less than 60 days delinquent as to contractual principal and interest payments, but because of other facts and circumstances, management has serious doubts regarding the borrower's ability to pay future interest and principal, which causes management to believe these loans may be classified as problem or restructured in the future. At both March 31, 1996 and December 31, 1995 total problem, restructured and potential problem loans, net of valuation allowances, were $9.6 million. The total pre-tax provision for loan losses was $52 thousand and $1.2 million for the three months ended March 31, 1996 and 1995, respectively. The carrying value of impaired loans as of March 31, 1996 and December 31, 1995, was $9.6 million in each period. 9 LIQUIDITY AND CAPITAL RESOURCES The Company's principal source of funds consists primarily of premiums and annuity deposits and collections of principal and income from the investment portfolio. The Company generates substantial positive cash flows from operating activities. The major use of these funds are policyholder claims and benefits, acquisition of investments, contract maturities, surrenders and other operating costs. 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. Item 2. Changes in Securities Not applicable. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. 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** (10) Reinsurance Agreement between Allstate Life Insurance Company of New York and Allstate Life Insurance Company** (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 first quarter of 1996. * Previously filed in Form S-1 Registration Statement No.33-47245 dated April 15, 1992 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.33-47245 dated April 16, 1996 and incorporated by reference. 11 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. Allstate Life Insurance Company of New York (Registrant) DATE May 14, 1996 /s/MICHAEL J. VELOTTA * ------------ ----------------------- LOUIS G. LOWER, II CHAIRMAN OF THE BOARD OF DIRECTORS and PRESIDENT (Principal Executive Officer) DATE May 14, 1996 /s/BARRY S. PAUL ------------ ------------------ BARRY S. PAUL ASSISTANT VICE PRESIDENT and CONTROLLER (Chief Accounting Officer) *by Michael J. Velotta, Vice President, Secretary and General Counsel pursuant to Power of Attorney dated January 5, 1993, previously filed with Form S-1 Registration Statement, File No. 33-47245, filed October 12, 1993, copy attached hereto. POWER OF ATTORNEY WITH RESPECT TO THE ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK CUSTOM ANNUITY CONTRACT Know all men by these presents that Louis G. Lower, II, whose signature appears below, constitutes and appoints Michael J. Velotta, his attorney-in- fact, with power of substitution, and is in any and all capacities, to sign any registration statements and amendments thereto for the Allstate Life Insurance Company of New York Custom Annuity Contract and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. January 5, 1993 --------------- Date /s/ LOUIS G. LOWER, II ---------------------- Louis G. Lower, II Chairman of the Board of Directors & President Allstate Life Insurance Company of New York EX-27 2 FINANCIAL DATA SCHEDULE
7 This schedule contains summary financial information extracted from Statements of Financial Position; Statements of Operations; and Statements of Cash Flows and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS 12-MOS DEC-31-1996 DEC-31-1995 JAN-01-1996 JAN-01-1995 MAR-31-1996 DEC-31-1995 1,334,675 1,424,893 0 0 0 0 0 0 85,454 86,394 0 0 1,451,151 1,541,329 1,541 1,472 3,548 3,331 55,550 53,944 1,766,625 1,842,969 811,450 838,739 0 0 0 0 506,817 499,548 0 0 2,000 2,000 0 0 0 0 208,326 248,067 1,766,625 1,842,969 28,804 148,316 27,594 104,384 (69) 1,846 0 0 43,017 198,055 1,147 5,502 0 0 7,692 29,433 2,767 9,911 4,925 19,522 0 0 0 0 0 0 4,925 19,522 61.56 244.03 61.56 244.03 5,009 3,527 3,527 10,806 53 134 4,166 9,397 93 60 4,330 5,009 0 0
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