SEC. 3. TABLES OF DISCOUNT

FACTORS

.01 The following tables present separately for each line of business the dis

Auto Physical Damage

Discount factor for all years equals

97.0874 percent.

count factors under § 846 for accident year 2000. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2000, which is 6.09 percent, and by assuming all loss payments occur in the middle of the calendar year.

.02 If the groupings of individual lines of business on the annual statement change, taxpayers must discount the unpaid losses on the affected lines of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 1995 annual statement. See Rev. Proc. 98–11, 1998–1 C. B. 358, section 2, for additional background on discounting under section 846 and the use of the Secretary’s tables.

.03 Section V of Notice 88–100, 1988–2 C.B. 439, provides a composite discount factor to be used in determining the discounted unpaid losses for accident years that are not separately reported on the annual statement. Taxpayers that do not use the methodology set forth in section V of Notice 88–100 should instead use the discount factor for the appropriate year in the Secretary’s table for that line of business. If such taxpayers have unpaid losses relating to an accident year that is older than the last accident year for which a discount factor is presented in the Secretary’s table, those unpaid losses should be discounted using the discount factor for the last accident year in the Secretary’s table. See section 2.03(3) of Rev. Proc. 98–11. .04 Tables

Accident and Health (Other Than Disability Income or

Credit Disability Insurance)

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 89.9430 89.9430 10.0570 9.7134 96.5830 AY+ 1 99.3814 9.4384 0.6186 0.5834 94.3008 AY+ 2 N/A 0.3093 0.3093 0.3003 97.0874

2000–43 I.R.B. 409 October 23, 2000

Commercial Auto/Truck Liability/Medical

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 25.8075 25.8075 74.1925 65.1995 87.8788 AY+ 1 49.8793 24.0718 50.1207 44.3762 88.5386 AY+ 2 67.6592 17.7799 32.3408 28.7654 88.9446 AY+ 3 79.7711 12.1119 20.2289 18.0419 89.1890 AY+ 4 88.2132 8.4421 11.7868 10.4453 88.6190 AY+ 5 93.1778 4.9646 6.8222 5.9679 87.4779 AY+ 6 95.9623 2.7845 4.0377 3.4633 85.7748 AY+ 7 97.0091 1.0468 2.9909 2.5960 86.7980 AY+ 8 97.5719 0.5628 2.4281 2.1744 89.5538 AY+ 9 98.2191 0.6471 1.7809 1.6403 92.1035 AY+10 N/A 0.6471 1.1338 1.0737 94.6950 AY+11 N/A 0.6471 0.4867 0.4725 97.0874

. Composite Discount Factors

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 35.4611 35.4611 64.5389 55.4546 85.9243 AY+ 1 59.1449 23.6838 40.8551 34.4374 84.2916 AY+ 2 70.8220 11.6771 29.1780 24.5073 83.9923 AY+ 3 81.9019 11.0799 18.0981 14.5875 80.6022 AY+ 4 86.3688 4.4669 13.6312 10.8749 79.7797 AY+ 5 90.0497 3.6809 9.9503 7.7459 77.8458 AY+ 6 92.7488 2.6991 7.2512 5.4375 74.9880 AY+ 7 93.8259 1.0771 6.1741 4.6593 75.4648 AY+ 8 94.2415 0.4156 5.7585 4.5150 78.4051 AY+ 9 94.8568 0.6153 5.1432 4.1561 80.8087 AY+10 N/A 0.6153 4.5279 3.7755 83.3830 AY+11 N/A 0.6153 3.9125 3.3716 86.1744 AY+12 N/A 0.6153 3.2972 2.9431 89.2617 AY+13 N/A 0.6153 2.6819 2.4886 92.7929 AY+14 N/A 0.6153 2.0665 2.0063 97.0874

Fidelity/Surety

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 24.1540 24.1540 75.8460 70.2828 92.6652 AY+ 1 59.0961 34.9421 40.9039 38.5727 94.3008 AY+ 2 N/A 20.4520 20.4520 19.8563 97.0874

October 23, 2000 410 2000–43 I.R.B.

Financial Guaranty/Mortgage Guaranty

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 9.2513 9.2513 90.7487 84.0520 92.6206 AY+ 1 50.5659 41.3146 49.4341 46.6168 94.3008 AY+ 2 N/A 24.7171 24.7171 23.9971 97.0874

International

(Composite)

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 35.4611 35.4611 64.5389 55.4546 85.9243 AY+ 1 59.1449 23.6838 40.8551 34.4374 84.2916 AY+ 2 70.8220 11.6771 29.1780 24.5073 83.9923 AY+ 3 81.9019 11.0799 18.0981 14.5875 80.6022 AY+ 4 86.3688 4.4669 13.6312 10.8749 79.7797 AY+ 5 90.0497 3.6809 9.9503 7.7459 77.8458 AY+ 6 92.7488 2.6991 7.2512 5.4375 74.9880 AY+ 7 93.8259 1.0771 6.1741 4.6593 75.4648 AY+ 8 94.2415 0.4156 5.7585 4.5150 78.4051 AY+ 9 94.8568 0.6153 5.1432 4.1561 80.8087 AY+10 N/A 0.6153 4.5279 3.7755 83.3830 AY+11 N/A 0.6153 3.9125 3.3716 86.1744 AY+12 N/A 0.6153 3.2972 2.9431 89.2617 AY+13 N/A 0.6153 2.6819 2.4886 92.7929 AY+14 N/A 0.6153 2.0665 2.0063 97.0874

Medical Malpractice — Claims-Made

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 6.3899 6.3899 93.6101 77.2316 82.5035 AY+ 1 24.0011 17.6112 75.9989 63.7954 83.9426 AY+ 2 42.6970 18.6959 57.3030 48.4238 84.5048 AY+ 3 58.0610 15.3640 41.9390 35.5479 84.7609 AY+ 4 69.6653 11.6043 30.3347 25.7603 84.9203 AY+ 5 75.6033 5.9380 24.3967 21.2130 86.9502 AY+ 6 81.8786 6.2753 18.1214 16.0413 88.5212 AY+ 7 87.8539 5.9753 12.1461 10.8637 89.4415 AY+ 8 89.5207 1.6668 10.4793 9.8084 93.5982 AY+ 9 94.3025 4.7818 5.6975 5.4805 96.1916 AY+10 N/A 4.7818 0.9157 0.8890 97.0874

2000–43 I.R.B. 411 October 23, 2000

Medical Malpractice — Occurrence

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 2.1239 2.1239 97.8761 72.1344 73.6997 AY+ 1 6.4831 4.3592 93.5169 72.0374 77.0314 AY+ 2 15.5987 9.1156 84.4013 67.0354 79.4246 AY+ 3 31.9062 16.3075 68.0938 54.3211 79.7739 AY+ 4 45.0931 13.1868 54.9069 44.0468 80.2208 AY+ 5 50.0751 4.9821 49.9249 41.5977 83.3206 AY+ 6 60.9728 10.8976 39.0272 32.9064 84.3166 AY+ 7 69.2138 8.2411 30.7862 26.4221 85.8247 AY+ 8 72.8658 3.6519 27.1342 24.2698 89.4433 AY+ 9 80.0005 7.1347 19.9995 18.3990 91.9973 AY+10 N/A 7.1347 12.8648 12.1707 94.6050 AY+11 N/A 7.1347 5.7300 5.5631 97.0874

Miscellaneous Casualty

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 77.6669 77.6669 22.3331 21.1962 94.9091 AY+ 1 94.0673 16.4004 5.9327 5.5946 94.3008 AY+ 2 N/A 2.9664 2.9664 2.8800 97.0874

Other Liability — Claims-Made

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 10.2440 10.2440 89.7560 74.2142 82.6844 AY+ 1 29.3763 19.1323 70.6237 59.0277 83.5805 AY+ 2 44.4111 15.0349 55.5889 47.1365 84.7949 AY+ 3 67.8197 23.4086 32.1803 25.8963 80.4726 AY+ 4 73.4753 5.6555 26.5247 21.6482 81.6150 AY+ 5 78.8604 5.3852 21.1396 17.4198 82.4039 AY+ 6 83.5027 4.6422 16.4973 13.6992 83.0388 AY+ 7 84.0676 0.5649 15.9324 13.9516 87.5674 AY+ 8 85.2129 1.1453 14.7871 13.6216 92.1180 AY+ 9 90.5992 5.3863 9.4008 8.9033 94.7074 AY+10 N/A 5.3863 4.0145 3.8976 97.0874

October 23, 2000 412 2000–43 I.R.B.

Other Liability — Occurrence

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 13.5751 13.5751 86.4249 68.2254 78.9418 AY+ 1 26.3964 12.8213 73.6036 59.1744 80.3960 AY+ 2 40.2725 13.8761 59.7275 48.4857 81.1782 AY+ 3 55.4566 15.1841 44.5434 35.7988 80.3685 AY+ 4 65.3309 9.8742 34.6691 27.8085 80.2112 AY+ 5 74.0647 8.7339 25.9353 20.5062 79.0668 AY+ 6 80.9090 6.8442 19.0910 14.7055 77.0281 AY+ 7 84.3622 3.4532 15.6378 12.0442 77.0197 AY+ 8 84.6163 0.2542 15.3837 12.5159 81.3585 AY+ 9 86.7311 2.1147 13.2689 11.1000 83.6538 AY+10 N/A 2.1147 11.1542 9.5978 86.0463 AY+11 N/A 2.1147 9.0395 8.0041 88.5462 AY+12 N/A 2.1147 6.9247 6.3134 91.1715 AY+13 N/A 2.1147 4.8100 4.5197 93.9645 AY+14 N/A 2.1147 2.6953 2.6168 97.0874

Multiple Peril Lines (Homeowners/Farmowners Multiple Peril, Commercial Multiple Peril, and Special Liability

(Ocean Marine, Aircraft (All Perils), Boiler and Machinery))

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 55.9587 55.9587 44.0413 39.1921 88.9894 AY+ 1 77.8939 21.9352 22.1061 18.9856 85.8842 AY+ 2 84.0083 6.1144 15.9917 13.8440 86.5701 AY+ 3 91.3188 7.3105 8.6812 7.1573 82.4462 AY+ 4 92.1670 0.8482 7.8330 6.7195 85.7851 AY+ 5 94.3838 2.2168 5.6162 4.8455 86.2767 AY+ 6 96.4959 2.1121 3.5041 2.9651 84.6181 AY+ 7 97.3670 0.8712 2.6330 2.2484 85.3944 AY+ 8 98.0034 0.6364 1.9966 1.7299 86.6410 AY+ 9 98.4059 0.4025 1.5941 1.4207 89.1194 AY+10 N/A 0.4025 1.1916 1.0926 91.6918 AY+11 N/A 0.4025 0.7892 0.7446 94.3565 AY+12 N/A 0.4025 0.3867 0.3754 97.0874

Other (Including Credit)

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 66.7418 66.7418 33.2582 31.4101 94.4432 AY+ 1 89.2755 22.5337 10.7245 10.1133 94.3008 AY+ 2 N/A 5.3622 5.3622 5.2061 97.0874

2000–43 I.R.B. 413 October 23, 2000

Private Passenger Auto Liability/Medical

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 37.9339 37.9339 62.0661 56.4356 90.9282 AY+ 1 67.7044 29.7705 32.2956 29.2089 90.4424 AY+ 2 81.5316 13.8272 18.4684 16.7457 90.6722 AY+ 3 89.8898 8.3583 10.1102 9.1565 90.5677 AY+ 4 94.6531 4.7633 5.3469 4.8080 89.9215 AY+ 5 97.1265 2.4734 2.8735 2.5532 88.8539 AY+ 6 98.4587 1.3322 1.5413 1.3366 86.7155 AY+ 7 98.9811 0.5224 1.0189 0.8799 86.3544 AY+ 8 99.2330 0.2519 0.7670 0.6740 87.8739 AY+ 9 99.4067 0.1737 0.5933 0.5362 90.3643 AY+10 N/A 0.1737 0.4196 0.3899 92.9156 AY+11 N/A 0.1737 0.2460 0.2348 95.4492 AY+12 N/A 0.1737 0.0723 0.0702 97.0874

Products Liability — Claims-Made

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 4.9750 4.9750 95.0250 75.9026 79.8765 AY+ 1 15.1072 10.1322 84.8928 70.0889 82.5617 AY+ 2 30.9560 15.8488 69.0440 58.0331 84.0523 AY+ 3 38.2420 7.2860 61.7580 54.0627 87.5396 AY+ 4 68.6101 30.3681 31.3899 26.0760 83.0712 AY+ 5 78.5966 9.9865 21.4034 17.3779 81.1923 AY+ 6 88.3971 9.8005 11.6029 8.3417 71.8934 AY+ 7 93.2957 4.8986 6.7043 3.8042 56.7423 AY+ 8 88.3815 -4.9142 11.6185 9.0975 78.3015 AY+ 9 89.6105 1.2290 10.3895 8.3856 80.7125 AY+10 N/A 1.2290 9.1604 7.6304 83.2971 AY+11 N/A 1.2290 7.9314 6.8291 86.1028 AY+12 N/A 1.2290 6.7024 5.9791 89.2095 AY+13 N/A 1.2290 5.4733 5.0774 92.7656 AY+14 N/A 1.2290 4.2443 4.1207 97.0874

October 23, 2000 414 2000–43 I.R.B.

Products Liability – Occurrence

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 9.0653 9.0653 90.9347 69.1525 76.0464 AY+ 1 14.9035 5.8382 85.0965 67.3506 79.1462 AY+ 2 29.2591 14.3555 70.7409 56.6660 80.1036 AY+ 3 45.6462 16.3871 54.3538 43.2383 79.5496 AY+ 4 57.5945 11.9483 42.4055 33.5647 79.1518 AY+ 5 63.8634 6.2689 36.1366 29.1518 80.6712 AY+ 6 75.2266 11.3632 24.7734 19.2231 77.5957 AY+ 7 78.2679 3.0413 21.7321 17.2613 79.4274 AY+ 8 78.1898 -0.0781 21.8102 18.3929 84.3316 AY+ 9 81.8722 3.6825 18.1278 15.7201 86.7184 AY+10 N/A 3.6825 14.4453 12.8845 89.1953 AY+11 N/A 3.6825 10.7628 9.8762 91.7625 AY+12 N/A 3.6825 7.0803 6.6847 94.4128 AY+13 N/A 3.6825 3.3979 3.2989 97.0874

Reinsurance A (Nonproportional Property)

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 27.1668 27.1668 72.8332 64.8422 89.0284 AY+ 1 68.7008 41.5340 31.2992 26.0111 83.1046 AY+ 2 70.0362 1.3354 29.9638 26.2197 87.5046 AY+ 3 87.5338 17.4976 12.4662 9.7940 78.5641 AY+ 4 90.2132 2.6794 9.7868 7.6307 77.9687 AY+ 5 91.3751 1.1619 8.6249 6.8986 79.9846 AY+ 6 94.3845 3.0095 5.6155 4.2190 75.1316 AY+ 7 93.3293 -1.0552 6.6707 5.5628 83.3917 AY+ 8 N/A 1.0387 5.6320 4.8317 85.7905 AY+ 9 N/A 1.0387 4.5932 4.0560 88.3049 AY+10 N/A 1.0387 3.5545 3.2332 90.9598 AY+11 N/A 1.0387 2.5158 2.3602 93.8153 AY+12 N/A 1.0387 1.4771 1.4340 97.0874

2000–43 I.R.B. 415 October 23, 2000

Reinsurance B (Nonproportional Liability)

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 6.6962 6.6962 93.3038 69.1335 74.0951 AY+ 1 22.3944 15.6982 77.6056 57.1746 73.6733 AY+ 2 32.6486 10.2542 67.3514 50.0947 74.3781 AY+ 3 50.2234 17.5748 49.7766 35.0434 70.4014 AY+ 4 53.5839 3.3605 46.4161 33.7162 72.6391 AY+ 5 55.6838 2.0999 44.3162 33.6066 75.8338 AY+ 6 63.6144 7.9306 36.3856 27.4848 75.5376 AY+ 7 66.4211 2.8066 33.5789 26.2678 78.2269 AY+ 8 N/A 2.8066 30.7723 24.9766 81.1660 AY+ 9 N/A 2.8066 27.9656 23.6069 84.4138 AY+10 N/A 2.8066 25.1590 22.1537 88.0547 AY+11 N/A 2.8066 22.3524 20.6120 92.2140 AY+12 N/A 2.8066 19.5457 18.9764 97.0874

Reinsurance C (Financial Lines)

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 11.4622 11.4622 88.5378 77.2190 87.2158 AY+ 1 44.5791 33.1169 55.4209 47.8112 86.2692 AY+ 2 63.9134 19.3343 36.0866 30.8085 85.3739 AY+ 3 65.6185 1.7051 34.3815 30.9285 89.9569 AY+ 4 79.9778 14.3593 20.0222 18.0220 90.0101 AY+ 5 88.9152 8.9374 11.0848 9.9140 89.4380 AY+ 6 91.2490 2.3338 8.7510 8.1140 92.7206 AY+ 7 94.7645 3.5155 5.2355 4.9872 95.2564 AY+ 8 N/A 3.5155 1.7200 1.6699 97.0874

Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Glass, Burglary and Theft)

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 57.4895 57.4895 42.5105 40.4949 95.2586 AY+ 1 90.5193 33.0297 9.4807 8.9404 94.3008 AY+ 2 N/A 4.7404 4.7404 4.6023 97.0874

October 23, 2000 416 2000–43 I.R.B.

Workers’ Compensation

Discounted Cumulative Estimated Unpaid Unpaid Losses Losses Paid Losses at Losses at Discount Tax Year Paid Each Year Year End Year End Factors (%) (%) (%) (%) (%)

AY+ 0 23.6461 23.6461 76.3539 62.5642 81.9398 AY+ 1 44.8166 21.1705 55.1834 44.5688 80.7648 AY+ 2 57.9652 13.1486 42.0348 33.7399 80.2667 AY+ 3 72.0542 14.0889 27.9458 21.2831 76.1583 AY+ 4 80.5542 8.5000 19.4458 13.8242 71.0909 AY+ 5 84.8876 4.3334 15.1124 10.2026 67.5118 AY+ 6 87.1173 2.2297 12.8827 8.5274 66.1927 AY+ 7 88.2647 1.1473 11.7353 7.8649 67.0194 AY+ 8 88.5404 0.2757 11.4596 8.0599 70.3333 AY+ 9 88.8062 0.2658 11.1938 8.2770 73.9426 AY+10 N/A 0.2658 10.9279 8.5072 77.8484 AY+11 N/A 0.2658 10.6621 8.7515 82.0804 AY+12 N/A 0.2658 10.3963 9.0107 86.6720 AY+13 N/A 0.2658 10.1304 9.2856 91.6604 AY+14 N/A 0.2658 9.8646 9.5773 97.0874

and by assuming all estimated salvage is recovered in the middle of each calendar year. See Rev. Proc. 98–12, 1998–1 C.B. 367, for background regarding the tables. .02 These tables must be used by taxpayers irrespective of whether they elected to discount unpaid losses using their own historical experience under § 846.

.03 Section V of Notice 88–100, 1988–2 C. B. 439, provides guidance concerning the determination of discount factors for unpaid losses for accident years not separately reported on the annual statement. Taxpayers that do not use the methodology set forth in section V of Notice 88–100 should instead use the discount factors for the appropriate year in the Secretary’s table for that line of business. If such taxpayers have unpaid losses relating to an accident year that is older than the last accident year for which a discount factor is presented in the Secretary’s table, those unpaid losses should be discounted using the discount factor for the last accident year in the Secretary’s table. See section 2.03(3) of Rev. Proc. 98–11, 1998–1 C.B. 358. .04 Tables.

DRAFTING INFORMATION

The principal author of this revenue procedure is Katherine A. Hossofsky of the Office of the Associate Chief Counsel (Financial Institutions and Products). For further information regarding this revenue procedure, contact Ms. Hossofsky at (202) 622-3477 (not a toll-free number).

26 CFR 601.201: Rulings and determination letters (Also Part I, Sections 832, 846; 1.832–4, 1.846–1.)

Rev. Proc. 2000–45