SECTION 4. TABLES OF DISCOUNT

FACTORS

.01 The following tables present separately for each line of business the discount factors under § 846 for accident year 2002. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2002, 5.71 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 unpaid losses on the resulting line of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 2002 annual statement.

.03 Tables

(4) Comments Requested on Smooth- ing Data . In some cases, the methodology currently used to estimate unpaid losses and salvage patterns may produce negative discount factors, discount factors that exceed one, or large year-to-year differences in discount factors. (See, for example, the unpaid loss discount factors for Reinsurance C.) Notice 88–100, section IV, sets forth a methodology to replace such factors by a positive discount factor. Notice 88–100 does not extend this methodology to situations with positive, yet small, discount factors, discount factors in excess of one, or factors that change substantially from year to year. Comments are requested as to whether a methodology should be adopted to smooth the raw payment data and thus produce a more stable pattern of discount factors. Comments should be sent to CC:ITA:RU (Rev. Proc.

2003–17), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Comments may be hand delivered between the hours of 8 a.m. and 4 p.m. to CC:ITA:RU (Rev. Proc. 2003–17), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC 20224. In the alternative, e-mail comments to Notice. Comments@irscounsel.treas.gov.