SECTION 5. REQUEST FOR

COMMENTS

.01 Effect of NAIC Change on Compos- ite Method . Section V of Notice 88-100 sets forth a composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. Beginning in 2024, the NAIC changed Schedule P of the annual statement to require ten years of data (and a “prior” row) to be reported for all lines of business. Previously, only two years of data were required to be reported for some lines of business. As described in Rev. Proc. 2025-15, the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) expect that composite method discount factors, which apply with respect to accident years not separately reported on the annual statement, will be of limited use to insurance companies with respect to the lines of business set forth in Tables 1 and 3 following the 2024 NAIC change. This is because the 2024 NAIC change generally increases the number of accident years being separately reported on the annual statement for these lines of business. Nonetheless, in Rev. Proc. 2025-15, the Treasury Department and the IRS made no change to the determination and application of composite method discount factors to reflect the 2024 NAIC change to Schedule P. The Treasury Department and the IRS instead requested comments regarding composite method discount factors with respect to the lines of business set forth in Tables 1 and 3 following the NAIC change. No comments were received.

.02 Plans Regarding Composite Method . The Treasury Department and the IRS are making no change to the determination and application of composite method discount factors to reflect the 2024 NAIC change to Schedule P in this revenue procedure. Accordingly, like Rev. Proc. 2025-15, this revenue procedure provides composite method discount factors for accident years that were separately reported on the annual statement due to the 2024 NAIC change to Schedule P, although section V of Notice 88-100 provides the composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. Beginning with the revenue procedure providing discount factors for use by insurance companies in computing discounted unpaid losses under § 846 and discounted estimated salvage recoverable under § 832 for taxable years beginning in 2026, the Treasury Department and the IRS expect to provide composite method discount factors only for accident years not separately reported on the annual statement. Accordingly, with respect to the lines of business set forth in Tables 1 and 3, the Treasury Department and the IRS expect to require that, for accident years separately reported on the annual statement, taxpayers using the composite method must use the same discount factors used by taxpayers not using the composite method. Consistent with prior practice, although the annual statement does not distinguish between cancellable accident and health insurance and other insurance designated as “Other,” these two groups of policies

would continue to be treated as if their losses were reported separately. Set forth below, for informational purposes only, are Table 1 (parts A and B) for the 2025 accident year and Table 3 (parts A and B) for taxable years beginning in 2025, as they would have appeared if the proposed approach had been required for taxable years beginning in 2025. The composite method discount factors set forth in these tables were derived using the loss payment patterns previously determined for the 2022 determination year under section 846(d)(3)(B)(i). See Rev. Proc. 2023-10 for background concerning the loss payment patterns. The anticipated changes to the discount factors used by insurance companies using the composite method to compute discounted unpaid losses under § 846 and discounted estimated salvage recoverable under § 832 are expected to change the proper time for the inclusion of the item in income or the taking of the item as a deduction. Accordingly, affected insurance companies are expected to have a change in method of accounting subject to § 446(e) and § 1.446-1. The Treasury Department and the IRS anticipate providing simplified procedures for insurance companies to change their method of accounting to use such factors in their first taxable year beginning after December 31, 2025. For example, the Treasury Department and the IRS are considering implementing the change on a cut-off basis, providing automatic change request procedures, and limiting the information that must be provided on Form 3115, Application for Change in Accounting Method .

Bulletin No. 2026–9 573 February 23, 2026

Table 1 (part A) Discount Factors Under Section 846 (percent) For Losses Incurred in Accident Year 2025 in Short-Tail Lines of Business

(Informational Purposes Only)

Taxable Year

Beginning in

Auto Physical

Damage Fidelity/Surety

Financial Guaranty/

Mortgage Guaranty International Other*

2025 98.0171 94.8069 94.2020 94.9732 96.3288

2026 96.5385 96.5385 96.5385 96.5385 96.5385

2027–2034 98.2463 98.2463 98.2463 98.2463 98.2463

Taxpayer Not Using Composite Method

Years after 2034 98.2463 98.2463 98.2463 98.2463 98.2463

Taxpayer Using the Composite Method

2035 98.2463 98.2463 98.2463 98.2463 98.2463

Years after 2035

Use composite method discount factors published for the accident year that is two years prior to the specifed taxable year.

*** For the Accident and Health line of business (other than disability income or credit disability insurance), the discount** factor for taxable years 2025 - 2034 is 98.2463 percent. This is also the discount factor used in taxable years after 2034 for taxpayers not using the composite method. For taxpayers using the composite method, the discount factor for losses incurred in accident year 2025 for taxable years after 2034 is the discount factor published for the Accident and Health line of business for losses incurred in the accident year coinciding with the taxable year.

February 23, 2026 574 Bulletin No. 2026–9

Table 1 (part B) Discount Factors Under Section 846 (percent) For Losses Incurred in Accident Year 2025 in Short-Tail Lines of Business

(Informational Purposes Only)

Special Property

Reinsurance -

Reinsurance -

Non- proportional

Reinsurance -

Non- proportional

Assumed Property

Earthquake, Burglary, Theft,

(Fire, Allied Lines, Inland Marine,

Pet) Warranty

Taxable Year

Beginning in

Assumed Financial Lines

Non- proportional

Assumed

Liability

Short-Tail Composite

2025 94.9406 93.8058 95.3714 97.0553 98.0069 96.6054

2026 96.5385 96.5385 96.5385 96.5385 96.5385 96.5385

2027–2034 98.2463 98.2463 98.2463 98.2463 98.2463 98.2463

Taxpayer Not Using Composite Method

Years after 2034 98.2463 98.2463 98.2463 98.2463 98.2463 98.2463

Taxpayer Using the Composite Method

2035 98.2463 98.2463 98.2463 98.2463 98.2463 98.2463

Years after 2035

Use composite method discount factors published for the accident year that is two years prior to the specifed taxable year.

Bulletin No. 2026–9 575 February 23, 2026

Table 3 (part A) Discount Factors Under Section 846 (percent)

For Taxable Years Beginning in 2025

Short-Tail Lines of Business (Informational Purposes Only)

Financial Guaranty/

Mortgage Guaranty International Other*

Accident Year

Auto Physical

Damage Fidelity/Surety

2025 98.0171 94.8069 94.2020 94.9732 96.3288

2024 96.9063 96.9063 96.9063 96.9063 96.9063

2023 98.5707 98.5707 98.5707 98.5707 98.5707

2022 98.6826 98.6826 98.6826 98.6826 98.6826

2021 98.5999 98.5999 98.5999 98.5999 98.5999

2020 98.4834 98.4834 98.4834 98.4834 98.4834

2019 98.4785 98.4785 98.4785 98.4785 98.4785

2018 98.5513 98.5513 98.5513 98.5513 98.5513

2017 98.5513 98.5513 98.5513 98.5513 98.5513

2016 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Not Using Composite Method

Years before 2016 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Using the Composite Method

Years before 2016 98.5707 98.5707 98.5707 98.5707 98.5707

*** For the Accident and Health line of business (other than disability income or credit disability insurance), the discount** factor for taxable year 2025 is 98.2463 percent.

February 23, 2026 576 Bulletin No. 2026–9

Table 3 (part B) Discount Factors Under Section 846 (percent)

For Taxable Years Beginning in 2025

Short-Tail Lines of Business (Informational Purposes Only)

Reinsurance -

Reinsurance -

Non- proportional

Reinsurance - Non-proportional

Assumed Property

Special Property (Fire, Allied Lines,

Inland Marine,

Earthquake, Burglary, Theft,

Pet) Warranty

Accident

Year

Assumed Financial Lines

Non- proportional

Assumed

Liability

Short-Tail Composite

2025 94.9406 93.8058 95.3714 97.0553 98.0069 96.6054

2024 96.9063 96.9063 96.9063 96.9063 96.9063 96.9063

2023 98.5707 98.5707 98.5707 98.5707 98.5707 98.5707

2022 98.6826 98.6826 98.6826 98.6826 98.6826 98.6826

2021 98.5999 98.5999 98.5999 98.5999 98.5999 98.5999

2020 98.4834 98.4834 98.4834 98.4834 98.4834 98.4834

2019 98.4785 98.4785 98.4785 98.4785 98.4785 98.4785

2018 98.5513 98.5513 98.5513 98.5513 98.5513 98.5513

2017 98.5513 98.5513 98.5513 98.5513 98.5513 98.5513

2016 98.5513 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Not Using Composite Method

Years before

2019 98.5513 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Using the Composite Method

Years before

2024 98.5707 98.5707 98.5707 98.5707 98.5707 98.5707

Bulletin No. 2026–9 577 February 23, 2026

(b) By mail to: Internal Revenue Service, CC:PA:01:PR (Revenue Procedure 2026-13), Room 5503, P.O. Box 7604, Ben Franklin Station, Washington, D.C., 20044. (3) Publication of comments . The Treasury Department and the IRS will publish for public availability any comment submitted electronically or on paper to its public docket on regulations.gov.