SECTION 4. APPLICATION

.01 The following tables present separately for each line of business the discount factors under § 832 for the 2008 accident year. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2008, which is 4.06 percent, and by assuming all estimated salvage is recovered

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in the middle of each calendar year. See Rev. Proc. 2008–11, 2008–3 I.R.B. 301, 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 a composite discount factor to be used in determining the discounted unpaid losses for accident years that are not separately reported on the NAIC Annual Statement. The tables separately provide discount factors for taxpayers who elect to use the composite method. Rev. Proc. 2002–74, 2002–2 C.B. 980, clarifies that for certain insurance companies subject to tax under § 831 the composite method for discounting unpaid losses set forth in Notice 88–100, section V, 1988–2 C.B. 439, is permitted but not required. This revenue procedure further provides alternative methods for computing discounted unpaid losses that are permitted for insurance companies not using the composite method, and sets forth a procedure for insurance companies to obtain automatic consent of the Commissioner to change to one of the methods described in Rev. Proc. 2002–74.

.04 Tables.

Tables of Factors to be Used to Discount Salvage Recoverable With Re-

spect to Losses Incurred in

Accident Year 2008

(Interest rate: 4.06 percent)

Accident and Health (Other Than Disability Income or Credit Disability Insurance)

Taxpayers that do not use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable with respect to losses incurred in this line of business in the 2008 accident year as of the end of the 2008 and later taxable years.

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount all salvage recoverable in this line of business as of the end of the 2008 taxable year.

Auto Physical Damage

Tax Year

Discount Factors (%)

2008 97.2331 2009 96.1174

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

Commercial Auto/Truck Liability/Medical

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

2018 and later years

98.0298

2010 and later years

98.0298

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2010 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Commercial Auto/Truck Liability/Medical

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Composite

2008 92.3690 2009 92.1172 2010 91.9402 2011 91.7659 2012 91.1438 2013 90.2174 2014 91.0647 2015 92.4105 2016 94.4361 2017 96.2605

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

Tax Year

Discount Factors (%)

Tax Year

Discount Factors (%)

2008 92.3526 2009 92.2970 2010 92.6408 2011 92.9897 2012 93.7281 2013 93.5170 2014 91.9508 2015 92.8642 2016 96.2378 2017 98.0298

2018 and later years

98.0298

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International (Composite)

Taxpayers that use the composite method of Notice 88–100 should use 96.8444 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Medical Malpractice — Claims-Made

Composite

Taxpayers that use the composite method of Notice 88–100 should use 96.8444 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Fidelity/Surety

Financial Guaranty/Mortgage Guaranty

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

2010 and later years

98.0298

Tax Year

Discount Factors (%)

Tax Year

Discount Factors (%)

2008 93.6954 2009 96.1174

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2010 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

International (Composite)

Tax Year

Discount Factors (%)

2008 92.6642 2009 93.7424 2010 92.1505 2011 92.7778 2012 92.0831 2013 87.6889 2014 84.3189 2015 90.2868 2016 96.4445 2017 98.0298

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

2010 and later years

98.0298

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2010 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Financial Guaranty/Mortgage Guaranty

2008 92.3690 2009 92.1172 2010 91.9402 2011 91.7659 2012 91.1438 2013 90.2174 2014 91.0647 2015 92.4105 2016 94.4361 2017 96.2605

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

2018 and later years

98.0298

Tax Year

Discount Factors (%)

2008 94.7421 2009 96.1174

2018 and later years

98.0298

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Other (Including Credit)

Medical Malpractice — Occurrence

Miscellaneous Casualty

98.0298

2010 and later years

Discount Factors (%)

Tax Year

Discount Factors (%)

Tax Year

2008 85.5177 2009 89.9300 2010 92.2898 2011 84.2693 2012 94.7905 2013 91.4234 2014 93.0145 2015 95.8751 2016 97.0989 2017 98.0298

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2010 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Multiple Peril Lines (Homeown- ers/Farmowners, Commercial Multiple Peril, and Special Liability (Ocean Marine, Aircraft (All Perils), Boiler and Machinery))

2008 95.6448 2009 96.1174

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

98.0298

2010 and later years

Tax Year

Discount Factors (%)

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2010 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Other Liability — Claims-Made

2018 and later years

98.0298

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Miscellaneous Casualty

2008 93.0068 2009 92.3990 2010 92.3201 2011 92.2569 2012 91.4462 2013 89.8725 2014 91.0239 2015 93.4483 2016 94.8485 2017 96.6142

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

Tax Year

Discount Factors (%)

Tax Year

Discount Factors (%)

98.0298

2008 96.5837 2009 96.1174

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

2018 and later years

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

2008 88.4208 2009 89.5374 2010 87.6521 2011 90.8781 2012 92.3590 2013 94.2379 2014 93.1673 2015 91.7716 2016 97.3613 2017 98.0298

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

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Products Liability — Claims-Made

Other Liability — Claims-Made

Private Passenger Auto Liability/Medical

2018 and later years

98.0298

Tax Year

Discount Factors (%)

Discount Factors (%)

Taxpayers that use the composite method of Notice 88–100 should use 98.0675 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Other Liability — Occurrence

Tax Year

Tax Year

Discount Factors (%)

2008 87.1236 2009 88.1600 2010 90.4878 2011 91.2470 2012 90.6851 2013 90.8000 2014 90.2668 2015 93.0020 2016 95.7619 2017 97.5722

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

2008 94.5329 2009 94.5579 2010 94.3102 2011 93.4459 2012 92.8620 2013 92.0891 2014 92.9858 2015 94.5440 2016 94.6149 2017 96.4088

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

2018 and later years

98.0298

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

2008 88.9426 2009 51.3741 2010 53.7803 2011 90.7115 2012 80.1341 2013 91.4320 2014 59.5121 2015 90.5055 2016 91.6367 2017 92.7680

Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

2018 94.5598 2019 96.3623 2020 and later 98.0298 years

Taxpayers that use the composite method of Notice 88–100 should use 95.2929 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

2018 and later years

98.0298

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

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Products Liability — Occurrence

Reinsurance — Nonproportional Assumed Liability

98.0298

Tax Year

Discount Factors (%)

2018 and later years

2008 87.6369 2009 89.7198 2010 91.6030 2011 92.4224 2012 92.8704 2013 90.4185 2014 91.0511 2015 94.0066 2016 94.2757 2017 96.1335

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

Reinsurance — Nonproportional Assumed Property

Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

2018 89.8547 2019 91.6751 2020 93.5877 2021 95.6459 2022 and later 98.0298 years

Taxpayers that use the composite method of Notice 88–100 should use 90.7540 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Reinsurance — Nonproportional Assumed Liability

Taxpayers that use the composite method of Notice 88–100 should use 94.8390 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Reinsurance — Nonproportional Assumed Financial Lines

Tax Year

Discount Factors (%)

2018 and later years

98.0298

Taxpayers that use the composite method of Notice 88–100 should use 95.9730 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

Reinsurance — Nonproportional Assumed Property

2008 86.7636 2009 90.0422 2010 91.4998 2011 88.6312 2012 90.7036 2013 91.5709 2014 91.4636 2015 93.2257 2016 95.1632 2017 96.9140

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

Tax Year

Discount Factors (%)

2008 87.1652 2009 85.9016 2010 89.9069 2011 78.5011 2012 90.2511 2013 80.2802 2014 90.4154 2015 90.8197 2016 97.5152 2017 98.0298

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

98.0298

Tax Year

Discount Factors (%)

2018 and later years

2008 91.0976 2009 92.7443 2010 95.6984 2011 80.1417 2012 89.8643 2013 81.5378 2014 51.4095 2015 92.8399 2016 73.3181 2017 88.1043

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

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

Workers’ Compensation

Discount Factors (%)

Tax Year

Tax Year

Discount Factors (%)

Workers’ Compensation

Taxpayers that use the composite method of Notice 88–100 should use 95.7028 percent to discount salvage recoverable as of the end of the 2018 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

DRAFTING INFORMATION

The principal author of this revenue procedure is Katherine A. Hossofsky of the Office of the Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure, contact Ms. Hossofsky at (202) 622–8435 (not a toll-free call).

2008 94.8844 2009 96.1174

Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

2010 and later years

98.0298

Taxpayers that use the composite method of Notice 88–100 should use 98.0298 percent to discount salvage recoverable as of the end of the 2010 taxable year with respect to losses incurred in this line of business in 2008 and prior years.

2008 88.3785 2009 90.4189 2010 91.2195 2011 91.1364 2012 89.6372 2013 88.2223 2014 88.8169 2015 88.5309 2016 90.7105 2017 92.4766

Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2008 accident year.

2018 94.2879 2019 96.1430 2020 and later 98.0298 years

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