Allstate Life Insurance Company, et al.; Notice of Application

AGENCY:

Securities and Exchange Commission (“SEC” or “Commission”).

ACTION:

Notice of application for an order of exemption pursuant to section 17(b) of the Investment Company Act of 1940 (the “Act”) from section 17(a) of the Act.

Applicants:

Allstate Life Insurance Company (“Allstate Life”) and Allstate Life Insurance Company of New York (“Allstate New York”), and Allstate Financial Advisors Separate Account I (“Allstate Separate Account I”), Allstate Life Insurance Company Separate Account A (“ALIC Separate Account A”), Allstate Life of New York Separate Account A (“ALNY Separate Account A”), Allstate Life of New York Variable Annuity Account (“ALNY VA”), and Allstate Life of New York Variable Annuity Account II (“ALNY VAII”) (collectively, the “Separate Accounts”).

Summary of Application:

Applicants seek an order of exemption to the extent necessary to permit a transfer of assets and assumption of liabilities of: (1) ALIC Separate Account A by Allstate Separate Account I; and (2) ALNY VA and ALNY VA II by ALNY Separate Account A.

Filing Date:

The application was filed on March 8, 2004.

Hearing or Notification of Hearing:

An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Secretary of the Commission and serving Applicants with a copy of the request, personally or by mail. Hearing requests must be received by the Commission by 5:30 p.m. on April 22, 2004, and must be accompanied by proof of service, on Applicants in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons may request notification of a hearing by writing to the Secretary of the Commission.

ADDRESSES:

Secretary, Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 20549. Applicants, Charles Smith, Esq., Assistant Counsel, Allstate Life Insurance Company, 3100 Sanders Road, Northbrook, Illinois 60062.

FOR FURTHER INFORMATION CONTACT:

Alison White, Senior Counsel, or Lorna MacLeod, Branch Chief, Office of Insurance Products, Division of Investment Management, at (202) 942-0670.

SUPPLEMENTARY INFORMATION:

The following is a summary of the application; the complete application is available for a fee from the Public Reference Branch of the Commission.

Applicants' Representations

1. Allstate Life is a stock life insurance company organized under the laws of the State of Illinois in 1957. Allstate Life's home office is located at 3100 Sanders Road, Northbrook, Illinois, 60062. Allstate Life is licensed to operate in the District of Columbia, Puerto Rico, and all states except New York. Allstate Life is a wholly owned subsidiary of Allstate Insurance Company, a stock property-liability insurance company incorporated under the laws of Illinois. All of the outstanding capital stock of Allstate Insurance Company is owned by The Allstate Corporation.

2. Allstate Life established Allstate Separate Account I and ALIC Separate Account A (collectively “Allstate Life Separate Accounts”) as separate accounts pursuant to Illinois law. Each is a “separate account,” as defined by section 2(a)(37) of the Act, and is registered with the Commission pursuant to the Act as a unit investment trust.

3. Allstate New York is a stock life insurance company organized under the laws of the State of New York in 1967 and was known as “Financial Life Insurance Company” from 1967 to 1978. From 1978 to 1984, the Company was known as “PM Life Insurance Company.” Since 1984, the Company has been known as “Allstate Life Insurance Company of New York.” Allstate New York's home office is located at 100 Motor Parkway, Hauppauge, NY 11788-5107. Allstate New York is licensed to operate in the states of New York and Texas. Allstate New York is a wholly owned subsidiary of Allstate Life.

4. Allstate New York established ALNY Separate Account A, ALNY VA and ALNY VAII (collectively “Allstate New York Separate Accounts”) as separate accounts pursuant to New York law. Each is a “separate account,” as defined by section 2(a)(37) of the Act, and is registered with the Commission pursuant to the Act as a unit investment trust.

5. Certain variable annuity contracts sponsored by Allstate Life and issued through Allstate Separate Account I and ALIC Separate Account A are registered with the Commission pursuant to the Securities Act of 1933 (the “Securities Act”). Certain variable annuity contracts sponsored by Allstate New York and issued through ALNY Separate Account A, ALNY VA and ALNY VA II are registered with the Commission pursuant to the Securities Act.

6. Allstate Separate Account I is divided into 105 sub-accounts, each of which invests exclusively in shares of a corresponding portfolio of an open-end, diversified management investment company registered under the Act (the “Funds”). ALIC Separate Account A is divided into 47 sub-accounts, each of which invests exclusively in shares of a corresponding portfolio of the Funds.

7. ALNY Separate Account A is divided into 111 sub-accounts, each of which invests exclusively in shares of a corresponding portfolio of the Funds. ALNY VA is divided into 11 sub-accounts, each of which invests exclusively in shares of a corresponding portfolio of the Funds. ALNY VAII is divided into 52 sub-accounts, each of which invests exclusively in shares of a corresponding portfolio of the Funds.

8. After considering the nature and purpose of each separate account, the Boards of Directors of Allstate Life and Allstate New York have determined that the efficiency of the operations of the separate accounts could be improved, and the overall administration enhanced, by merging: (a) ALIC Separate Account A into Allstate Separate Account I ; and (b) ALNY VA and ALNY VA II into ALNY Separate Account A (together, the “Mergers”). The Mergers will be structured so there will be no change in the rights and benefits of persons having an interest in any of the Contracts issued by those Separate Accounts.

9. The consolidation of the overlapping sub-accounts will take place at their respective net asset values and each Allstate Life or Allstate New York owner holding units of interest in one of the merging sub-accounts will have those units exchanged for units of equal value in the corresponding surviving sub-account. The values of the exchanged interests under the Contracts will thus be equivalent. The accumulation unit values for these sub-accounts will not change, and the Contract value of any affected Contract owner immediately after the sub-account consolidation will be the same as the value immediately before the sub-account consolidation.

10. The Merger provides for the transfer of ALIC Separate Account A assets to Allstate Separate Account I and the assumption of the liabilities and contractual obligations of ALIC Separate Account A by Allstate Separate Account I in return for the crediting of accumulation units of Allstate Separate Account I to ALIC Separate Account A contract owners. Once this process has been completed, the units of ALIC Separate Account A would be cancelled, ALIC Separate Account A would submit an application to the Commission pursuant to section 8(f) of the Act to effect its deregistration as an investment company and would cease to exist, and Allstate Separate Account I would continue to exist.

11. Immediately following the Merger, each ALIC Separate Account A contract owner will possess a number of Allstate Separate Account I units (both full and fractional) that, when multiplied by the unit value of Allstate Separate Account I units, would result in an aggregate unit value equal to the aggregate unit value of the units the contract owner had in the respective Separate Account immediately before the consummation of the Merger.

12. Allstate Life will distribute to each existing ALIC Separate Account A contract owner: (a) A contract rider indicating that such contracts are thereafter funded by Allstate Separate Account I; (b) a letter informing such contract owners of the Merger; and (c) a prospectus supplement that reflects Allstate Separate Account I as the separate account funding the contracts.

13. The Merger provides for the transfer of ALNY VA and ALNY VA II assets to ALNY Separate Account A and the assumption of the liabilities and contractual obligations of each of ALNY VA and ALNY VA II by ALNY Separate Account A in return for the crediting of accumulation units of ALNY Separate Account A to ALNY VA and ALNY VA II contract owners. Once this process has been completed, the units of ALNY VA and ALNY VA II would be cancelled, ALNY VA and ALNY VA II would each submit an application to the Commission pursuant to section 8(f) of the Act to effect its deregistration as an investment company and would cease to exist, and ALNY Separate Account A would continue to exist.

14. Immediately following the Merger, each ALNY VA and ALNY VA II contract owner will possess a number of ALNY Separate Account A units (both full and fractional) that, when multiplied by the unit value of ALNY Separate Account A units, would result in an aggregate unit value equal to the aggregate unit value of the units the contract owner had in the respective Separate Account immediately before the consummation of the Merger.

15. Allstate New York will distribute to each existing ALNY VA and ALNY VA II contract owner: (a) A contract rider indicating that such contracts are thereafter funded by ALNY Separate Account A; (b) a letter informing such contract owners of the Merger; and (c) a prospectus supplement that reflects ALNY Separate Account A as the separate account funding the contracts.

16. Except for the change in the separate account funding the variable annuity contracts, all the rights and benefits of the contract owners will remain unchanged after the Mergers. Further, the fees and charges under the contracts will not change as a result of the Mergers.

17. Allstate Life and Allstate New York assert that the Mergers will have no tax consequences for Allstate Life and Allstate New York contract owners. In addition, no payments will be required or charges imposed under the Allstate Life and Allstate New York contracts in connection with, or by virtue of, the Mergers that would not otherwise be required or imposed.

Applicants' Legal Analysis

1. Section 17(a) of the Act provides generally that it is unlawful for any affiliated person of a registered investment company, or any affiliated person of such a person, acting as principal to knowingly purchase or to sell any security or other property from or to such registered company.

2. Section 17(b) of the Act provides generally that the Commission may grant an order exempting a transaction otherwise prohibited by section 17(a) of the Act if evidence establishes that: (a) The terms of the proposed transaction, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned; (b) the proposed transaction is consistent with the policy of each registered investment company concerned; and (c) the proposed transaction is consistent with the general purposes of the Act.

3. The Mergers may be subject to the provisions of section 17(a) of the Act because it could be viewed as involving an investment company (ALIC Separate Account A, ALNY VA, ALNY VA II,) selling its assets to another investment company (Allstate Separate Account I, ALNY Separate Account A) that is affiliated by reason of having sponsoring insurance companies that are under common control, or by reason of having common directors.

4. Applicants request an order of the Commission pursuant to section 17(b) of the Act to the extent necessary to exempt the Mergers from the provisions of section 17(a) of the Act.

5. Applicants assert that the terms of the Mergers are fair and reasonable. Applicants represent that the transfer of assets held by ALIC Separate Account A will be made at the relative net asset values of the sub-accounts. Consequently, the interests of Allstate Separate Account I owners will not be diluted by the Merger, and each ALIC Separate Account A contract will be credited, immediately after the Merger, with units of Allstate Separate Account I having the same aggregate value as the aggregate value of the units of ALIC Separate Account A credited to such contract immediately prior to the Merger. Likewise, each ALNY VA and ALNY VA II contract will be credited, immediately after the Merger, with units of ALNY Separate Account A having the same aggregate value as the aggregate value of the units of ALNY VA and ALNY VA II credited to such contract immediately prior to the Merger. The Merger will not result in any change in charges, costs, fees or expenses borne by any Contract owner. No direct or indirect costs will be incurred by any Separate Account concerned as a result of the Mergers. Therefore, the proposed transactions will not result in dilution of the economic interests of any Contract owner. In addition, the Mergers will result in no change in the investment options available to Contract owners. Each sub-account of the Separate Accounts will continue to invest in the same Fund as that sub-account invested in prior to the Mergers.

6. The consolidation of any overlapping sub-accounts will take place at their respective net asset values and each Allstate Life or Allstate New York Contract owner holding units of interest in one of the merging sub-accounts will have those units exchanged for units of equal value in the corresponding surviving sub-account. The values of the exchanged interests under the Contracts will thus be equivalent. The accumulation unit values for these sub-accounts will not change, and the Contract value of any affected Contract owner immediately after the sub-account consolidation will be the same as the value immediately before the sub-account consolidation.

7. Applicants assert that the Mergers do not involve overreaching on the part of any party involved and is consistent with the general purposes of the Act. The purposes of the Mergers are to consolidate three variable annuity separate accounts, each of which issue variable annuity contracts, into a single separate account and to consolidate two variable life separate accounts, each of which issue variable life contracts, into a single separate account. The Mergers will allow for administrative efficiencies and cost savings by Allstate Life and Allstate New York because they can consolidate its separate account operations. The Merger will not dilute or otherwise adversely affect the economic interests of the owners of the Allstate Life and Allstate New York contracts, nor will the Mergers affect the values determined under the Allstate Life and Allstate New York contracts.

8. Applicants represent that the Mergers are consistent with the policy of each Separate Account as set forth in its registration statement. The policy of each Separate Account is to invest in the Funds. As noted above, the Mergers will result in no change to any Fund underlying the Separate Accounts. Each sub-account of the Separate Accounts will continue to invest in the same Fund as that sub-account invested in prior to the Mergers. Accordingly, the assets underlying the Contracts will continue to be invested in accordance with the policies recited in the Separate Accounts' respective registration statements.

Conclusion

For the reasons summarized above, Applicants assert that the terms of the Merger, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned, are consistent with the policies of the Allstate Life and Allstate New York Separate Accounts as recited in their registration statements, are consistent with the general purposes of the Act, and therefore meet the conditions for exemptive relief established by section 17(b).