LOSS PAYMENT PATTERNS AND DISCOUNT FACTORS FOR 1996 ARE PUBLISHED.
AUG. 15, 1996
Rev. Proc. 96-44; 1996-2 C.B. 330
DOCUMENT ATTRIBUTES
- Institutional AuthorsInternal Revenue Service
- Cross-Reference
Part III
Administrative, Procedural, and Miscellaneous
26 CFR 601.201: Rulings and determination letters
(Also Part I, Sections 846; 1.846-1.)
- Code Sections
- Subject Areas/Tax Topics
- Index Termsinsurance companies, losses, discounted unpaid
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 96-23034 (11 original pages)
- Tax Analysts Electronic Citation96 TNT 161-8
Citations: Rev. Proc. 96-44; 1996-2 C.B. 330
Rev. Proc. 96-44
SECTION 1. PURPOSE
[1] This revenue procedure prescribes the loss payment patterns and discount factors for the 1996 accident year. These factors will be used for computing discounted unpaid losses under section 846 of the Internal Revenue Code. See Rev. Proc. 92-47, 1992-1 C.B. 980, for background concerning the loss payment patterns and application of the discount factors.
SECTION 2. SCOPE
[2] This revenue procedure applies to any taxpayer that is required to discount its unpaid losses under section 846 for a line of business using discount factors published by the Secretary.
SECTION 3. TABLES OF DISCOUNT FACTORS
.01 The following tables present separately for each line of business the discount factors under section 846 for accident year 1996. All the discount factors presented in this section were determined using the applicable interest rate under section 846(c) for 1996, which is 6.63 percent, and by assuming all loss payments occur in the middle of the calendar year.
.02 If the groupings of individual lines of business on the annual statement changes, taxpayers must discount the unpaid losses on the resulting lines of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 1990 annual statement.
.03 Tables
Tables of Discount Factors
Section 846
- 1996 -
Interest rate: 6.63 percent
Homeowners/Farmowners
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 66.8753 66.8753 30.6325 33.1247 92.4763
AY+ 1 90.4633 23.5880 8.3060 9.5367 87.0955
AY+ 2 93.3914 2.9281 5.8331 6.6086 88.2656
AY+ 3 95.7081 2.3167 3.8276 4.2919 89.1817
AY+ 4 97.4081 1.7000 2.3259 2.5919 89.7376
AY+ 5 98.6271 1.2190 1.2214 1.3729 88.9620
AY+ 6 99.1528 0.5257 0.7595 0.8472 89.6468
AY+ 7 99.5425 0.3897 0.4074 0.4575 89.0559
AY+ 8 99.7318 0.1893 0.2390 0.2682 89.1020
AY+ 9 99.8063 0.0745 0.1779 0.1937 91.8346
AY+10 N/A 0.0745 0.1127 0.1192 94.5850
AY+11 N/A 0.0745 0.0432 0.0447 96.8412
AY+12 N/A 0.0447 0.0000 0.0000 N/A
Private Passenger Auto Liability/Medical
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 34.7617 34.7617 58.9016 65.2383 90.2868
AY+ 1 66.2963 31.5346 30.2435 33.7037 89.7336
AY+ 2 81.2140 14.9177 16.8444 18.7860 89.6646
AY+ 3 89.8272 8.6132 9.0671 10.1728 89.1303
AY+ 4 94.4549 4.6277 4.8895 5.5451 88.1776
AY+ 5 96.8788 2.4239 2.7107 3.1212 86.8495
AY+ 6 98.1526 1.2738 1.5751 1.8474 85.2614
AY+ 7 98.6962 0.5436 1.1182 1.3038 85.7661
AY+ 8 99.0485 0.3523 0.8286 0.9515 87.0805
AY+ 9 99.2667 0.2182 0.6582 0.7333 89.7569
AY+10 N/A 0.2182 0.4765 0.5151 92.5079
AY+11 N/A 0.2182 0.2828 0.2969 95.2452
AY+12 N/A 0.2182 0.0762 0.0787 96.8412
AY+13 N/A 0.0787 0.0000 0.0000 N/A
Commercial Auto/Truck Liability/Medical
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 20.8439 20.8439 69.0004 79.1561 87.1701
AY+ 1 47.3136 26.4697 46.2421 52.6864 87.7685
AY+ 2 65.6475 18.3340 30.3760 34.3525 88.4244
AY+ 3 79.0481 13.4005 18.5522 20.9519 88.5467
AY+ 4 86.8945 7.8465 11.6798 13.1055 89.1220
AY+ 5 92.4503 5.5558 6.7172 7.5497 88.9736
AY+ 6 95.5751 3.1247 3.9359 4.4249 88.9483
AY+ 7 97.3052 1.7302 2.4103 2.6948 89.4420
AY+ 8 98.1469 0.8417 1.7009 1.8531 91.7885
AY+ 9 98.8549 0.7080 1.0826 1.1451 94.5428
AY+10 N/A 0.7080 0.4233 0.4371 96.8412
AY+11 N/A 0.4371 0.0000 0.0000 N/A
Workers' Compensation
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 22.3366 22.3366 64.2484 77.6634 82.7268
AY+ 1 50.6941 28.3575 39.2256 49.3059 79.5557
AY+ 2 66.1886 15.4945 25.8264 33.8114 76.3837
AY+ 3 74.4228 8.2342 19.0359 25.5772 74.4253
AY+ 4 79.5663 5.1434 14.9867 20.4337 73.3432
AY+ 5 83.7227 4.1564 11.6883 16.2773 71.8077
AY+ 6 86.1316 2.4089 9.9758 13.8684 71.9321
AY+ 7 88.4452 2.3136 8.2482 11.5548 71.3830
AY+ 8 88.9625 0.5173 8.2608 11.0375 74.8434
AY+ 9 89.9266 0.9641 7.8130 10.0734 77.5606
AY+10 N/A 0.9641 7.3355 9.1093 80.5270
AY+11 N/A 0.9641 6.8263 8.1453 83.8070
AY+12 N/A 0.9641 6.2833 7.1812 87.4975
AY+13 N/A 0.9641 5.7044 6.2171 91.7536
AY+14 N/A 0.9641 5.0871 5.2530 96.8412
AY+15 N/A 5.2530 0.0000 0.0000 N/A
Commercial Multiple Peril
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 33.4193 33.4193 56.7613 66.5807 85.2519
AY+ 1 59.1296 25.7103 33.9757 40.8704 83.1303
AY+ 2 67.4080 8.2784 27.6799 32.5920 84.9284
AY+ 3 75.7571 8.3491 20.8936 24.2429 86.1844
AY+ 4 83.8673 8.1102 13.9041 16.1327 86.1858
AY+ 5 89.5799 5.7126 8.9270 10.4201 85.6710
AY+ 6 93.4124 3.8325 5.5614 6.5876 84.4217
AY+ 7 95.6455 2.2331 3.6242 4.3545 83.2276
AY+ 8 96.9571 1.3116 2.5101 3.0429 82.4887
AY+ 9 97.4497 0.4926 2.1678 2.5503 85.0017
AY+10 N/A 0.4926 1.8029 2.0577 87.6150
AY+11 N/A 0.4926 1.4137 1.5651 90.3275
AY+12 N/A 0.4926 0.9988 1.0725 93.1260
AY+13 N/A 0.4926 0.5563 0.5799 95.9349
AY+14 N/A 0.4926 0.0845 0.0873 96.8412
AY+15 N/A 0.0873 0.0000 0.0000 N/A
Medical Malpractice
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 3.7026 3.7026 69.6231 96.2974 72.3001
AY+ 1 11.5535 7.8510 66.1321 88.4465 74.7708
AY+ 2 21.9296 10.3761 59.8022 78.0704 76.6003
AY+ 3 32.8555 10.9259 52.4848 67.1445 78.1669
AY+ 4 46.6164 13.7609 41.7548 53.3836 78.2165
AY+ 5 60.9092 14.2928 29.7641 39.0908 76.1409
AY+ 6 69.2349 8.3257 23.1402 30.7651 75.2157
AY+ 7 71.6574 2.4225 22.1728 28.3426 78.2316
AY+ 8 73.7610 2.1036 21.4707 26.2390 81.8275
AY+ 9 77.8395 4.0786 18.6826 22.1605 84.3062
AY+10 N/A 4.0786 15.7097 18.0819 86.8808
AY+11 N/A 4.0786 12.5396 14.0033 89.5476
AY+12 N/A 4.0786 9.1594 9.9248 92.2886
AY+13 N/A 4.0786 5.5551 5.8462 95.0206
AY+14 N/A 4.0786 1.7118 1.7676 96.8412
AY+15 N/A 1.7676 0.0000 0.0000 N/A
Special Liability (Ocean Marine, Aircraft (all Perils), Boiler and
Machinery)
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 31.2231 31.2231 61.1626 68.7769 88.9290
AY+ 1 68.2247 37.0016 27.0091 31.7753 85.0004
AY+ 2 80.2858 12.0611 16.3453 19.7142 82.9115
AY+ 3 85.4166 5.1308 12.1308 14.5834 83.1827
AY+ 4 89.4028 3.9862 8.8189 10.5972 83.2194
AY+ 5 93.2493 3.8465 5.4316 6.7507 80.4607
AY+ 6 94.0515 0.8022 4.9634 5.9485 83.4397
AY+ 7 95.8901 1.8386 3.3939 4.1099 82.5788
AY+ 8 97.7995 1.9093 1.6473 2.2005 74.8580
AY+ 9 97.9920 0.1925 1.5577 2.0080 77.5737
AY+10 N/A 0.1925 1.4621 1.8155 80.5381
AY+11 N/A 0.1925 1.3603 1.6230 83.8157
AY+12 N/A 0.1925 1.2517 1.4304 87.5033
AY+13 N/A 0.1925 1.1359 1.2379 91.7563
AY+14 N/A 0.1925 1.0124 1.0454 96.8412
AY+15 N/A 1.0454 0.0000 0.0000 N/A
Other Liability
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 9.9737 9.9737 68.4086 90.0263 75.9874
AY+ 1 21.8819 11.9082 60.6475 78.1181 77.6356
AY+ 2 32.5583 10.6764 53.6438 67.4417 79.5409
AY+ 3 41.4543 8.8960 48.0142 58.5457 82.0115
AY+ 4 56.3583 14.9040 35.8074 43.6417 82.0485
AY+ 5 71.6763 15.3180 22.3638 28.3237 78.9578
AY+ 6 78.0397 6.3635 17.2755 21.9603 78.6670
AY+ 7 82.2566 4.2168 14.0665 17.7434 79.2771
AY+ 8 85.2754 3.0188 11.8818 14.7246 80.6934
AY+ 9 87.4014 2.1260 10.4742 12.5986 83.1378
AY+10 N/A 2.1260 8.9734 10.4727 85.6836
AY+11 N/A 2.1260 7.3730 8.3467 88.3341
AY+12 N/A 2.1260 5.6665 6.2207 91.0905
AY+13 N/A 2.1260 3.8469 4.0948 93.9461
AY+14 N/A 2.1260 1.9066 1.9688 96.8412
AY+15 N/A 1.9688 0.0000 0.0000 N/A
Special Property (Fire, Allied Lines, Inland Marine, Earthquake,
Glass, Burglary, and Theft)
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 57.7817 57.7817 39.8533 42.2183 94.3982
AY+ 1 88.3390 30.5573 10.9415 11.6610 93.8306
AY+ 2 N/A 5.8305 5.6463 5.8305 96.8412
AY+ 3 N/A 5.8305 0.0000 0.0000 N/A
Auto Physical Damage
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 84.1827 84.1827 15.2177 15.8173 96.2092
AY+ 1 98.8697 14.6870 1.0606 1.1303 93.8306
AY+ 2 N/A 0.5651 0.5473 0.5651 96.8412
AY+ 3 N/A 0.5651 0.0000 0.0000 N/A
Fidelity, Surety, Financial Guaranty, Mortgage Guaranty
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 25.1728 25.1728 68.7158 74.8272 91.8327
AY+ 1 57.6281 32.4553 39.7578 42.3719 93.8306
AY+ 2 N/A 21.1859 20.5167 21.1859 96.8412
AY+ 3 N/A 21.1859 0.0000 0.0000 N/A
Other (including Credit, Accident and Health)
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 63.6725 63.6725 34.1976 36.3275 94.1369
AY+ 1 88.8927 25.2202 10.4220 11.1073 93.8306
AY+ 2 N/A 5.5536 5.3782 5.5536 96.8412
AY+ 3 N/A 5.5536 0.0000 0.0000 N/A
International (Composite)
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 30.8006 30.8006 58.6213 69.1994 84.7137
AY+ 1 56.9235 26.1229 35.5330 43.0765 82.4881
AY+ 2 68.6906 11.7671 25.7379 31.3094 82.2050
AY+ 3 76.7697 8.0791 19.1017 23.2303 82.2275
AY+ 4 83.5336 6.7639 13.3837 16.4664 81.2783
AY+ 5 88.9725 5.4390 8.6546 11.0275 78.4822
AY+ 6 91.6218 2.6493 6.4927 8.3782 77.4953
AY+ 7 93.4305 1.8087 5.0554 6.5695 76.9538
AY+ 8 94.3638 0.9333 4.4269 5.6362 78.5443
AY+ 9 95.0595 0.6957 4.0020 4.9405 81.0046
AY+10 N/A 0.6957 3.5490 4.2448 83.6078
AY+11 N/A 0.6957 3.0659 3.5492 86.3851
AY+12 N/A 0.6957 2.5509 2.8535 89.3943
AY+13 N/A 0.6957 2.0016 2.1578 92.7611
AY+14 N/A 0.6957 1.4160 1.4622 96.8412
AY+15 N/A 1.4622 0.0000 0.0000 N/A
Reinsurance A
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 35.8044 35.8044 58.7668 64.1956 91.5432
AY+ 1 72.2671 36.4628 25.0109 27.7329 90.1850
AY+ 2 79.1294 6.8622 19.5830 20.8706 93.8306
AY+ 3 N/A 10.4353 10.1057 10.4353 96.8412
AY+ 4 N/A 10.4353 0.0000 0.0000 N/A
Reinsurance B (Composite)
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 30.8006 30.8006 58.6213 69.1994 84.7137
AY+ 1 56.9235 26.1229 35.5330 43.0765 82.4881
AY+ 2 68.6906 11.7671 25.7379 31.3094 82.2050
AY+ 3 76.7697 8.0791 19.1017 23.2303 82.2275
AY+ 4 83.5336 6.7639 13.3837 16.4664 81.2783
AY+ 5 88.9725 5.4390 8.6546 11.0275 78.4822
AY+ 6 91.6218 2.6493 6.4927 8.3782 77.4953
AY+ 7 93.4305 1.8087 5.0554 6.5695 76.9538
AY+ 8 94.3638 0.9333 4.4269 5.6362 78.5443
AY+ 9 95.0595 0.6957 4.0020 4.9405 81.0046
AY+10 N/A 0.6957 3.5490 4.2448 83.6078
AY+11 N/A 0.6957 3.0659 3.5492 86.3851
AY+12 N/A 0.6957 2.5509 2.8535 89.3943
AY+13 N/A 0.6957 2.0016 2.1578 92.7611
AY+14 N/A 0.6957 1.4160 1.4622 96.8412
AY+15 N/A 1.4622 0.0000 0.0000 N/A
Reinsurance C
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 23.0513 23.0513 69.1110 76.9487 89.8144
AY+ 1 47.1565 24.1051 48.8016 52.8435 92.3512
AY+ 2 73.1742 26.0177 25.1708 26.8258 93.8306
AY+ 3 N/A 13.4129 12.9892 13.4129 96.8412
AY+ 4 N/A 13.4129 0.0000 0.0000 N/A
Miscellaneous Casualty (Composite)
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Pact or
(%) (%) (%) (%) (%)
AY+ 0 73.9503 73.9503 24.6750 26.0497 94.7226
AY+ 1 93.7601 19.8099 5.8549 6.2399 93.8306
AY+ 2 N/A 3.1199 3.0214 3.1199 96.8412
AY+ 3 N/A 3.1199 0.0000 0.0000 N/A
Long Lines (Composite)
Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 30.8006 30.8006 58.6213 69.1994 84.7137
AY+ 1 56.9235 26.1229 35.5330 43.0765 82.4881
AY+ 2 68.6906 11.7671 25.7379 31.3094 82.2050
AY+ 3 76.7697 8.0791 19.1017 23.2303 82.2275
AY+ 4 83.5336 6.7639 13.3837 16.4664 81.2783
AY+ 5 88.9725 5.4390 8.6546 11.0275 78.4822
AY+ 6 91.6218 2.6493 6.4927 8.3782 77.4953
AY+ 7 93.4305 1.8087 5.0554 6.5695 76.9538
AY+ 8 94.3638 0.9333 4.4269 5.6362 78.5443
AY+ 9 95.0595 0.6957 4.0020 4.9405 81.0046
AY+10 N/A 0.6957 3.5490 4.2448 83.6078
AY+11 N/A 0.6957 3.0659 3.5492 86.3851
AY+12 N/A 0.6957 2.5509 2.8535 89.3943
AY+13 N/A 0.6957 2.0016 2.1578 92.7611
AY+14 N/A 0.6957 1.4160 1.4622 96.8412
AY+15 N/A 1.4622 0.0000 0.0000 N/A
DRAFTING INFORMATION
[3] The principal author of this revenue procedure is Katherine A. Hossofsky of the Office of the Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this revenue procedure, contact Ms. Hossofsky on (202) 622-3477 (not a toll-free number).
DOCUMENT ATTRIBUTES
- Institutional AuthorsInternal Revenue Service
- Cross-Reference
Part III
Administrative, Procedural, and Miscellaneous
26 CFR 601.201: Rulings and determination letters
(Also Part I, Sections 846; 1.846-1.)
- Code Sections
- Subject Areas/Tax Topics
- Index Termsinsurance companies, losses, discounted unpaid
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 96-23034 (11 original pages)
- Tax Analysts Electronic Citation96 TNT 161-8
