IRS PRESCRIBES LOSS PAYMENT PATTERNS AND DISCOUNT FACTORS FOR COMPUTING DISCOUNTED UNPAID LOSSES FOR 1995.

Rev. Proc. 95-40

SECTION 1. PURPOSE

This revenue procedure prescribes the loss payment patterns and discount factors for the 1995 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

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 1995. All the discount factors presented in this section were determined using the applicable interest rate under section 846(c) for 1995, which is 6.99 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 Unpaid Losses Discount Factors

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).