SECTION 4. APPLICATION

.01 The following tables present separately for each line of business the discount factors under § 832 for the 2009 accident year. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2009, which is 4.06 percent, and by assuming all estimated salvage is recovered 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 insur

December 28, 2009 993 2009–52 I.R.B.

ance companies subject to tax under § 831 the composite method for discounting unpaid losses set forth in Notice 88–100, section V, 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 2009

(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 2009 accident year as of the end of the 2009 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 2009 taxable year.

Auto Physical Damage

2009 92.3526 2010 92.2970 2011 92.6408 2012 92.9897 2013 93.7281 2014 93.5170 2015 91.9508 2016 92.8642 2017 96.2378 2018 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 2009 accident year.

Discount Factors (%)

Auto Physical Damage

2011 and later years

98.0298

Composite

Tax 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 2011 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Commercial Auto/Truck Liability/Medical

Tax Year

Discount Factors (%)

2009 92.3690 2010 92.1172 2011 91.9402 2012 91.7659 2013 91.1438 2014 90.2174 2015 91.0647 2016 92.4105 2017 94.4361 2018 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 2009 accident year.

2019 and later years

98.0298

Taxpayers that use the composite method of Notice 88–100 should use 97.8009 percent to discount salvage recoverable as of the end of the 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Fidelity/Surety

2019 and later years

Tax Year

Discount Factors (%)

Tax Year

Discount Factors (%)

98.0298

2009 97.2331 2010 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 2009 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 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

2009 93.6954 2010 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 2009 accident year.

2009–52 I.R.B. 994 December 28, 2009

Fidelity/Surety

2011 and later years

International (Composite)

98.0298

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 2011 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Financial Guaranty/Mortgage Guaranty

Medical Malpractice — Claims-Made

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 2009 accident year.

2019 and later years

98.0298

Tax Year

Discount Factors (%)

2009 94.7421 2010 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 2009 accident year.

2009 92.3690 2010 92.1172 2011 91.9402 2012 91.7659 2013 91.1438 2014 90.2174 2015 91.0647 2016 92.4105 2017 94.4361 2018 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 2009 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 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Medical Malpractice — Occurrence

Discount Factors (%)

2019 and later years

98.0298

Tax Year

2009 85.5177 2010 89.9300 2011 92.2898 2012 84.2693 2013 94.7905 2014 91.4234 2015 93.0145 2016 95.8751 2017 97.0989 2018 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 2009 accident year.

2011 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 2011 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Taxpayers that use the composite method of Notice 88–100 should use 97.8009 percent to discount salvage recoverable as of the end of the 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Medical Malpractice — Claims-Made

Tax Year

Discount Factors (%)

2009 92.6642 2010 93.7424 2011 92.1505 2012 92.7778 2013 92.0831 2014 87.6889 2015 84.3189 2016 90.2868 2017 96.4445 2018 98.0298

2019 and later years

98.0298

December 28, 2009 995 2009–52 I.R.B.

Other (Including Credit)

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 2009 accident year.

Medical Malpractice — Occurrence

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 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Miscellaneous Casualty

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

Tax Year

Discount Factors (%)

98.0298

2010 and later years

Tax Year

Discount Factors (%)

2009 96.5837 2010 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 2009 accident year.

2009 93.0068 2010 92.3990 2011 92.3201 2012 92.2569 2013 91.4462 2014 89.8725 2015 91.0239 2016 93.4483 2017 94.8485 2018 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 2009 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 2011 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Other Liability — Claims-Made

Tax Year

Discount Factors (%)

2011 and later years

2019 and later years

98.0298

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 2011 taxable year with respect to losses incurred in this line of business in 2009 and prior 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 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Other (Including Credit)

2009 88.4208 2010 89.5374 2011 87.6521 2012 90.8781 2013 92.3590 2014 94.2379 2015 93.1673 2016 91.7716 2017 97.3613 2018 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 2009 accident year.

Tax Year

Discount Factors (%)

2009 95.6448 2010 96.1174

2019 and later years

98.0298

2009–52 I.R.B. 996 December 28, 2009

Other Liability — Claims-Made

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 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Other Liability — Occurrence

Private Passenger Auto Liability/Medical

Tax Year

Discount Factors (%)

Products Liability — Claims-Made

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 2009 accident year.

2019 94.5598 2020 96.3623 2021 and later 98.0298 years

Taxpayers that use the composite method of Notice 88–100 should use 95.6711 percent to discount salvage recoverable as of the end of the 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Products Liability — Occurrence

Tax Year

Discount Factors (%)

2009 87.1236 2010 88.1600 2011 90.4878 2012 91.2470 2013 90.6851 2014 90.8000 2015 90.2668 2016 93.0020 2017 95.7619 2018 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 2009 accident year.

2009 94.5329 2010 94.5579 2011 94.3102 2012 93.4459 2013 92.8620 2014 92.0891 2015 92.9858 2016 94.5440 2017 94.6149 2018 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 2009 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 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Products Liability — Claims-Made

2019 and later years

98.0298

Tax Year

Discount Factors (%)

2009 87.6369 2010 89.7198 2011 91.6030 2012 92.4224 2013 92.8704 2014 90.4185 2015 91.0511 2016 94.0066 2017 94.2757 2018 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 2009 accident year.

2019 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 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

2009 88.9426 2010 51.3741 2011 53.7803 2012 90.7115 2013 80.1341 2014 91.4320 2015 59.5121 2016 90.5055 2017 91.6367 2018 92.7680

Tax Year

Discount Factors (%)

2019 and later years

98.0298

December 28, 2009 997 2009–52 I.R.B.

Reinsurance — Nonproportional Assumed Financial Lines

Products Liability — Occurrence

Taxpayers that use the composite method of Notice 88–100 should use 97.2089 percent to discount salvage recoverable as of the end of the 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

Reinsurance — Nonproportional Assumed Property

Reinsurance — Nonproportional Assumed Liability

Discount Factors (%)

Tax Year

Discount Factors (%)

Tax Year

2009 87.1652 2010 85.9016 2011 89.9069 2012 78.5011 2013 90.2511 2014 80.2802 2015 90.4154 2016 90.8197 2017 97.5152 2018 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 2009 accident year.

Tax Year

Discount Factors (%)

2009 91.0976 2010 92.7443 2011 95.6984 2012 80.1417 2013 89.8643 2014 81.5378 2015 51.4095 2016 92.8399 2017 73.3181 2018 88.1043

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 2009 accident year.

2019 89.8547 2020 91.6751 2021 93.5877 2022 95.6459 2023 and later 98.0298 years

Taxpayers that use the composite method of Notice 88–100 should use 91.4735 percent to discount salvage recoverable as of the end of the 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

2009 86.7636 2010 90.0422 2011 91.4998 2012 88.6312 2013 90.7036 2014 91.5709 2015 91.4636 2016 93.2257 2017 95.1632 2018 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 2009 accident year.

2019 and later years

98.0298

2019 and later years

98.0298

Taxpayers that use the composite method of Notice 88–100 should use 96.5025 percent to discount salvage recoverable as of the end of the 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior 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 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

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

Tax Year

Discount Factors (%)

2009 94.8844 2010 96.1174

2009–52 I.R.B. 998 December 28, 2009

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

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 2009 accident year.

Workers’ Compensation

Tax Year

Discount Factors (%)

Workers’ Compensation

2019 94.2879 2020 96.1430 2021 and later 98.0298 years

Taxpayers that use the composite method of Notice 88–100 should use 95.7330 percent to discount salvage recoverable as of the end of the 2019 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

DRAFTING INFORMATION

The principal author of this revenue procedure is Sarah E. Swan of the Office of the Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure, contact Ms. Swan at (202)622–8443 (not a toll-free call).

2011 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 2011 taxable year with respect to losses incurred in this line of business in 2009 and prior years.

2009 88.3785 2010 90.4189 2011 91.2195 2012 91.1364 2013 89.6372 2014 88.2223 2015 88.8169 2016 88.5309 2017 90.7105 2018 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 2009 accident year.

December 28, 2009 999 2009–52 I.R.B.