SECTION 4. APPLICATION

.01 The following tables present separately for each line of business the discount factors under § 832 for the 2010 accident year. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2010, which is 3.81 percent, and by assuming all estimated salvage is recovered in the middle of each calendar year. See Rev. Proc. 2008–11, 2008–1 C.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 annual statement approved by the National Association of Insurance Commissioners. The tables separately provide discount factors for taxpayers who elect to use the com

December 13, 2010 841 2010–50 I.R.B.

posite 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, 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 2010

(Interest rate: 3.81 percent)

Lines of Business

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 98.1478 percent to discount salvage recoverable with respect to losses incurred in this line of business in the 2010 accident year as of the end of the 2010 and later taxable years.

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount all salvage recoverable in this line of business as of the end of the 2010 taxable year.

Auto Physical Damage

2010 92.7837 2011 92.7323 2012 93.0580 2013 93.3885 2014 94.0857 2015 93.8868 2016 92.4123 2017 93.2791 2018 96.4600 2019 98.1478

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 2010 accident year.

Auto Physical Damage

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 2010 accident year.

Commercial Auto/Truck Liability/Medical

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

Composite

2012 and later years

98.1478

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2012 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

Commercial Auto/Truck Liability/Medical

Tax Year

Discount Factors (%)

Tax Year

Discount Factors (%)

2010 92.7966 2011 92.5582 2012 92.3906 2013 92.2259 2014 91.6392 2015 90.7679 2016 91.5729 2017 92.8475 2018 94.7606 2019 96.4814

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 2010 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.1394 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

2020 and later years

98.1478

Tax Year

Discount Factors (%)

2010 97.3968 2011 96.3467

2020 and later years

98.1478

2010–50 I.R.B. 842 December 13, 2010

Medical Malpractice — Claims-Made

Fidelity/Surety

Tax Year

Discount Factors (%)

Tax Year

Discount Factors (%)

2010 94.0623 2011 96.3467

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 2010 accident year.

Financial Guaranty/Mortgage Guaranty

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2012 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

International (Composite)

Tax Year

Discount Factors (%)

2010 93.0786 2011 94.0952 2012 92.5904 2013 93.1817 2014 92.5233 2015 88.3749 2016 85.2082 2017 90.8503 2018 96.6547 2019 98.1478

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 2010 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

Medical Malpractice — Occurrence

2012 and later years

98.1478

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2012 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

Financial Guaranty/Mortgage Guaranty

2010 92.7966 2011 92.5582 2012 92.3906 2013 92.2259 2014 91.6392 2015 90.7679 2016 91.5729 2017 92.8475 2018 94.7606 2019 96.4814

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 2010 accident year.

2020 and later years

98.1478

Tax Year

Discount Factors (%)

2010 95.0489 2011 96.3467

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 2010 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.1394 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

2020 and later years

98.1478

Discount Factors (%)

Tax Year

2010 86.3162 2011 90.4919 2012 92.7220 2013 85.1582 2014 95.0887 2015 91.9139 2016 93.4195 2017 96.1175 2018 97.2711 2019 98.1478

2012 and later years

98.1478

December 13, 2010 843 2010–50 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 2010 accident year.

Medical Malpractice — Occurrence

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 2010 accident year.

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

Tax Year

Discount Factors (%)

98.1478

2012 and later years

2020 and later years

98.1478

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

Miscellaneous Casualty

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2012 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

Other Liability — Claims-Made

Discount Factors (%)

Tax Year

Discount Factors (%)

Tax Year

2010 96.7847 2011 96.3467

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 2010 accident year.

2010 93.4004 2011 92.8257 2012 92.7508 2013 92.6906 2014 91.9254 2015 90.4434 2016 91.5362 2017 93.8270 2018 95.1497 2019 96.8145

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 2010 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

Other (Including Credit)

2020 and later years

98.1478

2010 89.0574 2011 90.1163 2012 88.3414 2013 91.3936 2014 92.7947 2015 94.5684 2016 93.5605 2017 92.2516 2018 97.5182 2019 98.1478

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 2010 accident year.

2012 and later years

98.1478

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2012 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

2010 95.8998 2011 96.3467

Tax Year

Discount Factors (%)

98.1478

2020 and later years

2010–50 I.R.B. 844 December 13, 2010

Other Liability — Claims-Made

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 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 2010 accident year.

2020 94.8773 2021 96.5773 2022 and later 98.1478 years

Taxpayers that use the composite method of Notice 88–100 should use 95.8305 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

Products Liability — Occurrence

Tax Year

Discount Factors (%)

2010 87.8282 2011 88.8138 2012 91.0169 2013 91.7356 2014 91.2069 2015 91.3193 2016 90.8227 2017 93.4080 2018 96.0113 2019 97.7168

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 2010 accident year.

2010 94.8467 2011 94.8695 2012 94.6345 2013 93.8178 2014 93.2668 2015 92.5396 2016 93.3887 2017 94.8601 2018 94.9293 2019 96.6211

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 2010 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

Products Liability — Claims-Made

2020 and later years

98.1478

Tax Year

Discount Factors (%)

2010 88.3200 2011 90.2935 2012 92.0747 2013 92.8492 2014 93.2720 2015 90.9592 2016 91.5621 2017 94.3528 2018 94.6093 2019 96.3618

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 2010 accident year.

2020 and later years

98.1478

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

2010 89.5111 2011 53.8777 2012 56.2338 2013 91.2109 2014 81.2016 2015 91.8947 2016 61.7067 2017 91.0293 2018 92.1071 2019 93.1849

Tax Year

Discount Factors (%)

2020 and later years

98.1478

December 13, 2010 845 2010–50 I.R.B.

Reinsurance — Nonproportional Assumed Financial Lines

Products Liability — Occurrence

Taxpayers that use the composite method of Notice 88–100 should use 98.1145 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

Reinsurance — Nonproportional Assumed Property

Reinsurance — Nonproportional Assumed Liability

Discount Factors (%)

Tax Year

Discount Factors (%)

Tax Year

2010 87.8550 2011 86.6634 2012 90.4544 2013 79.6749 2014 90.7909 2015 81.3855 2016 90.9640 2017 91.3553 2018 97.6631 2019 98.1478

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 2010 accident year.

Tax Year

Discount Factors (%)

2010 91.5967 2011 93.1520 2012 95.9361 2013 81.1923 2014 90.4025 2015 82.5156 2016 54.0401 2017 93.2324 2018 74.7782 2019 88.7685

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 2010 accident year.

2020 90.4287 2021 92.1524 2022 93.9603 2023 95.9026 2024 and later 98.1478 years

Taxpayers that use the composite method of Notice 88–100 should use 92.3206 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

2010 87.4907 2011 90.5937 2012 91.9716 2013 89.2639 2014 91.2258 2015 92.0480 2016 91.9513 2017 93.6177 2018 95.4465 2019 97.0969

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 2010 accident year.

2020 and later years

98.1478

2020 and later years

98.1478

Taxpayers that use the composite method of Notice 88–100 should use 98.0840 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

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

Tax Year

Discount Factors (%)

2010 95.1830 2011 96.3467

2010–50 I.R.B. 846 December 13, 2010

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 2010 accident year.

Workers’ Compensation

Tax Year

Discount Factors (%)

Workers’ Compensation

2020 94.6208 2021 96.3708 2022 and later 98.1478 years

Taxpayers that use the composite method of Notice 88–100 should use 95.6888 percent to discount salvage recoverable as of the end of the 2020 taxable year with respect to losses incurred in this line of business in 2010 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).

2012 and later years

98.1478

Taxpayers that use the composite method of Notice 88–100 should use 98.1478 percent to discount salvage recoverable as of the end of the 2012 taxable year with respect to losses incurred in this line of business in 2010 and prior years.

2010 89.0169 2011 90.9477 2012 91.7039 2013 91.6235 2014 90.2053 2015 88.8704 2016 89.4375 2017 89.1742 2018 91.2385 2019 92.9096

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 2010 accident year.

December 13, 2010 847 2010–50 I.R.B.