SECTION 4. APPLICATION

.01 The following tables present separately for each line of business the discount factors under § 832 for the 2011 accident year. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for

November 14, 2011 759 2011–46 I.R.B.

2011, which is 3.46 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 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, 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

Respect to Losses Incurred in

Accident Year 2011

(Interest rate: 3.46 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 98.3136 percent to discount salvage recoverable with respect to losses incurred in this line of business in the 2011 accident year as of the end of the 2011 and later taxable years.

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount all salvage recoverable in this line of business as of the end of the 2011 taxable year.

Auto Physical Damage

2011 97.6275 2012 96.6697

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 2011 accident year.

Commercial Auto/Truck Liability/Medical

Tax Year

Discount Factors (%)

2011 93.3955 2012 93.3497 2013 93.6495 2014 93.9535 2015 94.5922 2016 94.4105 2017 93.0655 2018 93.8651 2019 96.7732 2020 98.3136

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 2011 accident year.

2021 and later years

98.3136

Tax Year

Discount Factors (%)

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

2013 and later years

98.3136

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2013 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

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Composite

Tax Year

Discount Factors (%)

Fidelity/Surety

2013 and later years

98.3136

International (Composite)

2017 92.2931 2018 93.4656 2019 95.2188 2020 96.7927

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 2011 accident year.

2011 93.4039 2012 93.1846 2013 93.0306 2014 92.8794 2015 92.3429 2016 91.5493 2017 92.2931 2018 93.4656 2019 95.2188 2020 96.7927

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 2011 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2013 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Financial Guaranty/Mortgage Guaranty

98.3136

2021 and later years

Tax Year

Discount Factors (%)

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Medical Malpractice — Claims-Made

2021 and later years

98.3136

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Fidelity/Surety

2011 95.4821 2012 96.6697

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 2011 accident year.

Discount Factors (%)

2013 and later years

98.3136

Tax Year

2011 93.6663 2012 94.5958 2013 93.2150 2014 93.7553 2015 93.1492 2016 89.3501 2017 86.4691 2018 91.6464 2019 96.9508 2020 98.3136

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 2011 accident year.

Tax Year

Discount Factors (%)

2011 94.5806 2012 96.6697

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 2011 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2013 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

International (Composite)

2011 93.4039 2012 93.1846 2013 93.0306 2014 92.8794 2015 92.3429 2016 91.5493

Tax Year

Discount Factors (%)

2021 and later years

98.3136

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Medical Malpractice — Claims-Made

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Medical Malpractice — Occurrence

Miscellaneous Casualty

2011 97.0682 2012 96.6697

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 2011 accident year.

Tax Year

Discount Factors (%)

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

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 2011 accident year.

98.3136

Tax Year

Discount Factors (%)

2021 and later years

2011 87.4530 2012 91.2904 2013 93.3358 2014 86.4191 2015 95.5109 2016 92.6085 2017 93.9918 2018 96.4593 2019 97.5134 2020 98.3136

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 2011 accident year.

2013 and later years

98.3136

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2013 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

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

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Other (Including Credit)

2011 96.2595 2012 96.6697

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 2011 accident year.

Tax Year

Discount Factors (%)

Tax Year

Discount Factors (%)

2021 and later years

98.3136

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2013 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

2011 93.9591 2012 93.4315 2013 93.3624 2014 93.3066 2015 92.6060 2016 91.2535 2017 92.2618 2018 94.3624 2019 95.5747 2020 97.0967

2013 and later years

98.3136

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Private Passenger Auto Liability/Medical

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Products Liability — Claims-Made

Other Liability — Claims-Made

Tax Year

Discount Factors (%)

2011 89.9640 2012 90.9400 2013 89.3209 2014 92.1248 2015 93.4120 2016 95.0362 2017 94.1167 2018 92.9293 2019 97.7390 2020 98.3136

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 2011 accident year.

Other Liability — Occurrence

2020 97.9202

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 2011 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Private Passenger Auto Liability/Medical

2021 and later years

98.3136

Discount Factors (%)

Tax Year

2021 and later years

98.3136

Tax Year

Discount Factors (%)

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Other Liability — Occurrence

2011 95.2907 2012 95.3106 2013 95.0938 2014 94.3448 2015 93.8406 2016 93.1778 2017 93.9588 2018 95.3067 2019 95.3731 2020 96.9202

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 2011 accident year.

2011 90.3287 2012 57.4781 2013 59.7457 2014 91.9244 2015 82.7270 2016 92.5554 2017 64.8394 2018 91.7750 2019 92.7747 2020 93.7745

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 2011 accident year.

2021 95.3256 2022 96.8802 2023 and later 98.3136 years

Taxpayers that use the composite method of Notice 88–100 should use 96.1358 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Tax Year

Discount Factors (%)

2011 88.8323 2012 89.7443 2013 91.7691 2014 92.4298 2015 91.9481 2016 92.0560 2017 91.6100 2018 93.9815 2019 96.3629

2021 and later years

98.3136

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Products Liability — Occurrence

Reinsurance — Nonproportional Assumed Liability

98.3136

Tax Year

Discount Factors (%)

2021 and later years

2011 89.2922 2012 91.1086 2013 92.7443 2014 93.4548 2015 93.8417 2016 91.7263 2017 92.2857 2018 94.8423 2019 95.0804 2020 96.6835

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 2011 accident year.

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Reinsurance — Nonproportional Assumed Financial Lines

Tax Year

Discount Factors (%)

2021 and later years

98.3136

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Reinsurance — Nonproportional Assumed Property

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 2011 accident year.

2021 91.2427 2022 92.8279 2023 94.4867 2024 96.2644 2025 and later 98.3136 years

Taxpayers that use the composite method of Notice 88–100 should use 93.2014 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

Reinsurance — Nonproportional Assumed Liability

2011 88.5261 2012 91.3783 2013 92.6425 2014 90.1633 2015 91.9672 2016 92.7246 2017 92.6419 2018 94.1716 2019 95.8463 2020 97.3545

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 2011 accident year.

Tax Year

Discount Factors (%)

2011 88.8405 2012 87.7511 2013 91.2356 2014 81.3485 2015 91.5590 2016 82.9553 2017 91.7407 2018 92.1114 2019 97.8713 2020 98.3136

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 2011 accident year.

98.3136

Tax Year

Discount Factors (%)

2021 and later years

2011 92.3051 2012 93.7306 2013 96.2743 2014 82.6967 2015 91.1729 2016 83.9159 2017 57.7951 2018 93.7915 2019 76.8594 2020 89.7124

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

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Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Glass, 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 96.0008 percent to discount salvage recoverable as of the end of the 2021 taxable year with respect to losses incurred in this line of business in 2011 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 95.6046 2012 96.6697

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 2011 accident year.

2013 and later years

98.3136

Taxpayers that use the composite method of Notice 88–100 should use 98.3136 percent to discount salvage recoverable as of the end of the 2013 taxable year with respect to losses incurred in this line of business in 2011 and prior years.

2011 89.9261 2012 91.7002 2013 92.3933 2014 92.3172 2015 91.0146 2016 89.7934 2017 90.3201 2018 90.0878 2019 91.9867 2020 93.5222

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 2011 accident year.

2021 95.0909 2022 96.6917 2023 and later 98.3136 years

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