10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

Commission File Nos. 33-34562; 33-60288; 333-48983

ML LIFE INSURANCE COMPANY OF NEW YORK
(Exact name of Registrant as specified in its charter)

New York	16-1020455
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

222 Broadway
14th Floor
New York, New York 10038

(Address of Principal Executive Offices)
 

1-800-333-6524

(Registrant’s telephone no. including area code)

     Securities registered pursuant to Section 12(b) or 12(g) of the Act: None

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [X] No

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. [ ] Yes [X] No

     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. [X] Yes  [  ] No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

[ ] large accelerated filer [ ] accelerated filer [X] non-accelerated filer

     Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). [ ] Yes [X] No

     State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: Not applicable.

     Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Common 220,000

     REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.

PART I

Item 1.  Business.

     The Registrant (also referred to herein as “ML of New York”) is engaged in the sale of life insurance and annuity products. The Registrant is a stock life insurance company organized under the laws of the State of New York on November 28, 1973. The Registrant is currently subject to primary regulation by the New York State Insurance Department. The Registrant is a direct wholly owned subsidiary of Merrill Lynch Insurance Group (“MLIG”). MLIG is an indirect wholly owned subsidiary of Merrill Lynch & Co., Inc. (“Merrill Lynch & Co.”), a corporation whose common stock is traded on the New York Stock Exchange.

     Information pertaining to contract owner deposits, contract owner account balances, and capital contributions can be found in the Registrant’s financial statements which are contained herein.

     The Registrant is currently licensed to conduct life insurance and annuity business in nine states. It currently markets its annuity products and variable life insurance products only in the state of New York. During 2005, annuity and life insurance sales were made principally in New York (99%, as measured by total contract owner deposits).

     The Registrant’s life insurance and annuity products are sold by licensed agents affiliated with Merrill Lynch Life Agency, Inc. (“MLLA”), a wholly owned subsidiary of Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), pursuant to a general agency agreement by and between the Registrant and MLLA. At December 31, 2005, approximately 1,395 agents of MLLA were authorized to act for the Registrant.

     The Registrant makes available, free of charge, annual reports on Form 10-K and quarterly reports on Form 10-Q. This information is available through the "Financial Reports - Subsidiary Financials" section of the Merrill Lynch & Co. Investor Relations website at www.ir.ml.com. These reports are available through the website as soon as reasonably practicable after the Registrant electronically files such material with, or furnishes it to, the Securities and Exchange Commission.

Item 1A. Risk Factors

     In the course of conducting its business operations, ML of New York could be exposed to a variety of risks that are inherent to the insurance industry. A summary of some of the significant risks that could affect ML of New York’s financial condition and results of operations is included below. Some of these risks are managed in accordance with established risk management policies and procedures.

Competitive Environment

Industry Trends Could Adversely Affect Financial Results

     ML of New York continues to be influenced by a variety of trends that affect the insurance industry. The product development and product life-cycles have shortened in many product segments, leading to more intense competition with respect to product features. Larger companies have the ability to invest in brand equity, product development and risk management, which are among the fundamentals for sustained profitable growth in the life insurance industry. In addition, several of the industry’s products can be quite homogeneous and subject to intense price competition, and sufficient scale, financial strength and flexibility are becoming prerequisites for sustainable growth in the life insurance industry. Larger market participants tend to have the capacity to invest in additional distribution capability and the information technology needed to offer the superior customer service demanded by an increasingly sophisticated industry client base.

     Competitive Factors May Adversely Affect Market Share and Financial Results

     ML of New York is subject to intense competition. Management believes that this competition is based on a number of factors, including service, product features, scale, price, financial strength, claims-paying ratings, credit ratings, e-business capabilities and name recognition. ML of New York competes with a large number of other insurers for insurance products, as well as non-insurance financial services companies for investment products. Some of these companies offer a broader array of products, have more competitive pricing or, with respect to other insurers, have higher claims paying ability ratings. Some may also have greater financial resources with which to compete.

Regulatory and Legislative Risks

The Insurance Industry is Heavily Regulated, and Changes in Regulation May Adversely Affect Financial Results

     The life insurance industry is regulated at the state level, with some products also subject to federal regulation. Various federal and state securities regulators and self-regulatory organizations (including the Securities and Exchange Commission, New York Stock Exchange, and the NASD, Inc.), as well as industry participants continued to review and, in many cases, adopt changes to their established rules and policies in areas such as corporate governance, mutual fund trading, mutual fund and variable annuity distribution practices, disclosure practices and auditor independence.

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     ML of New York is subject to a wide variety of insurance and other laws and regulations. As life insurers introduce new and often more complex products, regulators refine capital requirements and introduce new reserving standards for the life insurance industry. Regulation recently adopted or currently under review can potentially impact the reserving/capital requirements and marketing/sales practices for certain products, particularly variable annuities.

     Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these laws and regulations may materially increase ML of New York’s direct and indirect compliance and other expenses of doing business, thus having a material adverse effect on financial results.

Changes in Tax Legislation Could Make Certain Products Less Attractive to Consumers

     Changes in tax laws could make variable annuities less attractive to consumers. For example, enacted reductions in the federal income tax that individual investors are required to pay on dividends and capital gains on stocks and mutual funds provide an incentive for some customers and potential customers to shift assets into mutual funds, and away from variable annuity products. These enacted tax rate reductions may impact the relative attractiveness of annuities as compared to stocks and mutual funds.

     ML of New York cannot predict whether any other legislation will be enacted, what the specific terms of any such legislation will be or how, if at all, this legislation or any other legislation could have a material adverse effect on financial condition and results of operations.

Market Risk

Volatility in Equity Markets May Adversely Affect Sales of Variable Annuity Products and Financial Results

     Significant downturns and volatility in equity markets may have an adverse effect on ML of New York’s financial results.

     Market downturns and volatility may discourage purchases of variable annuities which are generally correlated to the performance of the equity markets and may cause existing customers to withdraw or reduce investments in those products. In addition, since asset-based fees collected on inforce variable contracts represent a significant source of revenue, ML of New York’s financial condition will be impacted by fluctuations in investment performance of equity-based separate accounts assets.

     ML of New York also provides certain guarantees within its variable annuity products that protect policyholders against significant downturns in the equity markets. For example, ML of New York offers variable annuity products with guaranteed features, such as minimum death and minimum income benefits. These guarantees may be more costly than expected in volatile or declining equity market conditions, causing ML of New York to increase liabilities for future policy benefits and negatively affecting financial results.

Credit Risk

Impairment in the Value of the Fixed Maturity Securities Portfolio May Adversely Affect Financial Results

     ML of New York is subject to the risk that the issuers of the fixed maturity securities owned may default on principal and interest payments owed. The occurrence of a major economic downturn, acts of corporate malfeasance or other events that adversely affect the issuers of these securities could cause the value of the fixed maturities portfolio to decline and the default rate of fixed maturity securities in the investment portfolio to increase. A ratings downgrade affecting particular issuers or securities could also have a similar effect. With recent downgrades, as well as economic uncertainty and increasing interest rates, credit quality of issuers could be adversely affected. Any event reducing the value of these securities other than on a temporary basis could have a material adverse effect on ML of New York’s financial results.

Interest Rate Risk

Changes in Market Interest Rates May Adversely Affect Financial Results

     ML of New York’s fixed life and annuity products are exposed to the risk that changes in interest rates will reduce the spread, or the difference between the amounts that it is required to pay under fixed contracts and the rate of return it is able to earn on invested assets intended to support obligations under the contracts.

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     Spread is a key component of net earnings. A low level of short-term and long-term interest rates can have a negative impact on the demand for and the profitability of spread-based products such as fixed annuities. In addition, continued low interest rates could put pressure on interest spreads on existing blocks of business as declining investment portfolio yields may draw closer to minimum crediting rate guarantees on certain products.

     As interest rates decrease or remain at low levels, ML of New York may be forced to reinvest proceeds from investments that have matured or have been prepaid or sold at lower yields, reducing its investment margin. Moreover, borrowers may prepay or redeem certain investments in the investment portfolio with greater frequency in order to borrow at lower market rates, which exacerbates this risk. Lowering interest crediting rates can help offset decreases in investment margins on some products. However, ML of New York’s ability to lower these rates could be limited by competition or contractually guaranteed minimum rates and may not match the timing or magnitude of changes in asset yields. As a result, the spread could decrease or potentially become negative. A decline in market interest rates could also reduce the return on investments that do not support particular policy obligations. Accordingly, declining interest rates may materially adversely affect financial results.

     Increases in market interest rates could also negatively affect net earnings. Surrenders and withdrawals may tend to increase as policyholders seek investments with higher perceived returns as interest rates rise. This process may result in cash outflows requiring sales of invested assets at a time when the prices of those assets are adversely affected by the increase in market interest rates, which may result in net realized investment losses. An increase in market interest rates could also have a material adverse effect on the value of ML of New York’s investment portfolio, by decreasing the fair values of the fixed income securities that comprise a substantial majority of the investment portfolio.

Liquidity Risk

ML of New York’s Business and Financial Results May be Adversely Impacted by an Inability to Sell Assets to Meet Maturing Obligations.

     ML of New York could be exposed to liquidity risk, which is the potential inability to sell assets that can be quickly converted into cash obligations. ML of New York’s liquidity may be impaired due to circumstances that it may be unable to control, such as general market disruptions or an operational problem. ML of New York’s ability to sell assets may also be impaired if other market participants are seeking to sell similar assets at the same time. The inability of ML of New York to sell assets to meet maturing obligations, a negative change in its credit ratings, or regulatory capital restrictions, may have a negative effect on financial results.

Claims Experience and Reserving Assumptions

Differences between Actual Claims Experience and Reserving Assumptions May Adversely Affect Financial Results

     ML of New York’s earnings significantly depend upon the extent to which actual claims experience is consistent with the assumptions used in setting prices for variable annuity products and establishing liabilities for future policy benefits. Liabilities for future policyholder benefits and claims are established based on estimates. Principle assumptions used in the establishment of liabilities for future policy benefits are mortality, surrender rates, policy expenses, investment yields and inflation. These estimates and assumptions are influenced by historical experience, current developments and anticipated market trends. To the extent that actual claims experience is less favorable than the underlying assumptions used in establishing such liabilities, ML of New York could be required to increase liabilities.

     Due to the nature of the underlying risks and the high degree of uncertainty associated with the determination of liabilities for future policyholder benefits and claims, ML of New York cannot determine precisely the amounts which will ultimately be paid to settle liabilities. Such amounts may vary from the

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estimated amounts, particularly when those payments may not occur until well into the future. ML of New York evaluates liabilities periodically based on changes in the assumptions used to establish the liabilities, as well as actual experience. ML of New York charges or credits changes in liabilities to expenses in the period established or re-estimated. If the liabilities originally established for future benefit payments prove inadequate, they must be increased. Such increases could negatively affect earnings and have an adverse effect on ML of New York’s financial results.

Operational Risk

ML of New York May Incur Losses From Inadequate or Failed Internal Processes, People and Systems or From External Events.

     ML of New York may incur losses arising from its exposure to operational risk. Insurance companies, including ML of New York, are exposed to the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. Such operational risks may include, for example, exposure to natural or man-made disasters, mistakes made in the confirmation or settlement of transactions or from improper recording, evaluating or accounting for transactions. ML of New York could suffer financial loss, disruption of its business, liability to clients, regulatory intervention or reputational damage, which would affect its business and financial condition.

Litigation Risk

Legal Proceedings Could Adversely Affect ML of New York’s Financial Results for a Particular Period and Impact its Credit Ratings.

     ML of New York may be named as a defendant in legal actions including arbitrations, class actions, and other litigation arising in connection with its insurance business activities. These legal actions can include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 5, Accounting for Contingencies, ML of New York will accrue a liability when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases in which claimants seek substantial or indeterminate damages, ML of New York would not be able to predict what the eventual loss or range of loss related to such matters could be, which may be material to its financial results for any particular period and may impact its credit ratings .

Item 1B. Unresolved Staff Comments

     Not Applicable.

Item 2.  Properties.

     The Registrant’s home office is located at 222 Broadway, 14th Floor, New York, New York. This office space is leased from MLPF&S. In addition, personnel performing services for the Registrant pursuant to its Management Services Agreement operate in MLIG office space. MLIG occupies certain office space in Pennington, New Jersey through Merrill Lynch & Co. An allocable share of the cost of each of these premises is paid by the Registrant through the service agreement with MLIG. Merrill Lynch Insurance Group Services, Inc. (“MLIGS”), an affiliate of MLIG owns office space in Jacksonville, Florida. MLIGS also leases certain office space in Springfield, Massachusetts from Picknelly Family Limited Partnership. During 2001, MLIGS consolidated operations into the Jacksonville, Florida location. MLIGS continues to lease the office space in Springfield, Massachusetts, although there are no personnel at that location.

Item 3. Legal Proceedings.

     There is no material pending litigation to which the Registrant is a party or of which any of its property is the subject, and there are no legal proceedings contemplated by any governmental authorities against the Registrant of which it has any knowledge.

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Item 4.  Submission of Matters to a Vote of Security Holders.

     Information called for by this item is omitted pursuant to General Instruction I. of Form 10-K.

PART II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

     (a)  The Registrant is a wholly owned subsidiary of MLIG, which is an indirect wholly owned subsidiary of Merrill Lynch & Co. MLIG is the sole record holder of Registrant’s shares. Therefore, there is no public trading market for Registrant’s common stock.

     During 2005, the Registrant did not pay any dividends. During 2004, the Registrant paid an ordinary dividend of $2,500,000 to MLIG. No other cash dividends have been declared on Registrant’s common stock at any time during the two most recent fiscal years. Under laws applicable to insurance companies domiciled in the State of New York, notice of intention to declare a dividend must be filed with the New York Superintendent of Insurance who may disallow the payment. See Note 9 to the Registrant’s financial statements.

     (b)  Not applicable.

     (c)  Not applicable.

Item 6.  Selected Financial Data.

     Information called for by this item is omitted pursuant to General Instruction I. of Form 10-K.

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Item 7. Management’s Narrative Analysis of Results of Operations

     This Management’s Narrative Analysis of Results of Operations should be read in conjunction with the Financial Statements and Notes to Financial Statements included herein for the Registrant.

Forward Looking Statements

     Certain statements contained in this Report may be considered forward-looking, including statements about management expectations, strategic objectives, business prospects, anticipated financial performance, and other similar matters. These forward-looking statements are not statements of historical fact and represent only management’s beliefs regarding future events, which are inherently uncertain. There are a variety of factors, many of which are beyond ML of New York’s control, which affect its operations, performance, business strategy, and results and could cause its actual results and experience to differ materially from the expectations and objectives expressed in any forward-looking statements. These factors include, but are not limited to, actions and initiatives taken by current and potential competitors, general economic conditions, the effects of current, pending and future legislation, regulation and regulatory actions, and the other risks and uncertainties detailed in this report. See Risk Factors that Could Affect ML of New York. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. ML of New York does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates the forward-looking statements are made. The reader should, however, consult any further disclosures ML of New York may make in future filings of its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Overview

     ML of New York conducts its business primarily in the annuity markets and to a lesser extent in the life insurance markets of the financial services industry. These markets are highly regulated with particular emphasis on company solvency and sales practice monitoring. Demographically, the population is aging and there is a growing number of individuals preparing for retirement, which favors life insurance and annuity products. ML of New York believes that the demand for retirement products containing guarantee features will continue to increase in the future. ML of New York believes it is well positioned to continue meeting these demands for product guarantees with the introduction of its new variable annuity product line during 2005. ML of New York currently offers guaranteed minimum death benefits, guaranteed minimum income benefits, and is launching guaranteed minimum withdrawal benefits in January 2006.

Life Insurance Strategy

     During the first quarter 2003, ML of New York discontinued manufacturing variable life insurance products. As a result, Merrill Lynch Life currently does not manufacture, market, or issue life insurance products.

     During the first quarter 2005, ML of New York transitioned the policy administration of its inforce life insurance contracts to an unaffiliated third party service provider. ML of New York remains committed to the delivery of high quality services for all life insurance contracts inforce .

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Critical Accounting Policies and Estimates

     The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses. Estimates, by their nature, are based on judgment and available information. Therefore, actual results could differ and could have a material impact on the Financial Statements, and it is possible that such changes could occur in the near term.

     ML of New York’s critical accounting policies and estimates are discussed below. See Note 1 to the Financial Statements for additional information regarding accounting policies.

Valuation of Fixed Maturity and Equity Securities

     ML of New York’s principal investments are available-for-sale fixed maturity and equity securities as defined by SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. The fair value of publicly traded fixed maturity and equity securities are based on independently quoted market prices. ML of New York primarily utilizes pricing services and broker quotes to determine the fair value of non-publicly traded fixed maturity and equity securities. Since significant judgment is required for the valuation of non-publicly traded securities, the estimated fair value of these securities may differ from amounts realized upon an immediate sale. At December 31, 2005 and December 31, 2004, approximately, $27.2 million (or 17%) and $31.8 million (or 18%), respectively, of ML of New York’s fixed maturity and equity securities portfolio consisted of non-publicly traded securities.

     Changes in the fair value of fixed maturity and equity securities are reported as a component of accumulated other comprehensive income (loss) on the Balance Sheets and are not reflected in the Statements of Earnings until a sale transaction occurs or when declines in fair value are deemed other-than-temporary.

Other-Than-Temporary Impairment Losses on Investments

     ML of New York regularly reviews each investment in its fixed maturity and equity securities portfolio to evaluate the necessity of recording impairment losses for other-than-temporary (“OTT”) declines in the fair value of investments. Management makes this determination through a series of discussions with ML of New York’s portfolio managers and credit analysts, information obtained from external sources (i.e. company announcements, ratings agency announcements, or news wire services) and ML of New York’s ability and intent to hold the investments for a period of time sufficient for a forecasted market price recovery up to or beyond the amortized cost of the investment. The factors that may give rise to a potential OTT impairment include, but are not limited to, i) certain credit-related events such as default of principal or interest payments by the issuer, ii) bankruptcy of issuer, iii) certain security restructurings, and iv) fair market value less than amortized cost for an extended period of time. In the absence of a readily ascertainable market value, the estimated fair value on these securities represents management’s best estimate and is based on comparable securities and other assumptions as appropriate. Management bases this determination on the most recent information available. OTT impairment losses result in a permanent reduction of the cost basis of the investment. ML of New York did not incur realized investment losses due to OTT declines in fair value for the years ended December 31, 2005 and December 31, 2004. ML of New York recorded realized investment losses due to OTT declines in fair value of $0.8 million for the year ended December 31, 2003.

Deferred Policy Acquisition Costs for Variable Annuities and Variable Life Insurance

     The costs of acquiring business, principally commissions, certain expenses related to policy issuance, and certain variable sales expenses that relate to and vary with the production of new and renewal business, are deferred and amortized in accordance with SFAS No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments. Deferred policy acquisition costs (“DAC”) are subject to recoverability testing at the time of policy issuance

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and loss recognition testing at the end of each reporting period. At December 31, 2005, variable annuities and variable life insurance accounted for $15.4 million (or 67%) and $7.6 million (or 33%), respectively, of ML of New York’s DAC asset. At December 31, 2004, variable annuities and variable life insurance accounted for $19.0 million (or 68%) and $9.1 million (or 32%), respectively, of ML of New York’s DAC asset.

     DAC for variable annuities is amortized with interest over the lives of the policies in relation to the present values of estimated future gross profits from asset-based fees, contract fees, and surrender charges, less a provision for guaranteed minimum death benefit (“GMDB”) expenses, policy maintenance expenses, and non-capitalized commissions.

     DAC for variable life insurance is amortized with interest over the lives of the policies in relation to the present values of estimated future gross profits from fees related to contract loans, asset-based fees, and cost of insurance charges, less claims (net of reinsurance), cost of mortality reinsurance, policy maintenance expenses, and non-capitalized commissions.

     The most significant assumptions involved in the estimation of future gross profits are future net separate accounts performance, surrender rates and mortality rates. For variable annuities, ML of New York generally establishes a long-term rate of net separate accounts growth. If returns over a determined historical period differ from the long-term assumption, returns for future determined periods are calculated so that the long-term assumption is achieved. The result is that the long-term rate is assumed to be realized over a period of approximately ten years. However, the long-term rate may be adjusted if expectations change. This method for projecting market returns is known as reversion to the mean, a standard industry practice. ML of New York adopted this assumption in 2004. For variable life insurance, ML of New York generally assumes a level long-term rate of net variable life separate accounts growth for all future years and the long-term rate may be adjusted if expectations change. Additionally, ML of New York may modify the rate of net separate accounts growth over the short term to reflect near-term expectations of the economy and financial market performance in which separate accounts assets are invested. Surrender and mortality rates for all variable contracts are based on historical experience and a projection of future experience.

     Future gross profit estimates are subject to periodic evaluation with necessary revisions applied against amortization to date. The impact of revisions and assumptions to estimates on cumulative amortization is recorded as a charge or benefit to current operations, commonly referred to as “unlocking”. Changes in assumptions can have a significant impact on the amount of DAC reported and their related amortization patterns. In general, increases in the estimated separate accounts return and decreases in surrender or mortality assumptions increase the expected future profitability of the underlying business and may lower the rate of DAC amortization. Conversely, decreases in the estimated separate accounts returns and increases in surrender or mortality assumptions reduce the expected future profitability of the underlying business and may increase the rate of DAC amortization. For the years ended December 31, 2005, 2004 and 2003 the favorable (unfavorable) impact on pretax earnings related to unlocking on variable life insurance and annuity products was ($3.2) million, $3.0 million and ($1.0) million respectively. During 2005, ML of New York lowered its future gross profit assumptions on certain variable life insurance and annuity products by increasing future surrender and mortality rates which resulted in unfavorable unlocking. During 2004, ML of New York adopted the reversion to the mean technique for projecting future returns on separate account assets. The adoption resulted in increased equity market return assumptions which contributed to favorable unlocking. In addition to the adoption of the mean reversion technique, unlocking during 2004 was also favorably impacted by changes in lapse assumptions on variable annuity products.

Policyholder Liabilities

     ML of New York establishes liabilities for amounts payable on its life and annuity contracts based on methods and underlying assumptions in accordance with SFAS 60, Accounting and Reporting by Insurance Enterprises, SFAS 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments, and Statement of Position (“SOP”) 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts and applicable actuarial standards.

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     ML of New York’s liability for policyholder account balances represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. The liability is generally equal to the accumulated account deposits plus interest credited less policyholders’ withdrawals and other charges assessed against the account balance. Policyholder account balances at December 31, 2005 and 2004 were $168.9 million and $185.5 million, respectively.

     Future policy benefits are actuarially determined reserves, which are calculated to meet future obligations and are generally payable over an extended period of time. Principle assumptions used in the establishment of liabilities for future policy benefits are mortality, surrender rates, policy expenses, investment yields and inflation. These estimates and assumptions are influenced by historical experience, current developments and anticipated market trends. At December 31, 2005 and 2004, future policy benefits were $22.5 million and $22.1 million, respectively. Included within future policy benefits are liabilities for GMDB and guaranteed minimum income benefit (“GMIB”) provisions contained in the variable products that ML of New York issues. See Note 6 to the Financial Statements for further discussion of GMDB and GMIB liabilities as well as period-to-period differences in unlocking.

Federal Income Taxes

     ML of New York uses the asset and liability method in providing income taxes on all transactions that have been recognized in the financial statements. The asset and liability method requires that deferred taxes be adjusted to reflect the tax rates at which future taxable amounts will be settled or realized. ML of New York provides for federal income taxes based on amounts it believes it will ultimately owe. Inherent in the provision for federal income taxes are estimates regarding the realization of certain tax deductions and credits.

     Specific estimates include the realization of dividend-received deductions (“DRD”) and foreign tax credits (“FTC”). A portion of ML of New York’s investment income related to separate accounts business qualifies for the DRD and FTC. Information necessary to calculate these tax adjustments is typically not available until the following year. However, within the current year’s provision, management makes estimates regarding the future tax deductibility of these items. These estimates are primarily based on recent historic experience. See Note 7 to the Financial Statements for period-to-period differences in DRD and FTC adjustments.

Recent Developments

New Accounting Pronouncements

     In September 2005, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued SOP 05-1, “Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts.” SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97. The SOP defines an internal replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. This SOP is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. ML of New York will adopt SOP 05-1 on January 1, 2007. ML of New York is currently assessing the Financial Statement impact related to the adoption of SOP 05-1.

     On January 1, 2004, ML of New York adopted the provisions of SOP 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts.” SOP 03-1 required the establishment of a liability for contracts that contain death or other insurance benefits using a reserve methodology that was different from the methodology that ML of New York previously employed. As a result, ML of New York recorded a $3.1 million increase in policyholder liabilities resulting in a charge to earnings of $2.0 million, net of a federal income tax benefit of $1.1 million, which was reported as a cumulative effect of a change in accounting principle during 2004. Excluding the cumulative effect of a change in accounting principle during 2004, the changes in policyholder liabilities related to SOP 03-1 did not have a

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material impact on ML of New York’s Statements of Earnings for the years ended December 31, 2005 and 2004.

New Business

     ML of New York offers products in the highly competitive retirement planning market by selling variable and interest-sensitive annuity products through the retail network of Merrill Lynch, Pierce, Fenner & Smith, Incorporated, a wholly owned broker-dealer subsidiary of Merrill Lynch & Co. ML of New York competes for Merrill Lynch & Co.’s clients’ retirement planning business with i) unaffiliated insurers whose products are also sold through Merrill Lynch & Co.’s retail network, ii) insurers who solicit this business directly, and iii) other investment products sold through Merrill Lynch & Co.’s retail network. ML of New York competes in this market segment by integrating its products into Merrill Lynch & Co.’s planning-based financial management program.

     ML of New York seeks to provide superior customer service and financial management to promote the competitiveness of its products. ML of New York’s customer service center has established standards of performance that are monitored on a regular basis. Managers and employees in the customer service center are periodically evaluated based on their performance in meeting these standards.

     ML of New York has strategically placed its marketing emphasis on the sale of variable annuity products. These products are designed to address the retirement planning needs of Merrill Lynch & Co.’s clients. Each variable annuity product is designed to provide tax-deferred retirement savings with the opportunity for diversified investing in a wide selection of underlying mutual fund portfolios. During May 2005, ML of New York introduced a new variable annuity product line, Merrill Lynch Investor Choice Annuity (“ICA”), which replaced all new sales of existing variable annuity products. ICA provides the ability to customize variable annuity products with specific contract features, charge structures, and investment options. ICA is offered in B-Share, C-Share and L-Share classes similar to previous variable annuity products. These classes are differentiated by the surrender charge period and the types of contract fees charged to the contract owner. Additionally, ICA offers a bonus class in which a specified amount is added to the contract value with each deposit. Since its introduction, total deposits for ICA were $24.8 million.

     Total direct deposits by product for the three years ended December 31 were as follows:

	(In Millions)						% Change
	2005		2004		2003		2005 - 2004			2004 - 2003
Variable Annuities (including ICA):
B-Share	$	17.4	$	65.5	$	37.9		-73	%		73	%
L-Share		11.6		4.3		9.9		170			-57
Bonus		10.8		—		—		100			n/a
C-Share		2.3		4.6		10.4		-50			-56
		42.1		74.4		58.2		-43			28
All Other Deposits		0.9		1.9		2.2		-53			-14
Total Direct Deposits	$	43.0	$	76.3	$	60.4		-44	%		26	%

     Total direct deposits decreased $33.3 million (or 44%) to $43.0 million for the period ended December 31, 2005, as compared to the period ended December 31, 2004. During 2005, variable annuity deposits decreased $32.3 million (or 43%) to $42.1 million as compared to 2004. As noted above, ICA was not launched until May 2005. Additionally, as a result of the unique product structure and features, the sales force required specialized marketing, training and education, which extended throughout 2005. Management believes future deposits will be positively impacted by these marketing and training efforts. Further, management believes variable annuity

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deposits were impacted by a reduction in the number of internal wholesalers. For nearly the first half of 2005, one of the three internal wholesaler positions was vacant.

     All other deposits includes deposits on modified guaranteed annuities and immediate annuities as well as renewal deposits on existing life insurance and fixed annuity contracts that are no longer manufactured.

Surrenders

     Policy and contract surrenders increased $23.4 million (or 22%) to $128.0 million during 2005 as compared to 2004. During 2005, variable annuity surrenders increased $21.3 million (or 30%) to $92.0 million as compared to 2004. The increase in variable annuity surrenders is primarily a result of the anticipated increase in lapse rates on variable annuity contracts reaching the end of their surrender charge period.

Financial Condition

     At December 31, 2005, ML of New York’s assets were $1,231.6 million or $49.9 million lower than the $1,281.5 million in assets at December 31, 2004. Assets excluding separate accounts assets decreased $15.8 million (or 5%) primarily due to a reduction in the number of fixed rate contracts inforce and a decrease in market values on investment securities as a result of the rising interest rate environment during 2005. Separate accounts assets, which represent 77% of total assets, decreased $34.1 million (or 3%) to $946.3 million. Changes in separate accounts assets during each quarter of 2005 were as follows:

	1Q05			2Q05			3Q05			4Q05			Total
	(In Millions)
Investment performance	$	(10.3	)	$	15.2		$	36.6		$	20.0		$	61.5
Deposits		9.0			6.4			10.2			19.2			44.8
Policy fees and charges		(4.4	)		(4.2	)		(4.4	)		(4.3	)		(17.3	)
Surrenders, benefits and withdrawals		(27.8	)		(28.3	)		(31.0	)		(36.0	)		(123.1	)
Net increase (decrease)	$	(33.5	)	$	(10.9	)	$	11.4		$	(1.1	)	$	(34.1	)

     During 2005, ML of New York experienced contract owner withdrawals that exceeded deposits on all products by $106.4 million. The components of contract owner transactions were as follows:

	2005
	(In Millions)
Deposits collected	$	43.0
Internal tax-free exchanges		(7.6	)
Net contract owner deposits		35.4
Contract owner withdrawals		59.6
Net transfers from separate accounts		82.2
Net contract owner withdrawals		141.8
Net contract owner activity	$	(106.4	)

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     ML of New York maintains a conservative general account investment portfolio. ML of New York has no mortgage or real estate investments and its investment in below investment grade fixed maturity securities are below the industry average. The following schedule identifies ML of New York’s general account invested assets by type for the years ended December 31:

	2005			2004
Investment grade fixed maturity securities (rated A or higher)		58	%		61	%
Policy loans		31			30
Investment grade fixed maturity securities (rated BBB)		10			9
Below investment grade fixed maturity securities		1			—
		100	%		100	%

     At December 31, 2005 and 2004, approximately $162.1 million (or 99%) and $179.8 million (or 100%), respectively, of fixed maturity securities were considered investment grade. ML of New York defines investment grade securities as unsecured debt obligations that have a rating equivalent to Standard and Poor’s BBB- or higher (or similar rating agency). Also, at December 31, 2005, approximately $5.7 million (or 3%) of fixed maturity securities were rated BBB-, which is the lowest investment grade rating given by Standard and Poor’s. This compares to $7.5 million (or 4%) of BBB- rated fixed maturity securities at December 31, 2004.

     At December 31, 2005, approximately $2.2 million (or 1%) of fixed maturity securities were considered below investment grade. The majority of these below investment grade holdings will mature in January 2006. At December 31, 2004, ML of New York did not hold any fixed maturity securities that were considered below investment grade. Below investment grade securities are speculative and are subject to significantly greater risks related to the creditworthiness of the issuers and the liquidity of the market for such securities. Current below investment grade holdings are the result of ratings downgrades on existing securities as ML of New York does not purchase below investment grade securities. ML of New York closely monitors such investments.

     ML of New York’s investment in collateralized mortgage obligations (“CMO”) and mortgage backed securities (“MBS”) had a carrying value of $2.6 million and $1.4 million at December 31, 2005 and 2004, respectively. At December 31, 2005 and 2004, approximately $0.7 million (or 29%) and $1.0 million (or 71%), respectively, of CMO and MBS holdings were fully collateralized by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. CMO and MBS securities are structured to allow the investor to determine, within certain limits, the amount of interest rate risk, prepayment risk and default risk that the investor is willing to accept. It is this level of risk that determines the degree to which the yields on CMO and MBS securities will exceed the yields that can be obtained from similarly rated corporate securities.

     At December 31, 2005, ML of New York had 1,657 life insurance and annuity contracts inforce with interest rate guarantees. The estimated average rate of interest credited on behalf of contract owners was 4.14% and 4.35% during 2005 and 2004, respectively. Total investments and cash and cash equivalents supporting liabilities with interest rate guarantees had an estimated average effective yield of 4.33% and 4.13% during 2005 and 2004, respectively. The number of life insurance and annuity contracts inforce with interest rate guarantees decreased 196 (or 11%) as compared to 2004.

Business Environment

     ML of New York’s financial position and/or results of operations are primarily impacted by the following economic factors: equity market performance, fluctuations in medium term interest rates, and the corporate credit environment via credit quality and fluctuations in credit spreads. The following discusses the impact of each economic factor.

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Equity Market Performance

     Changes in the U.S. equity market directly affect the values of the underlying U.S. equity-based mutual funds supporting separate accounts assets and, accordingly, the values of variable contract owner account balances. Approximately 70% of separate accounts assets are in equity-based mutual funds at December 31, 2005. Since asset-based fees collected on inforce variable contracts represent a significant source of revenue, ML of New York’s financial condition will be impacted by fluctuations in investment performance of equity-based separate accounts assets.

     Fluctuations in the U.S. equity market also directly impact ML of New York’s exposure to GMDB and GMIB provisions contained in the variable annuities it manufactures. Minimal or negative investment performance generally results in greater exposure to GMDB and GMIB provisions, to the extent there is an increase in the number of variable contracts (and amount per contract) in which the GMDB and GMIB exceeds the variable account balance. Prolonged periods of minimal or negative investment performance may result in greater GMDB and GMIB expense because it may change ML of New York’s assumptions regarding the long term cost of GMDB’s and GMIB’s. If ML of New York increases its estimated long term cost of GMDB’s and GMIB’s, it will result in establishing greater GMDB and GMIB liabilities as compared to current practice. GMDB and GMIB expenses are recorded as a component of policy benefits.

     The investment performance of the underlying U.S. equity-based mutual funds supporting ML of New York’s variable products do not replicate the returns of any specific U.S. equity market index. However, investment performance will generally increase or decrease with corresponding increases or decreases of the overall U.S. equity market. There are several standard indices published on a daily basis that measure performance of selected components of the U.S. equity market. Examples include the Dow Jones Industrial Average (“Dow”), the NASDAQ Composite Index (“NASDAQ”) and the Standard & Poor’s 500 Composite Stock Price Index (“S&P”). U.S. equity indices declined during the first half of the year and spent the latter part of the year recovering. The Dow ended the year essentially unchanged from 2004. Both the S&P and the NASDAQ finished the year with modest gains of 3.0% and 1.4% respectively.

     During 2005 asset-based policy fees increased $0.3 million (or 2%) while average variable account balances were relatively unchanged at $944.3 million as compared to 2004.

Medium Term Interest Rates

     Changes in interest rates affect the value of investments, primarily fixed maturity securities and preferred equity securities, as well as interest sensitive liabilities. Changes in interest rates have an inverse relationship to the value of investments and interest sensitive liabilities. Also, since ML of New York has certain fixed products that contain guaranteed minimum crediting rates, decreases in interest rates can decrease the amount of interest spread earned by ML of New York.

     Interest rates continued to trend upward and the yield curve flattened throughout 2005, at times becoming inverted. The U.S. Federal Reserve System’s Federal Open Market Committee raised the federal funds rate eight times during 2005 to 4.25%, up from 2.25%. The successive increases in short-term interest rates raised the medium-term interest rate to 4.36% at December 31, 2005 as compared to 3.16% at December 31, 2004. ML of New York defines medium term interest rates as the average interest rate on U.S. Treasury securities with terms of 1 to 5 years.

Corporate Credit and Credit Spreads

     Changes in the corporate credit environment directly impact the value of ML of New York’s investments, primarily fixed maturity securities. ML of New York primarily invests in investment-grade corporate debt to support its fixed rate product liabilities.

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     ML of New York defines credit spreads according to the Merrill Lynch U.S. Corporate Bond Index for BBB-A Rated bonds with three to five year maturities. Credit spreads represent the credit risk premiums required by market participants for a given credit quality, i.e. the additional yield that a debt instrument issued by a AA-rated entity must produce over a risk-free alternative (e.g., U.S. Treasury instruments). Changes in credit spreads have an inverse relationship to the value of investments.

     The impact of changes in medium term interest rates, corporate credit and credit spreads on market valuations for the years ended December 31 were as follows:

	2005			2004
Average medium term interest rate yield		4.36	%		3.16	%
Increase in medium term interest rates (in basis points)		120			111
Credit spreads (in basis points)		106			72
Expanding (contracting) of credit spreads (in basis points)		34			(13	)
Increase (decrease) on market valuations: (in millions)
Available-for-sale investment securities	$	(3.3	)	$	(2.3	)
Interest-sensitive policyholder liabilities		0.5			1.1
Net decrease on market valuations	$	(2.8	)	$	(1.2	)

Liquidity and Capital Resources

     ML of New York’s liquidity requirements include the payment of sales commissions and other underwriting expenses and the funding of its contractual obligations for the life insurance and annuity contracts it has inforce. ML of New York has developed and utilizes a cash flow projection system and regularly performs asset / liability duration matching in the management of its asset and liability portfolios. ML of New York anticipates funding all its cash requirements utilizing cash from operations, normal investment maturities and anticipated calls and repayments, consistent with prior years. As of December 31, 2005 and 2004, ML of New York’s assets included $172.8 million and $186.4 million, respectively, of cash, short-term investments, and investment grade publicly traded available-for-sale securities that could be liquidated if funds were required.

     The following table summarizes ML of New York’s contractual obligations as of December 31, 2005:

	Less Than		Three to		More Than
	Three Years		Five Years		Five Years		Total
	(In Millions)
Long-term liabilities (1)	$	1.3	$	1.4	$	17.5	$	20.2

(1) The long-term liabilities include the portion of future policy benefits for which ML of New York believes the amount and timing of the payments are essentially fixed and determinable. These amounts primarily relate to contracts where ML of New York is currently making payments to policyholders and will continue to do so until the occurrence of a specific event.

     In order to continue to issue annuity products, ML of New York must meet or exceed the statutory capital and surplus requirements of the insurance departments of the states in which it conducts business. Statutory accounting practices differ from generally accepted accounting principles (“GAAP”) in two major respects. First, under statutory accounting practices, the acquisition costs of new business are charged to expense, while under GAAP they are amortized over a period of time. Second, under statutory accounting practices, the required additions to statutory reserves for new business in some cases may initially exceed the statutory

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revenues attributable to such business. These practices result in a reduction of statutory income and surplus at the time of recording new business.

     The National Association of Insurance Commissioners utilizes the Risk Based Capital (“RBC”) adequacy monitoring system. The RBC calculates the amount of adjusted capital that a life insurance company should have based upon that company’s risk profile. As of December 31, 2005 and 2004, based on the RBC formula, ML of New York’s total adjusted capital level was well in excess of the minimum amount of capital required to avoid regulatory action.

     ML of New York receives claims paying ability ratings from Standard and Poors and A.M. Best. At December 31, 2005, ML of New York received ratings from Standard and Poors and A.M. Best of “A+” and “A”, respectively. These ratings were unchanged from the ratings at December 31, 2004.

     ML of New York has developed a comprehensive capital management plan that will continue to provide appropriate levels of capital for the risks that assumed, but will allow ML of New York to reduce its absolute level of surplus. In implementing this plan, ML of New York paid an ordinary cash dividend of $2.5 million to MLIG during 2004. ML of New York did not pay a dividend during 2005 or 2003. Pending regulatory approval, ML of New York intends to pay a cash dividend during 2006.

     ML of New York believes that it will be able to fund the capital and surplus requirements of projected new business from current statutory earnings and existing statutory capital and surplus. If sales of new business significantly exceed projections, ML of New York may have to look to its parent and other affiliated companies to provide the capital or borrowings necessary to support its current marketing efforts. ML of New York’s future marketing efforts could be hampered should its parent and/or affiliates be unwilling to commit additional funding.

     During June 2003, ML of New York and Merrill Lynch & Co. executed a “keepwell” agreement. The agreement obligates Merrill Lynch & Co. to maintain a level of capital in ML of New York in excess of minimum regulatory capital requirements.

Results of Operations

     ML of New York’s gross earnings are principally derived from two sources:

• the charges imposed on variable annuity and variable life insurance contracts, and

• the net earnings from investment of fixed rate life insurance and annuity contract owner deposits less interest credited to contract owners, commonly known as interest spread

     The costs associated with acquiring contract owner deposits (DAC) are amortized over the period in which ML of New York anticipates holding those funds, as noted in the Critical Accounting Policies section above. Insurance expenses and taxes reported in the statements of earnings are net of amounts deferred. In addition, ML of New York incurs expenses associated with the maintenance of inforce contracts.

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2005 compared to 2004

     ML of New York recorded earnings before change in accounting principle of $5.5 and $7.9 million for 2005 and 2004, respectively.

     Net earnings derived from interest spread increased $1.0 million (or 44%) to $3.1 million during 2005 as compared to $2.1 million in 2004. The following table provides the components and changes in interest spread:

Interest Spread	2005			2004			Change
	(In Millions)
Net investment income	$	11.3		$	11.2		$	0.1	(1)
Interest credited to policyholder account balances		(8.2	)		(9.1	)		0.9	(2)
	$	3.1		$	2.1		$	1.0

(1)	Despite the reduction in fixed rate contracts inforce, net investment income was favorably impacted by an increase in asset yields during 2005 as compared to 2004.
(2)	The decrease in interest credited is primarily due to the reduction of fixed rate contracts inforce.

     Net realized investment gains increased $1.7 million to $1.8 million during 2005 as compared to $0.1 million in 2004. The increase in net realized investment gains is primarily due to one large credit related gain incurred during the third quarter 2005.

     Policy benefits decreased $0.5 million (or 17%) to $2.5 million during 2005 as compared to $3.0 million in 2004. The following table provides the changes in policy benefits by type:

Policy Benefits	2005		2004		Change
	(In Millions)
Life insurance mortality expense	$	1.4	$	1.7	$	(0.3	)(1)
Variable annuity mortality expense		1.1		1.3		(0.2	)(2)
	$	2.5	$	3.0	$	(0.5	)

(1)	The decrease in life insurance mortality expense is primarily due to a decrease in the number of death claims.
(2)	The decrease in variable annuity mortality expense is due to favorable GMDB liability unlocking during 2005 as noted in the Critical Accounting Policies section above.

     Reinsurance premium ceded increased $0.1 million (or 7%) to $1.8 million during 2005 as compared to $1.7 million in 2004. The increase is primarily attributable to the increased reinsurance of variable annuity products containing GMIB provisions.

     Amortization of DAC increased $6.2 million to $7.0 million during 2005 as compared to $0.8 million in 2004 primarily as a result of period-to-period differences in DAC unlocking of $6.2 million as noted in the Critical Accounting Policies section above.

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     Insurance expenses and taxes increased $0.7 million (or 18%) to $4.7 million during 2005 as compared to $4.0 million in 2004. The following table provides the changes in insurance expenses and taxes by type:

Insurance Expenses and Taxes – Net of Capitalization	2005		2004		Change
	(In Millions)
General insurance expenses	$	3.7	$	3.2	$	0.5	(1)
Commissions		0.4		0.1		0.3	(2)
Taxes, licenses, and fees		0.6		0.7		(0.1	)
	$	4.7	$	4.0	$	(0.7	)

(1)	The increase in general insurance expenses is primarily due to new product development expenses.
(2)	The increase in commissions is primarily due to an increase in variable annuity asset-based commissions.

     ML of New York’s effective federal income tax rate decreased to 24% for 2005 from 29% for 2004 primarily due to period-to-period differences in DRD and FTC adjustments as noted in the Critical Accounting Policies section above.

2004 compared to 2003

     ML of New York recorded earnings before change in accounting principle of $7.9 and $4.4 million for 2004 and 2003, respectively.

     Policy charge revenue increased $2.0 million (or 12%) to $18.4 million during 2004 as compared to $16.4 million in 2003. The increase in policy charge revenue is attributable to the increase in average variable account balances during 2004. Average variable account balances increased $92.5 million (or 11%) as compared to 2003. During the same comparative period, asset-based policy charge revenue increased $1.8 million (or 17%). Non-asset based policy charge revenue was relatively unchanged during the 2004 as compared to 2003.

     Net earnings derived from interest spread decreased $0.9 million (or 30%) to $2.1 million during 2004 as compared to $3.0 million in 2003. The decrease in interest spread is primarily due to the reduction in fixed rate contracts inforce, as well as, reductions in invested asset yields resulting from the increase in credit quality of the portfolio and a higher level of call activity.

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     Net realized investment gains decreased $0.5 million to $0.1 during 2004 as compared to $0.6 million in 2003. The following table provides the changes in net realized investment gains (losses) by type:

Realized Gains (Losses)	2004		2003			Change
	(In Millions)
Interest related gains	$	0.1	$	2.4		$	(2.3	)(1)
Credit related losses		—		(1.8	)		1.8	(2)
	$	0.1	$	0.6		$	(0.5	)

(1)	The decrease in interest related net realized gains is primarily due to decreased invested asset sales and decreases to asset market valuations resulting from the increasing interest rate environment during 2004 as compared to 2003.
(2)	The decrease in credit related net realized losses is primarily due to the reduction in OTT declines in the carrying value of fixed maturity securities and asset sales of several large security holdings. There were no OTT declines or credit related asset sales during 2004. OTT declines were $0.8 million and losses on credit related asset sales were $1.0 million during 2003.

     Policy benefits decreased $1.0 million (or 25%) to $3.0 million during 2004 as compared to $4.0 million in 2003. The following table provides the changes in policy benefits by type:

Policy Benefits	2004		2003		Change
	(In Millions)
Life insurance mortality expense	$	1.7	$	2.1	$	(0.4	)(1)
Variable annuity mortality expense		1.3		1.9		(0.6	)(2)
	$	3.0	$	4.0	$	(1.0	)

(1)	The decrease in life insurance mortality expense is due to a decrease in net amount at risk per death claim.
(2)	The decrease in variable annuity mortality expense is due to decreased death benefit expense incurred under GMDB provisions due to improving equity markets.

     Reinsurance premium ceded increased $0.1 million (or 9%) to $1.7 million during 2004 as compared to $1.6 million in 2003. Reinsurance premium ceded related to ML of New York’s annuity products increased $0.2 million during 2004 as compared to 2003. The increase is attributable to the reinsurance of variable annuity products containing GMIB provisions. Reinsurance premium ceded related to ML of New York’s life insurance products decreased $0.1 million during 2004 as compared to 2003. The decrease is attributable to the decrease in life insurance inforce.

     Amortization of DAC decreased $4.0 million (or 83%) to $0.8 million during 2004 as compared to $4.8 million in 2003 primarily as a result of period-to-period differences in DAC unlocking as noted in the Critical Accounting Policies section above. Excluding DAC unlocking, amortization of DAC was relatively unchanged during 2004 as compared to 2003.

     Insurance expenses and taxes increased $0.4 million (or 12%) to $4.0 million during 2004 as compared to $3.6 million in 2003. The increase in insurance expenses and taxes is primarily due to increased New York State franchise tax expense.

     ML of New York’s effective federal income tax rate increased to 29% for 2004 from 28% for 2003 primarily due to period-to-period differences in DRD and FTC adjustments as noted in the Critical Accounting Policies section above.

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     As noted in the Recent Developments section above, effective January 1, 2004, ML of New York adopted SOP 03-1 and recorded a cumulative change in accounting principle of $2.0 million, net of a federal income tax benefit of $1.1 million.

Segment Information

     ML of New York’s operating results are categorized into two business segments: Life Insurance and Annuities. ML of New York’s Life Insurance segment consists of variable life insurance products and interest-sensitive life products. ML of New York’s Annuity segment consists of variable annuities and interest-sensitive annuities. The “Other” earnings category represents earnings on invested assets that do not support contract owner liabilities.

     Earnings before change in accounting principle by segment were as follows:

Segment	2005		2004		2003
	(In Millions)
Life Insurance	$	2.1	$	2.1	$	1.3
Annuities		2.8		5.2		2.6
Other		0.6		0.6		0.5

     Net earnings by segment were as follows:

Segment	2005		2004		2003
	(In Millions)
Life Insurance	$	2.1	$	1.9	$	1.3
Annuities		2.8		3.3		2.6
Other		0.6		0.6		0.5

     The products that comprise the Life Insurance and Annuity segments generally possess similar economic characteristics. As such, the financial condition and results of operations of each business segment are generally consistent with ML of New York’s consolidated financial condition and results of operations presented herein.

     During 2005 and 2004, ML of New York did not incur any OTT impairment losses on investments for either the Life Insurance or Annuity segments. The Annuity segment recorded $0.8 million of OTT impairment losses on investments in 2003.

     ML of New York is not dependent upon any single customer, and no single customer accounted for more than 10% of its revenues during 2005, 2004, or 2003.

Inflation

     ML of New York’s operations have not been materially impacted by inflation and changing prices during the preceding three years.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     Market risk is the potential change in a financial instrument’s value caused by fluctuations in certain underlying risk factors. ML of New York is primarily subject to market risk resulting from fluctuations in interest rates, credit spreads, credit risk, and equity prices. ML of New York utilizes an integrated approach to manage financial market risks including a comprehensive asset / liability management process, product design, and reinsurance programs.

     A number of assumptions must be made to obtain the expected fair value changes illustrated below. ML of New York has no reason to believe that historically simulated interest rate and credit spread movements have any predictive power for future fair value changes. The volatility experienced during recent years demonstrates the limitations of these models.

Interest Rate Risk

     Interest rate risk arises from the possibility that changes in interest rates will affect the value of investments, primarily fixed maturity securities and preferred equity securities, as well as interest sensitive liabilities. Changes in interest rates have an inverse relationship to the value of investments and interest sensitive liabilities. ML of New York manages interest rate risk as part of its asset / liability management strategy. For each portfolio, management monitors the expected changes in assets and liabilities, as produced by ML of New York’s model, resulting from various interest rate scenarios. Based on these results, management closely matches the duration and convexity of insurance liabilities to the duration and convexity of assets supporting those liabilities.

     The following table presents the estimated net impact on the fair value of investments and interest sensitive liabilities resulting from various hypothetical interest rate scenarios, based on assumptions contained in ML of New York’s model:

	Change in Fair Value
Change in Interest Rates	2005			2004
	(In Millions)
+ 100 basis points	($	1.1	)	($	2.2	)
+ 50 basis points	($	0.6	)	($	1.1	)
+ 10 basis points	($	0.1	)	($	0.2	)
– 10 basis points	$	0.1		$	0.2
– 50 basis points	$	0.6		$	1.1
– 100 basis points	$	1.1		$	2.2

     ML of New York’s model is based on existing business inforce as of the year ended 2005 without considering the impact of new annuity sales on assets or liabilities. The model incorporates ML of New York’s fixed maturity securities and preferred equity investments excluding variable rate securities with rate resetting in less than ninety days, securities with a maturity of less than ninety days, and securities that are in or near default. The changes in interest rate scenarios, noted above, assume parallel shifts in the yield curve occurring uniformly throughout the year.

     Additionally, certain products have features that mitigate the impact of interest rate risk. Examples include surrender charges, market value adjustments, and resetting of interest credited rates (subject to certain guaranteed minimum crediting rates). For interest sensitive life products the guaranteed minimum rate is 4%. However, for some products, the minimum rate may be reduced by a charge for mortality that varies by the attained age of the insured. For interest sensitive annuity products the guaranteed minimum rates range from 3% to 4.5%, with the greatest concentration in the 3% to 4% range.

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Credit Spread Risk

     Credit spread risk arises from the possibility that changes in credit spreads will affect the value of investments. Credit spreads represent the credit risk premiums required by market participants for a given credit quality, i.e., the additional yield that a debt instrument issued by an AA-rated entity must produce over a risk-free alternative (e.g., U.S. Treasury instruments).

     The following table presents the estimated net impact on the fair value of investments resulting from various hypothetical fluctuations in credit spreads, based on assumptions contained in ML of New York’s model:

	Change in Fair Value
Change in Credit Spreads	2005			2004
	(In Millions)
+ 50 basis points	($	1.6	)	($	2.3	)
+ 10 basis points	($	0.3	)	($	0.5	)
– 10 basis points	$	0.5		$	0.5
– 50 basis points	$	1.7		$	2.3

     ML of New York’s model is based on existing business inforce as of the year ended 2005 without considering the impact of new annuity sales on assets. The model incorporates ML of New York’s fixed maturity securities and preferred equity investments excluding securities with a maturity of less than ninety days and securities that are in or near default. The changes in credit spreads, noted above, assume a uniform occurrence throughout the year.

     Liability valuations for modified guaranteed annuities mitigate ML of New York’s exposure to credit spread risk on these products. Contract owner surrender values reflect changes in spread between corporate bonds and U.S. Treasury securities since the market value adjusted account value is based on current crediting rates for new and renewal contracts. These crediting rates are adjusted weekly and reflect current market conditions.

Credit Risk

     Credit risk represents the loss that ML of New York would incur if an issuer fails to perform its contractual obligations and the value of the security held has been impaired or is deemed worthless. ML of New York manages its credit risk by setting investment policy guidelines that assure diversification with respect to investment, issuer, geographic location and credit quality. Management regularly monitors compliance of each investment portfolio’s status with the investment policy guidelines, including timely updates of credit-related securities.

Equity Price Risk

     Equity price risk arises from the possibility that general reductions in equity prices will negatively affect the value of assets and liabilities, primarily separate accounts assets and separate accounts liabilities. ML of New York manages its exposure to equity risk via certain product design features (e.g., waiting periods, age caps, subsequent premium restrictions, and adjusted withdrawals) and reinsurance programs to the extent reinsurance capacity is available in the marketplace. General reductions in equity prices impact ML of New York in the following ways:

• Reductions in separate accounts assets. Asset-based policy fees collected on separate accounts assets are a primary source of earnings, thus lower asset balances will result in lower policy charge revenue.

• Increased exposure to GMDB. Decreasing variable contract owner account values increase the number of contracts, as well as amounts per contract, in which GMDB exceed those variable contract owner account balances. This may result in greater future policy benefit expense.

• Potential hindrance of sales and marketing efforts for variable annuity products.

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Item 8.  Financial Statements and Supplementary Data.

     The financial statements of Registrant are set forth in Part IV hereof and are incorporated herein by reference.

Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

     Not applicable.

Item 9A.  Controls and Procedures.

     In 2002, Registrant formed a Disclosure Committee to assist with the monitoring and evaluation of our disclosure controls and procedures. Registrant’s Chief Executive Officer, Chief Financial Officer and Disclosure Committee have evaluated the effectiveness of Registrant’s disclosure controls and procedures (as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934) as of the end period covered by this Report. Based on that evaluation, Registrant’s Chief Executive Officer and Chief Financial Officer have concluded that Registrant’s disclosure controls and procedures are effective.

     In addition, no change in Registrant’s internal control over financial reporting (as defined in Rule 15d-15(f) under the Securities Exchange Act of 1934) occurred during the fourth fiscal quarter of 2005 that has materially affected, or is reasonably likely to materially affect, Registrant’s internal control over financial reporting.

Item 9B. Other Information.

     No information is required to be disclosed under this item.

PART III

     Information called for by items 10 through 13 of this part is omitted pursuant to General Instruction I. of Form 10-K.

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PART IV

Item 14.  Principal Accounting Fees and Services

Pre-Approval of Services Provided by the Registrant’s Independent Auditor

Consistent with SEC rules regarding auditor independence, the Audit Committee has established a policy governing the provision of audit and non-audit services to the Registrant.

Pursuant to this policy, the Audit Committee will consider annually and, if appropriate approve the provision of all audit services to the Registrant by the independent auditor. The Audit Committee will also consider and, if appropriate, pre-approve the provision by the independent auditor of services that fit within the following categories of permitted non-audit services within a specified dollar limit.

• Audit service, include audit work performed in the review and preparation of the financial statements, as well as services that generally only the independent auditor can be expected to provide, such as comfort letters, statutory audits, attest services, consents and assistance with the review of documents filed with the SEC.

• Audit-Related services include accounting consultations relating to actuarial valuations.

• Tax services include all services performed by the independent auditor's tax personnel.

• All Other service, include all other miscellaneous services not captured in the other two categories that are not prohibited services, as defined by the SEC, and that the Audit Committee believes will not impair the independence of the independent auditor.

Any proposed engagement of the independent auditor that does not fit within one of the pre-approved categories of service or is not within the established fee limits must be pre-approved by the Audit Committee.

The Audit Committee has delegated pre-approval authority to the Chair of the Audit Committee in time sensitive cases. The exercise of such authority must be reported to the Audit Committee at its next regularly scheduled meeting. The Audit Committee regularly reviews summary reports detailing all services (and related fees and expenses) being provided to the Registrant by the independent auditor.

Fees Paid to the Registrant’s Independent Auditor

The following table presents fees for professional services rendered by Deloitte & Touche LLP for the audit of the Registrant’s financial statements for the years ended December 31, 2005 and 2004 and fees billed for other services rendered by Deloitte & Touche LLP during those periods.

	2005		2004
Audit (1)	$	242,146	$	207,506
Audit Related (2)		5,272		4,554
Tax (3)		2,636		2,277
All Other (4)		13,531		13,362
Total	$	263,585	$	227,699

(1)	Audit Fees included audit work performed in the review and preparation of the financial statements, as well as, services that generally only the independent auditor can be expected to provide, such as comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the Securities and Exchange Commission.
(2)	Audit–Related Fees included accounting consultations relating to actuarial valuations.
(3)	Tax Fees included all services performed by the independent auditor’s tax personnel.
(4)	All Other Fees included miscellaneous out-of-pocket expenses.

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PART IV

Item 15.  Exhibits and Financial Statement Schedules.

     (a)  Financial Statements and Exhibits.

(1)	The following financial statements of the Registrant are filed as part of this report:
a.	Independent Auditors’ Report dated February 27, 2006.
b.	Balance Sheets at December 31, 2005 and 2004.
c.	Statements of Earnings for the Years Ended December 31, 2005, 2004 and 2003.
d.	Statements of Comprehensive Income for the Years Ended December 31, 2005, 2004 and 2003.
e.	Statements of Stockholder’s Equity for the Years Ended December 31, 2005, 2004 and 2003.
f.	Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003.
g.	Notes to Financial Statements for the Years Ended December 31, 2005, 2004 and 2003.
(2)	Not applicable.
(3)	The following exhibits are filed as part of this report as indicated below:

-25-

3.1	Certificate of Amendment of the Charter of ML Life Insurance Company of New York. (Incorporated by reference to Exhibit 6(a)(ii) to Post-Effective Amendment No. 10 to ML of New York Variable Annuity Account A’s registration statement on Form N-4, File No. 33-43654, filed December 9, 1996.)
3.2	By-Laws of ML Life Insurance Company of New York. (Incorporated by reference to Exhibit 6(b) to Post-Effective Amendment No. 10 to ML of New York Variable Annuity Account A’s registration statement on Form N-4, File No. 33-43654, filed December 9, 1996.)
4.1	Modified Guaranteed Annuity Contract. (Incorporated by reference to Exhibit 4(a) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.)
4.2	Modified Guaranteed Annuity Contract Application. (Incorporated by reference to Exhibit 4(b) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.)
4.3	Qualified Retirement Plan Endorsement. (Incorporated by reference to Exhibit 4(c) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.)
4.4	IRA Endorsement. (Incorporated by reference to Exhibit 4(d) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.)
4.5	Company Name Change Endorsement. (Incorporated by reference to Exhibit 4(e) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed March 30, 1992.)
4.6	IRA Endorsement, MLNY009 (Incorporated by reference to Exhibit 4(d)(2) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994).

-26-

4.7	Modified Guaranteed Annuity Contract MLNY-AY-991/94. (Incorporated by reference to Exhibit 4(a)(2) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed December 7, 1994).
4.8	Qualified Retirement Plan Endorsement MLNY-AYQ-991/94. (Incorporation by reference to Exhibit 4(c)(2) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed December 7, 1994).
10.1	General Agency Agreement between Royal Tandem Life Insurance Company and Merrill Lynch Life Agency Inc. (Incorporated by reference to Exhibit 10(a) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.)
10.2	Investment Management Agreement by and between Royal Tandem Life Insurance Company and Equitable Capital Management Corporation. (Incorporated by reference to Exhibit 10(b) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.)
10.3	Shareholders’ Agreement by and among The Equitable Life Assurance Society of the United States and Merrill Lynch & Co., Inc. and Tandem Financial Group, Inc. (Incorporated by reference to Exhibit 10(c) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.)
10.4	Service Agreement by and between Royal Tandem Life Insurance Company and Tandem Financial Group, Inc. (Incorporated by reference to Exhibit 10(d) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.)
10.5	Service Agreement by and between Tandem Financial Group, Inc. and Merrill Lynch & Co., Inc. (Incorporated by reference to Exhibit 10(e) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.)

-27-

10.6	Form of Investment Management Agreement by and between Royal Tandem Life Insurance Company and Merrill Lynch Asset Management, Inc. (Incorporated by reference to Exhibit 10(f) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed March 7, 1991.)
10.7	Assumption Reinsurance Agreement between Merrill Lynch Life Insurance Company, Tandem Insurance Group, Inc. and Royal Tandem Life Insurance Company and Family Life Insurance Company. (Incorporated by reference to Exhibit 10(g) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed March 30, 1992.)
10.8	Indemnity Agreement between ML Life Insurance Company of New York and Merrill Lynch Life Agency, Inc. (Incorporated by reference to Exhibit 10(h) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed March 30, 1992.)
10.9	Amended General Agency Agreement between ML Life Insurance Company of New York and Merrill Lynch Life Agency, Inc. (Incorporated by reference to Exhibit 10(i) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed March 30, 1992.)
10.10	Amended Management Agreement between ML Life Insurance Company of New York and Merrill Lynch Asset Management, Inc. (Incorporated by reference to Exhibit 10(j) to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 30, 1993.)
10.11	Mortgage Loan Servicing Agreement between ML Life Insurance Company of New York and Merrill Lynch & Co., Inc. (Incorporated by reference to Exhibit 10(k) to Post-Effective Amendment No. 4 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 29, 1995.)
23.1	Written Consent of Deloitte & Touche, LLP, independent registered public accounting firm, is filed herewith.
24.1	Power of attorney of Frederick J. C. Butler. (Incorporated by reference to Exhibit 24(a) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.)

-28-

24.2	Power of attorney of Robert L. Israeloff. (Incorporated by reference to Exhibit 24(g) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.)
24.3	Power of attorney of Cynthia L. Kahn. (Incorporated by reference to Exhibit 24(i) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.)
24.4	Power of attorney of Robert A. King. (Incorporated by reference to Exhibit 24(j) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.)
24.5	Power of attorney of Irving M. Pollack. (Incorporated by reference to Exhibit 24(k) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.)
24.6	Power of attorney of Barry G. Skolnick. (Incorporated by reference to Exhibit 24(l) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.)

-29-

24.7	Power of attorney of Richard M. Drew. (Incorporated by reference to Exhibit 24.14 to Annual Report on Form 10-K, File Nos. 33-34562, 33-60288, and 333-48983, filed March 30, 2000.)
24.8	Power of attorney of John C. Carroll, is filed herewith.
24.9	Power of attorney of Paul Michalowski, is filed herewith.
24.10	Power of attorney of Joseph Justice. (Incorporated by reference to ML of New York Variable Annuity Separate Account A’s registration statement on Form N-4, File No. 333-69220, filed September 10, 2001.)
24.11	Power of attorney of Lori M. Salvo. (Incorporated by reference to ML of New York Variable Annuity Separate Account A’s registration statement on Form N-4, File No. 333-69220, filed September 10, 2001.)
24.12	Power of attorney of Deborah J. Adler. (Incorporated by reference to Exhibit 24.13 to Annual Report on Form 10-K, File Nos. 33-34562, 33-60288, and 333-48983, filed March 29, 2004.)
24.13	Power of attorney of Concetta M. Ruggiero. (Incorporated by reference to Exhibit 24.13 to Annual Report on Form 10-K, File Nos. 33-34562, 33-60288, and 333-48983, filed March 29, 2004.)
31.1	Certification by the Chief Executive Officer of the Registrant pursuant to Rule 15d-14(a), is filed herewith.
31.2	Certification by the Chief Financial Officer of the Registrant pursuant to Rule 15d-14(a), is filed herewith.
32.1	Certification by the Chief Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is filed herewith.
32.2	Certification by the Chief Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is filed herewith.

-30-

INDEX TO FINANCIAL STATEMENTS

Independent Auditors’ Report

Balance Sheets at December 31, 2005 and 2004

Statements of Earnings for the Years Ended December 31, 2005, 2004 and 2003

Statements of Comprehensive Income for the Years Ended December 31, 2005, 2004 and 2003

Statements of Stockholder’s Equity for the Years Ended December 31, 2005, 2004 and 2003

Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003

Notes to Financial Statements for the Years Ended December 31, 2005, 2004 and 2003

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
ML Life Insurance Company of New York

We have audited the accompanying balance sheets of ML Life Insurance Company of New York (the “Company”) as of December 31, 2005 and 2004, and the related statements of earnings, comprehensive income, stockholder’s equity, and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial position of ML Life Insurance Company of New York as of December 31, 2005 and 2004, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the financial statements, in 2004 the Company changed its method of accounting for long-duration contracts to conform to Statement of Position 03-1 “Accounting and Reporting by Insurance Enterprises for Certain Non-Traditional Long-Duration Contracts and for Separate Accounts.”

February 27, 2006

ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)

BALANCE SHEETS
AS OF DECEMBER 31, 2005 AND 2004
(Dollars in thousands, except common stock par value and shares)

ASSETS	2005		2004
INVESTMENTS:
Fixed maturity available-for-sale securities, at estimated fair value (amortized cost: 2005 - $165,404 ; 2004 - $177,601)	$	164,279	$	179,753
Equity available-for-sale securities, at estimated fair value (cost: 2005 - $702; 2004 - $0)		706		—
Policy loans on insurance contracts, at outstanding loan balances		74,393		76,750
Total Investments		239,378		256,503
CASH AND CASH EQUIVALENTS		14,650		6,649
ACCRUED INVESTMENT INCOME		3,934		3,919
DEFERRED POLICY ACQUISITION COSTS		23,038		28,132
DEFERRED SALES INDUCEMENTS		601		—
OTHER ASSETS		3,772		5,978
SEPARATE ACCOUNTS ASSETS		946,261		980,398
TOTAL ASSETS	$	1,231,634	$	1,281,579

See accompanying notes to financial statements. (Continued)

ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)

BALANCE SHEETS (Continued)
AS OF DECEMBER 31, 2005 AND 2004
(Dollars in thousands, except common stock par value and shares)

LIABILITIES AND STOCKHOLDER’S EQUITY	2005			2004
LIABILITIES:
POLICYHOLDER LIABILITIES AND ACCRUALS:
Policyholder account balances	$	168,880		$	185,538
Future policy benefits		22,546			22,101
Claims and claims settlement expenses		3,329			5,265
Total Policyholder Liabilities and Accruals		194,755			212,904
OTHER POLICYHOLDER FUNDS		264			1,099
FEDERAL INCOME TAXES – DEFERRED		2,091			3,871
FEDERAL INCOME TAXES – CURRENT		642			734
AFFILIATED PAYABLES – NET		2,869			2,357
OTHER LIABILITIES		863			—
SEPARATE ACCOUNTS LIABILITIES		946,261			980,398
Total Liabilities		1,147,745			1,201,363
STOCKHOLDER’S EQUITY:
Common stock, $10 par value - 220,000 shares authorized, issued and outstanding		2,200			2,200
Additional paid-in capital		52,310			52,310
Retained earnings		30,556			25,088
Accumulated other comprehensive income (loss)		(1,177	)		618
Total Stockholder’s Equity		83,889			80,216
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	1,231,634		$	1,281,579

See accompanying notes to financial statements.

ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)

STATEMENTS OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
(Dollars in thousands)

	2005			2004			2003
REVENUES:
Policy charge revenue	$	18,431		$	18,426		$	16,388
Net investment income		11,275			11,222			12,775
Net realized investment gains		1,799			127			633
Total Revenues		31,505			29,775			29,796
BENEFITS AND EXPENSES:
Interest credited to policyholder liabilities		8,216			9,096			9,756
Policy benefits (net of reinsurance recoveries: 2005 - $98; 2004 - $1,066; 2003 - $705)		2,501			3,014			4,027
Reinsurance premium ceded		1,845			1,722			1,577
Amortization of deferred policy acquisition costs		7,005			821			4,810
Insurance expenses and taxes		4,699			3,999			3,562
Total Benefits and Expenses		24,266			18,652			23,732
Earnings Before Federal Income Tax Provision		7,239			11,123			6,064
FEDERAL INCOME TAX PROVISION (BENEFIT):
Current		2,585			2,597			4,510
Deferred		(814	)		662			(2,818	)
Total Federal Income Tax Provision		1,771			3,259			1,692
EARNINGS BEFORE CHANGE IN ACCOUNTING PRINCIPLE		5,468			7,864			4,372
Change in Accounting Principle, Net of Tax		—			(2,032	)		—
NET EARNINGS	$	5,468		$	5,832		$	4,372

See accompanying notes to financial statements.

ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)

STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
(Dollars in thousands)

	2005			2004			2003
NET EARNINGS	$	5,468		$	5,832		$	4,372
OTHER COMPREHENSIVE INCOME (LOSS):
Net unrealized gains (losses) on available-for-sale securities:
Net unrealized holding gains (losses) arising during the period		(1,474	)		(2,133	)		1,245
Reclassification adjustment for gains included in net earnings		(1,799	)		(127	)		(321	)
Total net unrealized gains (losses) on available-for-sale securities		(3,273	)		(2,260	)		924
Adjustments for:
Policyholder liabilities		512			1,132			864
Deferred federal income taxes		966			395			(626	)
Total other comprehensive income (loss), net of tax		(1,795	)		(733	)		1,162
COMPREHENSIVE INCOME	$	3,673		$	5,099		$	5,534

See accompanying notes to financial statements.

ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)

STATEMENTS OF STOCKHOLDER’S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
(Dollars in thousands)

								Accumulated
			Additional					other			Total
	Common		paid-in		Retained			comprehensive			stockholder’s
	stock		capital		earnings			income (loss)			equity
BALANCE, JANUARY 1, 2003	$	2,200	$	52,310	$	17,384		$	189		$	72,083
Net earnings						4,372						4,372
Other comprehensive income, net of tax									1,162			1,162
BALANCE, DECEMBER 31, 2003		2,200		52,310		21,756			1,351			77,617
Net earnings						5,832						5,832
Cash dividend paid to parent						(2,500	)					(2,500	)
Other comprehensive loss, net of tax									(733	)		(733	)
BALANCE, DECEMBER 31, 2004		2,200		52,310		25,088			618			80,216
Net earnings						5,468						5,468
Other comprehensive loss, net of tax									(1,795	)		(1,795	)
BALANCE, DECEMBER 31, 2005	$	2,200	$	52,310	$	30,556		$	(1,177	)	$	83,889

See accompanying notes to financial statements.

ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
(Dollars in thousands)

	2005			2004			2003
Cash Flows From Operating Activities:
Net earnings	$	5,468		$	5,832		$	4,372
Noncash items included in earnings:
Change in accounting principle, net of tax		—			2,032			—
Amortization of deferred policy acquisition costs		7,005			821			4,810
Capitalization of policy acquisition costs		(1,911	)		(3,924	)		(2,323	)
Amortization of deferred sales inducements		(28	)		—			—
Capitalization of deferred sales inducements		(573	)		—			—
Amortization of investments		821			622			689
Interest credited to policyholder liabilities		8,216			9,096			9,756
Change in variable contract reserves		285			(188	)		—
Provision (benefit) for deferred Federal income tax		(814	)		662			(2,818	)
(Increase) decrease in operating assets:
Accrued investment income		(15	)		413			513
Federal income taxes – current		—			—			1,628
Other		2,206			(2,330	)		495
Increase (decrease) in operating liabilities:
Claims and claims settlement expenses		(1,936	)		1,338			782
Other policyholder funds		(835	)		(1,015	)		1,327
Federal income taxes – current		(92	)		(231	)		965
Affiliated payables – net		512			(480	)		367
Other		863			(28	)		(470	)
Other operating activities:
Net realized investment gains		(1,799	)		(127	)		(633	)
Net cash and cash equivalents provided by operating activities		17,373			12,493			19,460
Cash Flow From Investing Activities:
Proceeds from (payments for):
Sales of available-for-sale securities		36,283			26,368			38,922
Maturities of available-for-sale securities		13,182			26,870			60,331
Purchases of available-for-sale securities		(36,992	)		(53,564	)		(109,475	)
Policy loans on insurance contracts		2,357			4,242			5,611
Net cash and cash equivalents provided by (used in) investing activities	$	14,830		$	3,916		$	(4,611	)

See accompanying notes to financial statements. (Continued)

ML LIFE INSURANCE COMPANY OF NEW YORK
(a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)

STATEMENTS OF CASH FLOWS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
(Dollars in thousands)

	2005			2004			2003
Cash Flows From Financing Activities:
Proceeds from (payments for):
Cash dividend paid to parent	$	—		$	(2,500	)	$	—
Policyholder deposits (excludes internal policy replacement deposits)		35,439			71,983			57,372
Policyholder withdrawals (including transfers from separate accounts)		(59,641	)		(91,581	)		(82,975	)
Net cash and cash equivalents used in financing activities		(24,202	)		(22,098	)		(25,603	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		8,001			(5,689	)		(10,754	)
CASH AND CASH EQUIVALENTS:
Beginning of year		6,649			12,338			23,092
End of year	$	14,650		$	6,649		$	12,338
Supplementary Disclosure of Cash Flow Information:
Cash paid to affiliates for:
Federal income taxes	$	2,677		$	2,828		$	1,917
Interest		67			25			18

See accompanying notes to financial statements.

ML LIFE INSURANCE COMPANY OF NEW YORK
(A wholly owned subsidiary of Merrill Lynch Insurance Group, Inc.)

NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business: ML Life Insurance Company of New York (the “Company”) is a wholly owned subsidiary of Merrill Lynch Insurance Group, Inc. (“MLIG”). The Company is an indirect wholly owned subsidiary of Merrill Lynch & Co., Inc. (“Merrill Lynch & Co.”). The Company is domiciled in the State of New York.

The Company sells non-participating annuity products, including variable annuities, modified guaranteed annuities and immediate annuities. The Company is licensed to sell insurance and annuities in nine states; however, it currently limits its marketing activities to the State of New York. The Company markets its products solely through the retail network of Merrill Lynch, Pierce, Fenner & Smith, Incorporated (“MLPF&S”), a wholly owned broker-dealer subsidiary of Merrill Lynch & Co.

Basis of Reporting: The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and prevailing industry practices, both of which require management to make estimates that affect the reported amounts and disclosure of contingencies in the Financial Statements. Actual results could differ from those estimates.

The significant accounting policies and related judgments underlying the Company’s Financial Statements are summarized below. In applying these policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain.

For the purpose of reporting cash flows, cash and cash equivalents include cash on hand and on deposit and short-term investments with original maturities of three months or less.

Certain reclassifications and format changes have been made to prior year amounts to conform to the current year presentation.

Revenue Recognition: Revenues for variable annuity contracts consist of policy charges for i) mortality and expense risks, ii) certain benefit guarantees selected by the contract owner, iii) administration fees, iv) annual contract maintenance charges, and v) withdrawal charges assessed on contracts surrendered during the withdrawal charge period.

Revenues for variable life insurance contracts consist of policy charges for i) mortality and expense risks, ii) cost of insurance fees, iii) amortization of deferred sales charges, and iv) withdrawal charges assessed on contracts surrendered during the withdrawal charge period. The Company does not currently manufacture variable life insurance contracts.

Revenues for interest-sensitive annuity contracts (market value adjusted annuities, immediate annuities, and single premium deferred annuities) and interest-sensitive life insurance contracts (single premium whole life insurance) consist of i) investment income, ii) gains (losses) on the sale of invested assets, and iii) withdrawal charges assessed on contracts surrendered during the withdrawal charge period. The Company does not currently manufacture single premium deferred annuities or single premium whole life contracts.

Investments: The Company’s investments in fixed maturity and equity securities are classified as available-for-sale and are carried at estimated fair value with unrealized gains and losses included in stockholder’s equity as a component of accumulated other comprehensive income (loss), net of tax. These changes in estimated fair value are not reflected in the Statements of Earnings until a sale transaction occurs or when declines in fair value are deemed other-than-temporary.

If management determines that a decline in the value of an available-for-sale security is other-than-temporary, the carrying value is adjusted to estimated fair value and the decline in value is recorded as a net realized investment loss. Management makes this determination through a series of discussions with the Company’s portfolio managers and credit analysts,

information obtained from external sources (i.e. company announcements, ratings agency announcements, or news wire services) and the Company’s ability and intent to hold the investments for a period of time sufficient for a forecasted market price recovery up to or beyond the amortized cost of the investment. The factors that may give rise to a potential other-than-temporary impairment include, but are not limited to, i) certain credit-related events such as default of principal or interest payments by the issuer, ii) bankruptcy of issuer, iii) certain security restructurings, and iv) fair market value less than amortized cost for an extended period of time. In the absence of a readily ascertainable market value, the estimated fair value on these securities represents management’s best estimate and is based on comparable securities and other assumptions as appropriate. Management bases this determination on the most recent information available.

For fixed maturity securities, premiums are amortized to the earlier of the call or maturity date, discounts are accreted to the maturity date, and interest income is accrued daily. For equity securities, dividends are recognized on the ex-dividend date. Realized gains and losses on the sale or maturity of investments are determined on the basis of specific identification. Investment transactions are recorded on the trade date.

Certain fixed maturity and equity securities are considered below investment grade. The Company defines below investment grade securities as unsecured debt obligations that have a Standard and Poor’s (or similar rating agency) rating lower than BBB-.

Policy loans on insurance contracts are stated at unpaid principal balances.

Deferred Policy Acquisition Costs (“DAC”): Policy acquisition costs for variable annuities and variable life insurance contracts are deferred and amortized based on the estimated future gross profits for each group of contracts. These future gross profit estimates are subject to periodic evaluation by the Company, with necessary revisions applied against amortization to date. The impact of these revisions on cumulative amortization is recorded as a charge or credit to current operations, commonly referred to as “unlocking”. It is reasonably possible that estimates of future gross profits could be reduced in the future, resulting in a material reduction in the carrying amount of DAC.

Policy acquisition costs are principally commissions and a portion of certain other expenses relating to policy acquisition, underwriting and issuance that are primarily related to and vary with the production of new business. Insurance expenses and taxes reported in the Statements of Earnings are net of amounts deferred. Policy acquisition costs can also arise from the acquisition or reinsurance of existing inforce policies from other insurers. These costs include ceding commissions and professional fees related to the reinsurance assumed. The deferred costs are amortized in proportion to the estimated future gross profits over the anticipated life of the acquired insurance contracts utilizing an interest methodology.

During 1990, the Company entered into an assumption reinsurance agreement with an unaffiliated insurer. The acquisition costs relating to this agreement are being amortized over a twenty-five year period using an effective interest rate of 7.5%. This reinsurance agreement provided for payment of contingent ceding commissions, for a ten year period, based upon the persistency and mortality experience of the insurance contracts assumed. Payments made for contingent ceding commissions were capitalized and amortized using an identical methodology as that used for the initial acquisition costs. The following is a reconciliation of the acquisition costs related to this reinsurance agreement for the years ended December 31:

	2005			2004			2003
Beginning balance	$	8,167		$	8,830		$	9,703
Interest accrued		613			662			728
Amortization		(1,831	)		(1,325	)		(1,601	)
Ending balance	$	6,949		$	8,167		$	8,830

     The following table presents the expected amortization, net of interest accrued, of these deferred acquisition costs over the next five years.

     Amortization may be adjusted based on periodic evaluation of the expected gross profits on the reinsured policies.

2006	$	815
2007	$	737
2008	$	697
2009	$	686
2010	$	681

Deferred Sales Inducements: The Company offers a sales inducement whereby the contract owner receives a bonus which increases the initial account balance by an amount equal to a specified percentage of the contract owner’s deposit. This amount may be subject to recapture under certain circumstances. The expense associated with offering this bonus is deferred and amortized over the anticipated life of the related contracts consistent with the amortization of DAC.

Separate Accounts: The Company’s Separate Accounts consist of variable annuities and variable life insurance contracts, of which the assets and liabilities are legally segregated and reported as separate captions in the Balance Sheets. Separate Accounts are established in conformity with New York State Insurance Law and are generally not chargeable with liabilities that arise from any other business of the Company. Separate Accounts assets may be subject to claims of the Company only to the extent the value of such assets exceeds Separate Accounts liabilities. The assets of the Separate Accounts are carried at the daily net asset value of the mutual funds in which they invest.

Absent any contract provision wherein the Company guarantees either a minimum return or account value upon death or annuitization, the net investment income and net realized and unrealized gains and losses attributable to Separate Accounts assets supporting variable annuities and variable life contracts accrue directly to the contract owner and are not reported as revenue in the Statements of Earnings. Mortality, policy administration and withdrawal charges associated with Separate Accounts products are included in policy charge revenue in the Statements of Earnings.

Policyholder Account Balances: The Company’s liability for policyholder account balances represents the contract value that has accrued to the benefit of the policyholder as of the balance sheet date. The liability is generally equal to the accumulated account deposits plus interest credited less policyholders’ withdrawals and other charges assessed against the account balance. Interest-crediting rates for the Company’s fixed rate products are as follows:

Interest-sensitive life products	4.00%
Interest-sensitive deferred annuities	3.00% - 6.80%

These rates may be changed at the option of the Company after initial guaranteed rates expire, unless contracts are subject to minimum interest rate guarantees.

Future Policy Benefits: The Company’s liability for future policy benefits consists of liabilities for immediate annuities and liabilities for certain guarantee benefits contained in the variable insurance products the Company manufactures. Liabilities for immediate annuities are equal to the present value of estimated future payments to or on behalf of policyholders, where the timing and amount of payment generally depends on policyholder mortality. Interest rates used in establishing such liabilities range from 3.00% to 8.80%. Liabilities for guarantee benefits for variable annuity and life insurance contracts are discussed in more detail in Note 6 of the Financial Statements.

Claims and Claims Settlement Expenses: Liabilities for claims and claims settlement expenses equal the death benefit (plus accrued interest) for claims that have been reported to the Company but have not settled and an estimate, based upon prior experience, for unreported claims.

Federal Income Taxes: The results of operations of the Company are included in the consolidated Federal income tax return of Merrill Lynch & Co. The Company has entered into a tax-sharing agreement with Merrill Lynch & Co. whereby the Company will calculate its current tax provision based on its operations. Under the agreement, the Company periodically remits to Merrill Lynch & Co. its current federal income tax liability.

The Company provides for income taxes on all transactions that have been recognized in the financial statements in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes. Accordingly, deferred taxes are adjusted to reflect the tax rates at which future taxable amounts will likely be settled or realized. The effects of tax rate changes on future deferred tax liabilities and deferred tax assets, as well as other changes in income tax laws, are recognized in net earnings in the period during which such changes are enacted. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

The Company is generally subject to taxes on premiums and, in substantially all states, is exempt from state income taxes.

Accounting Pronouncements: In September 2005, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued SOP 05-1, “Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts.” SOP 05-1 provides guidance on accounting by insurance enterprises for deferred acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in SFAS No. 97. The SOP defines an internal replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. This SOP is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. The Company will adopt SOP 05-1 on January 1, 2007. The Company is currently assessing the Financial Statement impact related to the adoption of SOP 05-1.

On January 1, 2004, the Company adopted the provisions of Statement of Position (“SOP”) 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts.” SOP 03-1 required the establishment of a liability for contracts that contain death or other insurance benefits using a reserve methodology that was different from the methodology that the Company previously employed. As a result, the Company recorded a $3,120 increase in policyholder liabilities and a $6 decrease in DAC resulting in a charge to earnings of $2,032, net of a federal income tax benefit of $1,094, which was reported as a cumulative effect of a change in accounting principle during 2004. Excluding the cumulative effect of a change in accounting principle during 2004, the changes in policyholder liabilities related to SOP 03-1 did not have a material impact on the company’s Statements of Earnings for the years ended December 31, 2005 and 2004.

NOTE 2. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments are carried at fair value or amounts that approximate fair value. The carrying value of financial instruments at December 31 were:

	2005		2004
Assets:
Fixed maturity securities (1)	$	164,279	$	179,753
Equity securities (1)		706		—
Policy loans on insurance contracts (2)		74,393		76,750
Cash and cash equivalents (3)		14,650		6,649
Separate Accounts assets (4)		946,261		980,398
Total assets	$	1,200,289	$	1,243,550
Liabilities:
Policyholder account balances	$	168,880	$	185,538

(1)	For publicly traded securities, the estimated fair value is determined using quoted market prices. For securities without a readily ascertainable market value, the Company utilizes pricing services and broker quotes. Such estimated fair values do not necessarily represent the values for which these securities could have been sold at the dates of the balance sheets. At December 31, 2005 and 2004, securities without a readily ascertainable market value, having an amortized cost of $27,093 and $31,189, had an estimated fair value of $27,223 and $31,752, respectively.
(2)	The Company estimates the fair value of policy loans as equal to the book value of the loans. Policy loans are fully collateralized by the account value of the associated insurance contracts, and the spread between the policy loan interest rate and the interest rate credited to the account value held as collateral is fixed.
(3)	The estimated fair value of cash and cash equivalents approximates the carrying value.
(4)	Assets held in Separate Accounts are carried at the net asset value provided by the fund managers.

NOTE 3. INVESTMENTS

The amortized cost and estimated fair value of investments in fixed maturity securities at December 31 were:

	2005
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Fixed maturity securities:
Corporate debt securities	$	151,263	$	1,052	$	2,650	$	149,665
U.S. Government and agencies		7,043		221		—		7,264
Foreign governments		4,499		324		59		4,764
Mortgage-backed securities		2,599		34		47		2,586
Total fixed maturity securities	$	165,404	$	1,631	$	2,756	$	164,279
Equity securities:
Non redeemable preferred stock	$	702	$	4	$	—	$	706

	2004
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Fixed maturity securities:
Corporate debt securities	$	164,746	$	2,675	$	1,371	$	166,050
U.S. Government and agencies		7,048		508		—		7,556
Foreign governments		4,501		316		22		4,795
Mortgage-backed securities		1,306		56		10		1,352
Total fixed maturity securities	$	177,601	$	3,555	$	1,403	$	179,753

Estimated fair value and gross unrealized losses by length of time that certain fixed maturity securities have been in a continuous unrealized loss position at December 31 were:

	2005
	Less than 12 Months				More than 12 Months				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Fixed maturity securities:
Corporate debt securities	$	54,548	$	874	$	64,241	$	1,776	$	118,789	$	2,650
Foreign governments		—		—		2,440		59		2,440		59
Mortgage-backed securities		1,469		21		743		26		2,212		47
Total temporarily impaired securities	$	56,017	$	895	$	67,424	$	1,861	$	123,441	$	2,756

Unrealized losses are primarily due to price fluctuations resulting from changes in interest rates and credit spreads. Based on the most recent available information, the Company has the ability and intent to hold the investments for a period of time sufficient for a forecasted market price recovery up to or beyond the amortized cost of the investment.

There were no realized investment losses due to other-than-temporary declines in fair value for the years ended December 31, 2005 and 2004. The Company recorded realized investment losses due to other-than-temporary declines in fair value of $786 for the year ended December 31, 2003.

The amortized cost and estimated fair value of fixed maturity securities at December 31 by contractual maturity were:

	2005
	Amortized		Estimated
	Cost		Fair Value
Fixed maturity securities:
Due in one year or less	$	43,051	$	42,782
Due after one year through five years		102,664		100,914
Due after five years through ten years		9,708		9,742
Due after ten years		7,382		8,255
		162,805		161,693
Mortgage-backed securities		2,599		2,586
Total fixed maturity securities	$	165,404	$	164,279

	2004
	Amortized		Estimated
	Cost		Fair Value
Fixed maturity securities:
Due in one year or less	$	12,678	$	12,751
Due after one year through five years		140,870		141,725
Due after five years through ten years		14,094		14,586
Due after ten years		8,653		9,339
		176,295		178,401
Mortgage-backed securities		1,306		1,352
Total fixed maturity securities	$	177,601	$	179,753

In the preceding tables fixed maturity securities not due at a single maturity date have been included in the year of final maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The amortized cost and estimated fair value of fixed maturity securities at December 31 by rating agency equivalent were:

	2005
	Amortized			Estimated
	Cost			Fair Value
AAA	$	37,172		$	37,277
AA		28,547			27,906
A		72,124			71,953
BBB		25,338			24,958
Below investment grade		2,223			2,185
Total fixed maturity securities	$	165,404		$	164,279
Investment grade		99	%		99	%
Below investment grade		1	%		1	%

	2004
	Amortized			Estimated
	Cost			Fair Value
AAA	$	41,191		$	41,917
AA		35,057			35,057
A		77,483			78,885
BBB		23,870			23,894
Total fixed maturity securities	$	177,601		$	179,753
Investment grade		100	%		100	%

The Company has recorded certain adjustments to policyholder account balances in conjunction with unrealized holding gains or losses on investments classified as available-for-sale. The Company adjusts those liabilities as if the unrealized holding gains or losses had actually been realized, with corresponding credits or charges reported in accumulated other comprehensive income (loss), net of taxes. The components of net unrealized gains (losses) included in accumulated other comprehensive income (loss) at December 31 were as follows:

	2005			2004
Assets:
Fixed maturity securities	$	(1,125	)	$	2,152
Equity securities		4			—
Federal income taxes – deferred		634			—
		(487	)		2,152
Liabilities:
Policyholders’ account balances		690			1,202
Federal income taxes – deferred		—			332
		690			1,534
Stockholder’s equity:
Accumulated other comprehensive income (loss)	$	(1,177	)	$	618

Proceeds and gross realized investment gains and losses from the sale of available-for-sale securities for the years ended December 31 were:

	2005		2004		2003
Proceeds	$	36,283	$	26,368	$	38,922
Gross realized investment gains		2,114		280		2,485
Gross realized investment losses		315		153		1,852

The Company considers fair value at the date of sale to be equal to proceeds received. Proceeds on the sale of available-for-sale securities sold at a realized loss were $17,299, $14,811 and $7,903 for the years ended December 31, 2005, 2004, and 2003, respectively.

The Company had investment securities with a carrying value of $869 and $906 that were deposited with insurance regulatory authorities at December 31, 2005 and 2004, respectively.

Excluding investments in U.S. Government and agencies, the Company is not exposed to any significant concentration of credit risk in its fixed maturity securities portfolio.

Net investment income by source for the years ended December 31 was as follows:

	2005			2004			2003
Fixed maturity securities	$	7,411		$	7,416		$	8,589
Policy loans on insurance contracts		3,679			3,751			4,004
Cash and cash equivalents		480			265			221
Equity securities		17			—			206
Other		—			129			52
Gross investment income		11,587			11,561			13,072
Less investment expenses		(312	)		(339	)		(297	)
Net investment income	$	11,275		$	11,222		$	12,775

Net realized investment gains (losses), for the years ended December 31 were as follows:

	2005		2004		2003
Fixed maturity securities	$	1,799	$	127	$	460
Equity securities		—		—		173
Net realized investment gains	$	1,799	$	127	$	633

NOTE 4. DAC

The components of amortization of DAC for the years ended December 31 were as follows:

	2005			2004			2003
Normal amortization related to life insurance and annuity contracts	$	3,820		$	3,788		$	3,774
Unlocking related to life insurance products		(157	)		—			507
Unlocking related to annuity insurance products		3,342			(2,967	)		529
Total amortization of DAC	$	7,005		$	821		$	4,810

During 2005, the Company lowered its future gross profit assumptions on certain life insurance and annuity products resulting from historical surrender experience and reinsurance assumptions.

During 2004, the Company elected to adopt new assumptions for market returns associated with assets held in the Company’s variable annuity separate accounts. If returns over a determined historical period differ from the Company’s long-term assumption, returns for future determined periods are calculated so that the long-term assumption is achieved. This method for projecting market returns is known as reversion to the mean, a standard industry practice. The Company previously established estimates for market returns based on actual historical results and on future anticipated market returns without the use of a mean reversion technique.

NOTE 5. DEFERRED SALES INDUCEMENTS

During May 2005, the Company introduced a new variable annuity product in which certain contracts contain sales inducements. The expense associated with offering the deferred sales inducement and the subsequent capitalization and amortization are recorded as a component of policy benefits in the Statements of Earnings. The deferred sales inducement asset at December 31, 2005 was $601.

NOTE 6. VARIABLE CONTRACTS CONTAINING GUARANTEES

Variable Annuity Contracts Containing Guarantees

The Company issues variable annuity contracts in which the Company may contractually guarantee to the contract owner a guaranteed minimum death benefit (“GMDB”) and/or an optional guaranteed minimum income benefit (“GMIB”). In general, contracts containing GMDB provisions provide a death benefit equal to the greater of the GMDB or the contract value. Depending on the type of contract, the GMDB may equal: i) the contract value on specified contract anniversaries, ii) return of contract deposits, or iii) some combination of these benefits. Each benefit type is reduced for contract withdrawals. In general, contracts containing GMIB provisions provide the option to receive a guaranteed future income stream upon annuitization. There is a waiting period of ten years that must elapse before the GMIB provision can be exercised. The Company began offering GMIB benefits in 2003.

The Company had the following variable annuity contracts containing guarantees at December 31:

	2005				2004
	GMDB		GMIB		GMDB		GMIB
Net amount at risk (1)	$	49,572	$	100	$	63,233	$	—
Average attained age of contract owners		67		59		67		58
Weighted average period remaining until expected annuitization		n/a		9 yrs		n/a		9 yrs

(1) Net amount at risk for GMDB is defined as the current GMDB in excess of the contract owners’ account balance at the balance sheet date.

Net amount at risk for GMIB is defined as the present value of the minimum guaranteed annuity payments available to the contract owner determined in accordance with the terms of the contract in excess of the contract owners’ account balance at the balance sheet date.

The Company records liabilities for contracts containing guarantees as a component of future policy benefits in the Balance Sheets. Changes in these guarantee liabilities are included as a component of policy benefits in the Statements of Earnings. The GMDB liability is determined by projecting future expected guaranteed benefits under multiple scenarios for returns on Separate Accounts assets. The Company uses estimates for mortality and surrender assumptions based on actual and projected experience for each contract type. These estimates are consistent with the estimates used in the calculation of DAC. The Company regularly evaluates the estimates used and adjusts the GMDB and/or GMIB liability balances with a related charge or credit to earnings (“unlocking”), if actual experience or evidence suggests that earlier assumptions should be revised.

The variable annuity liability for each type of guarantee at December 31, 2005 was as follows:

	GMDB			GMIB
Balance at January 1, 2005	$	2,863		$	26
Guarantee benefits incurred		1,345			50
Guarantee benefits paid		(892	)		—
Unlocking		(233	)		—
Balance at December 31, 2005	$	3,083		$	76

At December 31, contract owners’ account balances by mutual fund class for contracts containing guarantee provisions were distributed as follows:

	2005
	Money
	Market		Bond		Equity		Balanced		Other		Total
GMDB only	$	53,033		117,433		371,277		20,933		161	$	562,837
GMIB and GMDB (2)		17,093		20,512		79,528		3,815		699		121,647
GMIB only		—		513		1,847		316		114		2,790
Total	$	70,126		138,458		452,652		25,064		974	$	687,274

	2004
	Money
	Market		Bond		Equity		Balanced		Total
GMDB only	$	24,189		136,476		410,449		53,533	$	624,647
GMIB and GMDB (2)		2,516		15,743		59,369		9,746		87,374
Total	$	26,705		152,219		469,818		63,279	$	712,021

(2) Certain variable annuity contracts with GMIB provisions include a GMDB provision.

At December 31, 2005, $1,488 of contract owner’s account balances did not contain any guarantee provisions. At December 31, 2004, all contract owners’ account balances contained guarantee provisions.

Variable Life Contracts Containing Guarantees

The Company has issued variable life contracts in which the Company contractually guarantees to the contract owner a GMDB. In general, contracts containing GMDB provisions provide a death benefit equal to the amount specified in the contract regardless of the level of the contract’s account value.

The Company records liabilities for contracts containing guarantees as a component of future policy benefits. Changes in these guarantee liabilities are included as a component of policy benefits in the Statements of Earnings. The variable life GMDB liability at December 31, 2005 and 2004 was $205 and $191, respectively. The variable life GMDB liability is set as a percentage of asset-based fees and cost of insurance charges deducted from contracts that include a GMDB provision. The percentage is established based on the Company’s estimate of the likelihood of future GMDB claims.

At December 31, contract owners’ account balances by mutual fund class for contracts containing GMDB provisions were distributed as follows:

	2005		2004
Balanced	$	102,463	$	104,748
Equity		83,953		88,514
Bond		35,692		38,075
Money market		33,530		35,725
Other		1,861		1,315
Total	$	257,499	$	268,377

NOTE 7. FEDERAL INCOME TAXES

The following is a reconciliation of the provision for income taxes based on earnings before Federal income taxes, computed using the Federal statutory tax rate, versus the reported provision for income taxes for the years ended December 31:

	2005			2004			2003
Provision for income taxes computed at Federal statutory rate	$	2,533		$	3,893		$	2,123
Increase (decrease) in income taxes resulting from:
Dividend received deduction		(772	)		(622	)		(243	)
Foreign tax credit		10			(12	)		(188	)
Federal income tax provision	$	1,771		$	3,259		$	1,692

The Federal statutory rate for each of the three years ended December 31 was 35%.

The Company provides for deferred income taxes resulting from temporary differences that arise from recording certain transactions in different years for income tax reporting purposes than for financial reporting purposes. The sources of these differences and the tax effect of each were as follows:

	2005			2004			2003
DAC (1)	$	(1,401	)	$	1,414		$	(508	)
Policyholder account balances (1)		(316	)		(733	)		(2,308	)
Deferred sales inducements		210			—			—
Investment adjustments		693			(19	)		(2	)
Deferred Federal income tax provision (benefit)	$	(814	)	$	662		$	(2,818	)

(1) The 2004 amounts exclude deferred tax benefits related to the adoption of SOP 03-1 (see Note 1 to the Financial Statements).

Deferred tax assets and liabilities at December 31 were as follows:

	2005		2004
Deferred tax assets:
Policyholder account balances	$	3,067	$	2,751
Investment adjustments		772		1,465
Net unrealized investment loss on investment securities		634		—
Total deferred tax assets		4,473		4,216
Deferred tax liabilities:
DAC		6,354		7,755
Deferred sales inducements		210		—
Net unrealized investment gain on investment securities		—		332
Total deferred tax liabilities		6,564		8,087
Net deferred tax liability	$	2,091	$	3,871

The Company anticipates that all deferred tax assets will be realized; therefore no valuation allowance has been provided.

NOTE 8. REINSURANCE

In the normal course of business, the Company seeks to limit its exposure to loss on any single insured life and to recover a portion of benefits paid by ceding reinsurance to other insurance enterprises or reinsurers under indemnity reinsurance agreements, primarily excess coverage and coinsurance agreements. The maximum amount of mortality risk retained by the Company is approximately $500 on single life policies and joint life policies.

Indemnity reinsurance agreements do not relieve the Company from its obligations to contract owners. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company regularly evaluates the financial condition of its reinsurers so as to minimize its exposure to significant losses from reinsurer insolvencies. The Company holds collateral under reinsurance agreements in the form of letters of credit and funds withheld totaling $112 that can be drawn upon for delinquent reinsurance recoverables.

As of December 31, 2005, the Company had the following life insurance inforce:

									Percentage
			Ceded to		Assumed				of amount
	Gross		other		from other		Net		assumed to
	amount		companies		companies		amount		net
Life insurance inforce	$	622,008	$	83,655	$	2,158	$	540,511		0.4	%

In addition, the Company seeks to limit its exposure to guaranteed features contained in certain variable annuity contracts. Specifically, the Company reinsures certain GMIB and GMDB provisions to the extent reinsurance capacity is available in the marketplace. As of December 31, 2005, 83% and 6% of the account value for variable annuity contracts containing GMIB and GMDB provisions, respectively, were reinsured.

NOTE 9. RELATED PARTY TRANSACTIONS

The Company and MLIG are parties to a service agreement whereby MLIG has agreed to provide certain accounting, data processing, legal, actuarial, management, advertising and other services to the Company. Expenses incurred by MLIG, in relation to this service agreement, are reimbursed by the Company on an allocated cost basis. Charges allocated to the Company by MLIG pursuant to the agreement were $3,954, $3,616 and $3,441 for 2005, 2004 and 2003, respectively. Charges attributable to this agreement are included in insurance expenses and taxes, except for investment related expenses, which are included in net investment income. The Company is allocated interest expense on its accounts payable to MLIG that approximates the daily Federal funds rate. Total intercompany interest incurred was $67, $25 and $18 for 2005, 2004 and 2003, respectively. Intercompany interest is included in net investment income.

The Company and Merrill Lynch Investment Managers, L.P. (“MLIM”) are parties to a service agreement whereby MLIM has agreed to provide certain invested asset management services to the Company. The Company pays a fee to MLIM for these services through the MLIG service agreement. Charges attributable to this agreement and allocated to the Company by MLIG were $155, $169 and $171 for 2005, 2004 and 2003, respectively.

MLIG has entered into an agreement with Roszel Advisors, LLC (“Roszel”), a subsidiary of MLIG, with respect to administrative services for the MLIG Variable Insurance Trust (“the Trust”). Certain Separate Accounts of the Company may invest in the various mutual fund portfolios of the Trust in connection with variable annuity contracts the Company has inforce. Under this agreement, Roszel pays MLIG an amount equal to a percentage of the assets invested in the Trust through the Separate Accounts. Revenue attributable to this agreement is included in policy charge revenue. The Company received from MLIG its allocable share of such compensation in the amount of $205, $180 and $101 during 2005, 2004 and 2003, respectively.

The Company has a general agency agreement with Merrill Lynch Life Agency Inc. (“MLLA”) whereby registered representatives of MLPF&S, who are the Company’s licensed insurance agents, solicit applications for contracts to be issued by the Company. MLLA is paid commissions for the contracts sold by such agents. Commissions paid to MLLA were $2,042, $3,304 and $2,267 for 2005, 2004 and 2003, respectively. Certain commissions were capitalized as DAC and are being amortized in accordance with the accounting policy discussed in Note 1 to the Financial Statements. Charges attributable to this agreement are included in insurance expenses and taxes, net of amounts capitalized.

While management believes that the service agreements referenced above are calculated on a reasonable basis, they may not necessarily be indicative of the costs that would have been incurred with an unrelated third party. Affiliated agreements generally contain reciprocal indemnity provisions pertaining to each party’s representations and contractual obligations thereunder.

NOTE 10. STOCKHOLDER’S EQUITY AND STATUTORY REGULATIONS

During 2005 and 2003, the Company did not pay a dividend. During 2004, the Company paid an ordinary cash dividend of $2,500 to MLIG. Pending regulatory approval, the Company intends to pay a cash dividend during 2006.

Applicable insurance department regulations require that the Company report its accounts in accordance with statutory accounting practices. Statutory accounting practices differ from principles utilized in these financial statements as follows: policy acquisition costs are expensed as incurred, policyholder liabilities are established using different actuarial assumptions, provisions for deferred income taxes are limited to temporary differences that will be recognized within one year, and securities are valued on a different basis.

The Company’s statutory financial statements are presented on the basis of accounting practices prescribed or permitted by the New York Insurance Department. The State of New York has adopted the National Association of Insurance Commissioners (“NAIC”) statutory accounting practices as a component of prescribed or permitted practices by the State of New York.

Statutory capital and surplus at December 31, 2005 and 2004, was $43,307 and $32,680, respectively. At December 31, 2005 and 2004, approximately $4,111 and $3,048, respectively, of stockholder’s equity was available for distribution to MLIG that does not require approval by the New York Insurance Department.

The Company’s statutory net income for 2005, 2004 and 2003 was $10,662, $7,141 and $6,567, respectively.

The NAIC utilizes the Risk Based Capital (“RBC”) adequacy monitoring system. The RBC calculates the amount of adjusted capital that a life insurance company should have based upon that company’s risk profile. As of December 31, 2005, and 2004, based on the RBC formula, the Company’s total adjusted capital level was well in excess of the minimum amount of capital required to avoid regulatory action.

NOTE 11. COMMITMENTS AND CONTINGENCIES

State insurance laws generally require that all life insurers who are licensed to transact business within a state become members of the state’s life insurance guaranty association. These associations have been established for the protection of contract owners from loss (within specified limits) as a result of the insolvency of an insurer. At the time an insolvency occurs, the guaranty association assesses the remaining members of the association an amount sufficient to satisfy the insolvent insurer’s contract owner obligations (within specified limits). Based upon the public information available at this time, management believes the Company has no material financial obligations to state guaranty associations.

In the normal course of business, the Company is subject to various claims and assessments. Management believes the settlement of these matters would not have a material effect on the financial position or results of operations of the Company.

NOTE 12. SEGMENT INFORMATION

In reporting to management, the Company’s operating results are categorized into two business segments: Life Insurance and Annuities. The Company’s Life Insurance segment consists of variable life insurance and interest-sensitive life insurance contracts. The Company currently does not manufacture, market, or issue life insurance contracts. The Company’s Annuity segment consists of variable annuity and interest-sensitive annuity contracts. The accounting policies of the business segments are the same as those described in the summary of significant accounting policies. All revenue and expense transactions are recorded at the contract level and accumulated at the business segment level for review by management. The “Other” category, presented in the following segment financial information, represents net revenues and earnings on invested assets that do not support life or annuity policyholder liabilities.

The following tables summarize each business segment’s contribution to the consolidated amounts, for the years ended December 31.

	Life Insurance
	2005		2004			2003
Policy charge revenue	$	7,346	$	7,624		$	7,605
Net interest spread (1)		1,045		552			485
Net realized investment gains		—		—			—
Net revenues		8,391		8,176			8,090
Policy benefits		1,365		1,705			2,114
Reinsurance premium ceded		1,439		1,479			1,562
Amortization of DAC		1,476		1,130			1,632
Insurance expenses and taxes		1,311		1,269			1,219
Net benefits and expenses		5,591		5,583			6,527
Earnings before federal income tax provision		2,800		2,593			1,563
Federal income tax provision		700		520			306
Earnings before change in accounting principle		2,100		2,073		$	1,257
Change in accounting principle, net of tax		—		(115	)		—
Net earnings	$	2,100	$	1,958		$	1,257
Balance Sheet Information:
Total assets	$	359,982	$	380,257		$	397,569
DAC		7,655		9,119			10,179
Policyholder liabilities and accruals		85,973		90,451			93,172
Other policyholder funds		431		449			677

	Annuities
	2005			2004			2003
Policy charge revenue	$	11,085		$	10,802		$	8,783
Net interest spread (1)		1,055			707			1,697
Net realized investment gains		1,799			113			633
Net revenues		13,939			11,622			11,113
Policy benefits		1,136			1,309			1,913
Reinsurance premium ceded		406			243			15
Amortization of DAC		5,529			(309	)		3,178
Insurance expenses and taxes		3,388			2,730			2,343
Net benefits and expenses		10,459			3,973			7,449
Earnings before federal income tax provision		3,480			7,649			3,664
Federal income tax provision		736			2,431			1,093
Earnings before change in accounting principle		2,744			5,218			2,571
Change in accounting principle, net of tax		—			(1,917	)		—
Net earnings	$	2,744		$	3,301		$	2,571
Balance Sheet Information:
Total assets	$	837,047		$	875,359		$	831,328
DAC		15,383			19,013			14,856
Policyholder liabilities and accruals		108,782			122,453			127,096
Other policyholder funds		(167	)		650			1,437

	Other
	2005		2004		2003
Policy charge revenue	$	—	$	—	$	—
Net interest spread (1)		959		867		837
Net realized investment gains		—		14		—
Net revenues		959		881		837
Earnings before federal income tax provision		959		881		837
Federal income tax provision		335		308		293
Net earnings	$	624		573	$	544
Balance Sheet Information:
Total assets	$	34,605	$	25,963	$	22,863

(1) Management considers investment income net of interest credited to policyholder liabilities in evaluating results.

The following table summarizes the Company’s total revenues by contract type for the years ended December 31:

	2005		2004		2003
Life Insurance:
Variable life	$	8,346	$	8,134	$	8,041
Interest-sensitive whole life		45		42		49
Total Life Insurance		8,391		8,176		8,090
Annuities:
Variable annuities		11,658		11,325		9,587
Interest-sensitive annuities		2,281		297		1,526
Total Annuities		13,939		11,622		11,113
Other		959		881		837
Net Revenues	$	23,289	$	20,679	$	20,040

* * * * * *

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

	ML Life Insurance Company of New York (Registrant)
Date: March 27, 2006	By:	/s/ Joseph E. Justice Joseph E. Justice Chief Financial Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Barry G. Skolnick Barry G. Skolnick	Director, Senior Vice President, and General Counsel*	March 27, 2006
/s/ Joseph E. Justice Joseph E. Justice	Director, Senior Vice President, Chief Financial Officer, and Treasurer	March 27, 2006
* Deborah J. Adler	Chairman of the Board, President, Chief Executive Officer, and Chief Actuary	March 27, 2006

* Frederick J. C. Butler	Director	March 27, 2006
* John C. Carroll	Director and Senior Vice President	March 27, 2006
* Richard M. Drew	Director	March 27, 2006
* Robert L. Israeloff	Director	March 27, 2006
* Robert A. King	Director	March 27, 2006
* Paul Michalowski	Director and Vice President	March 27, 2006
* Irving M. Pollack	Director	March 27, 2006
* Concetta M. Ruggiero	Director and Senior Vice President	March 27, 2006
* Lori M. Salvo	Director, Vice President, Chief Compliance Officer, Senior Counsel, Director of Compliance, and Secretary	March 27, 2006
* Cynthia Kahn Sherman	Director	March 27, 2006
/s/ Elizabeth Garrison Elizabeth Garrison	Vice President and Controller	March 27, 2006

*Signing in his own capacity and as Attorney-in-Fact.

     SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.

No annual report covering the Registrant’s last fiscal year or proxy
material has been or will be sent to Registrant’s security holder

     EXHIBIT INDEX

Exhibit No.	Description	Location
3.1	Certificate of Amendment of the Charter of ML Life Insurance Company of New York	Incorporated by reference to Exhibit 6(a)(ii) to Post-Effective Amendment No. 10 to ML of New York Variable Annuity Account A’s registration statement on Form N-4, File No. 33-43654, filed December 9, 1996.
3.2	By-Laws of ML Life Insurance Company of New York	Incorporated by reference to Exhibit 6(b) to Post-Effective Amendment No. 10 to ML of New York Variable Annuity Account A’s registration statement on Form N-4, File No. 33-43654, filed December 9, 1996.
4.1	Modified Guaranteed Annuity Contract	Incorporated by reference to Exhibit 4(a) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.
4.2	Modified Guaranteed Annuity Contract Application	Incorporated by reference to Exhibit 4(b) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.
4.3	Qualified Retirement Plan Endorsement	Incorporated by reference to Exhibit 4(c) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.
4.4	IRA Endorsement	Incorporated by reference to Exhibit 4(d) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.

E-1

4.5	Company Name Change Endorsement	Incorporated by reference to Exhibit 4(e) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed March 30, 1992.
4.6	IRA Endorsement, MLNY009	Incorporated by reference to Exhibit 4(d)(2) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.
4.7	Modified Guaranteed Annuity Contract MLNY-AY-991/94	Incorporated by reference to Exhibit 4(a)(2) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed December 7, 1994.
4.8	Qualified Retirement Plan Endorsement MLNY-AYQ-991/94	Incorporated by reference to Exhibit 4(c)(2) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed December 7, 1994.
10.1	General Agency Agreement between Royal Tandem Life Insurance Company and Merrill Lynch Life Agency Inc.	Incorporated by reference to Exhibit 10(a) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.
10.2	Investment Management Agreement by and between Royal Tandem Life Insurance Company and Equitable Capital Management Corporation	Incorporated by reference to Exhibit 10(b) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.
10.3	Shareholders’ Agreement by and among The Equitable Life Assurance Society of the United States and Merrill Lynch & Co., Inc. and Tandem Financial Group, Inc.	Incorporated by reference to Exhibit 10(c) to Pre- Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.

E-2

10.4	Service Agreement by and between Royal Tandem Life Insurance Company and Tandem Financial Group, Inc.	Incorporated by reference to Exhibit 10(d) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.
10.5	Service Agreement by and between Tandem Financial Group, Inc. and Merrill Lynch & Co., Inc.	Incorporated by reference to Exhibit 10(e) to Pre-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed October 16, 1990.
10.6	Form of Investment Management Agreement by and between Royal Tandem Life Insurance Company and Merrill Lynch Asset Management, Inc.	Incorporated by reference to Exhibit 10(f) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed March 7, 1991.
10.7	Assumption Reinsurance Agreement between Merrill Lynch Life Insurance Company, Tandem Insurance Group, Inc. and Royal Tandem Life Insurance Company and Family Life Insurance Company	Incorporated by reference to Exhibit 10(g) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed March 30, 1992.
10.8	Indemnity Agreement between ML Life Insurance Company of New York and Merrill Lynch Life Agency, Inc.	Incorporated by reference to Exhibit 10(h) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed March 30, 1992.
10.9	Amended General Agency Agreement between ML Life Insurance Company of New York and Merrill Lynch Life Agency, Inc.	Incorporated by reference to Exhibit 10(i) to Post-Effective Amendment No. 3 to the Registrant’s registration statement on Form S-1, File No. 33-34562, filed March 30, 1992.
10.10	Amended Management Agreement between ML Life Insurance Company of New York and Merrill Lynch Asset Management, Inc.	Incorporated by reference to Exhibit 10(j) to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 30, 1993.

E-3

10.11	Mortgage Loan Servicing Agreement between ML Life Insurance Company of New York and Merrill Lynch & Co., Inc.	Incorporated by reference to Exhibit 10(k) to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 29, 1995.
23.1	Written Consent of Deloitte & Touche LLP, independent registered public accounting firm	Exhibit 23.1
24.1	Power of attorney of Frederick J. C.Butler	Incorporated by reference to Exhibit 24(a) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.
24.2	Power of attorney of Robert L. Israeloff	Incorporated by reference to Exhibit 24(g) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.

E-4

24.3	Power of attorney of Cynthia L. Kahn	Incorporated by reference to Exhibit 24(i) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.
24.4	Power of attorney of Robert A. King	Incorporated by reference to Exhibit 24(j) to Post-Effective Amendment No. 1 the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.
24.5	Power of attorney of Irving M. Pollack	Incorporated by reference to Exhibit 24(k) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.
24.6	Power of attorney of Barry G. Skolnick	Incorporated by reference to Exhibit 24(l) to Post-Effective Amendment No. 1 to the Registrant’s registration statement on Form S-1, File No. 33-60288, filed March 31, 1994.
24.7	Power of attorney of Richard M. Drew	Incorporated by reference to Exhibit 24.14 to Annual Report on Form 10-K, File Nos. 33-34562, 33-60288, and 333-48983, filed March 30, 2000.
24.8	Power of attorney of John C. Carroll	Exhibit 24.8
24.9	Power of attorney of Paul Michalowski	Exhibit 24.9
24.10	Power of attorney of Joseph Justice	Incorporated by reference to ML of New York Variable Annuity Separate Account A’s registration statement on Form N-4, File No. 333-69220, filed September 10, 2001.
24.11	Power of attorney of Lori M. Salvo	Incorporated by reference to ML of New York Variable Annuity Separate Account A’s registration statement on Form N-4, File No. 333-69220, filed September 10, 2001.
24.12	Power of attorney of Deborah J. Adler	Incorporated by reference to Exhibit 24.13 to Annual Report on Form 10-K, File Nos. 33-34562, 33-60288, and 333-48983, filed March 29, 2004.
24.13	Power of attorney of Concetta M. Ruggiero	Incorporated by reference to Exhibit 24.14 to Annual Report on Form 10-K, File Nos. 33-34562, 33-60288, and 333-48983, filed March 29, 2004.
31.1	Certification by the Chief Executive Officer of the Registrant pursuant to Rule 15d-14(a).	Exhibit 31.1
31.2	Certification of the Chief Financial Officer of the Registrant pursuant to Rule 15d-14(a).	Exhibit 31.2
32.1	Certification by the Chief Executive Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Exhibit 32.1
32.2	Certification by the Chief Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Exhibit 32.2

E-5 EX-23.1 2 w18064exv23w1.htm EXHIBIT 23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-48983 on Form S-3 of our report on the financial statements dated February 27, 2006, (which report expresses an unqualified opinion and includes an explanatory paragraph for the change in accounting method in 2004 for long-duration contracts to conform to Statement of Position 03-1 “Accounting and Reporting by Insurance Enterprises for Certain Non-Traditional Long Duration Contracts and for Separate Accounts”) relating to the financial statements and financial statement schedules of ML Life Insurance Company of New York for the year ended December 31, 2005.

/s/ DELOITTE & TOUCHE LLP

New York, New York
March 28, 2006

EX-24.8 3 w18064exv24w8.htm POWER OF ATTORNEY

Exhibit 24.8

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that John C. Carroll, a member of the Board of Directors of ML Life Insurance Company of New York (the “Company”), whose signature appears below, constitutes and appoints Barry G. Skolnick, Frances Grabish and Kirsty Lieberman, respectively, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for his and in his name, place and stead, in any and all capacities, to sign any and all Registration Statements and Amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, under the Investment Company Act of 1940, where applicable, and the Securities Act of 1933, respectively, with the Securities Exchange Commission, for the purpose of registering any and all variable life and variable annuity separate accounts (collectively “Separate Accounts”), of the Company that may be established in connection with the issuance of any and all variable life and variable annuity contracts funded by such Separate Accounts, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done.

Effective Date: January 6, 2006

/s/ John C. Carroll

John C. Carroll

State of New Jersey
County of Mercer

     On the 3rd day of February, 2006 before me came John C. Carroll, Director of ML Life Insurance Company of New York, to me known to be said person and he signed the above Power of Attorney on behalf of ML Life Insurance Company of New York.

	/s/ Denise A. Marshall
[SEAL]	Notary Public

Denise A. Marshall
Notary Public of New Jersey
My Commission Expires Feb. 24, 2006

EX-23.1

exv23w1

EX-24.8

exv24w8

EX-24.9

Exhibit 24.9

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that Paul Michalowski, a member of the Board of Directors of ML Life Insurance Company of New York (the “Company”), whose signature appears below, constitutes and appoints Barry G. Skolnick, Frances Grabish and Kirsty Lieberman, respectively, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for his and in his name, place and stead, in any and all capacities, to sign any and all Registration Statements and Amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, under the Investment Company Act of 1940, where applicable, and the Securities Act of 1933, respectively, with the Securities Exchange Commission, for the purpose of registering any and all variable life and variable annuity separate accounts (collectively “Separate Accounts”), of the Company that may be established in connection with the issuance of any and all variable life and variable annuity contracts funded by such Separate Accounts, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done.

Effective Date: January 6, 2006

/s/ Paul Michalowski

Paul Michalowski

State of New Jersey
County of Mercer

     On the 3rd day of February, 2006 before me came Paul Michalowski, Director of ML Life Insurance Company of New York, to me known to be said person and he signed the above Power of Attorney on behalf of ML Life Insurance Company of New York.

	/s/ Denise A. Marshall
[SEAL]	Notary Public

Denise A. Marshall
Notary Public of New Jersey
My Commission Expires Feb. 24, 2006

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Deborah J. Adler, certify that:

1.     I have reviewed this annual report on Form 10-K of ML Life Insurance Company of New York;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: March 28, 2006
	/s/ DEBORAH J. ADLER Deborah J. Adler Chairman of the Board, President, Chief Executive Officer and Chief Actuary

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Joseph E. Justice, certify that:

     1.     I have reviewed this annual report on Form 10-K of ML Life Insurance Company of New York;

     2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3.     Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	March 27, 2006
		/s/ JOSEPH E. JUSTICE Joseph E. Justice Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of ML Life Insurance Company of New York (the “Company”) on Form 10-K for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Deborah J. Adler, Chairman of the Board, President, Chief Executive Officer and Chief Actuary of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ DEBORAH J. ADLER                      
Deborah J. Adler
Chairman of the Board, President, Chief Executive Officer
and Chief Actuary

Dated: March 28, 2006

A signed original of this written statement required by Section 906 has been provided to ML Life Insurance Company of New York and will be retained by ML Life Insurance Company of New York and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 8 w18064exv32w2.htm EXHIBIT 32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of ML Life Insurance Company of New York (the “Company”) on Form 10-K for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph E. Justice, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ JOSEPH E. JUSTICE                          
Joseph E. Justice
Senior Vice President and
Chief Financial Officer

Dated: March 27, 2006

A signed original of this written statement required by Section 906 has been provided to ML Life Insurance Company of New York and will be retained by ML Life Insurance Company of New York and furnished to the Securities and Exchange Commission or its staff upon request.

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EX-32.2

exv32w2