IRS PUBLISHES 1994 DISCOUNTED UNPAID LOSS FACTORS.
JUL. 15, 1994
Rev. Proc. 94-47; 1994-2 C.B. 688
DOCUMENT ATTRIBUTES
- Institutional AuthorsInternal Revenue Service
- Cross-ReferencePart 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 94-6656
- Tax Analysts Electronic Citation94 TNT 138-12
Citations: Rev. Proc. 94-47; 1994-2 C.B. 688
Rev. Proc. 94-47
SECTION 1. PURPOSE
This revenue procedure prescribes the loss payment patterns and discount factors for the 1994 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.
SEC. 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.
SEC. 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 1994. All the discount factors presented in this section were determined using the applicable interest rate under section 846(c) for 1994, which is 7.45 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
Section 846
- 1994 -
Interest rate: 7.45 percent
Homeowners/Farmowners
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 66.8753 66.8753 30.3659 33.1247 91.6716
AY+ 1 90.4633 23.5880 8.1773 9.5367 85.7460
AY+ 2 93.3914 2.9281 5.7513 6.6086 87.0281
AY+ 3 95.7081 2.3167 3.7784 4.2919 88.0348
AY+ 4 97.4081 1.7000 2.2977 2.5919 88.6480
AY+ 5 98.6271 1.2190 1.2053 1.3729 87.7890
AY+ 6 99.1528 0.5257 0.7501 0.8472 88.5406
AY+ 7 99.5425 0.3897 0.4020 0.4575 87.8785
AY+ 8 99.7318 0.1893 0.2358 0.2682 87.9101
AY+ 9 99.8063 0.0745 0.1761 0.1937 90.9204
AY+10 N/A 0.0745 0.1120 0.1192 93.9647
AY+11 N/A 0.0745 0.0431 0.0447 96.4710
AY+12 N/A 0.0447 0.0000 0.0000 N/A
Private Passenger Auto Liability/Medical
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 34.7617 34.7617 58.2282 65.2383 89.2546
AY+ 1 66.2963 31.5346 29.8780 33.7037 88.6490
AY+ 2 81.2140 14.9177 16.6405 18.7860 88.5792
AY+ 3 89.8272 8.6132 8.9520 10.1728 87.9988
AY+ 4 94.4549 4.6277 4.8219 5.5451 86.9573
AY+ 5 96.8788 2.4239 2.6685 3.1212 85.4968
AY+ 6 98.1526 1.2738 1.5469 1.8474 83.7356
AY+ 7 98.6962 0.5436 1.0987 1.3038 84.2686
AY+ 8 99.0485 0.3523 0.8154 0.9515 85.6925
AY+ 9 99.2667 0.2182 0.6499 0.7333 88.6304
AY+10 N/A 0.2182 0.4722 0.5151 91.6646
AY+11 N/A 0.2182 0.2812 0.2969 94.6981
AY+12 N/A 0.2182 0.0759 0.0787 96.4710
AY+13 N/A 0.0787 0.0000 0.0000 N/A
Commercial Auto/Truck Liability/Medical
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 20.8439 20.8439 67.9438 79.1561 85.8351
AY+ 1 47.3136 26.4697 45.5676 52.6864 86.4883
AY+ 2 65.6475 18.3340 29.9578 34.3525 87.2070
AY+ 3 79.0481 13.4005 18.2989 20.9519 87.3374
AY+ 4 86.8945 7.8465 11.5286 13.1055 87.9682
AY+ 5 92.4503 5.5558 6.6285 7.5497 87.7984
AY+ 6 95.5751 3.1247 3.8833 4.4249 87.7588
AY+ 7 97.3052 1.7302 2.3791 2.6948 88.2865
AY+ 8 98.1469 0.8417 1.6839 1.8531 90.8695
AY+ 9 98.8549 0.7080 1.0754 1.1451 93.9178
AY+10 N/A 0.7080 0.4217 0.4371 96.4710
AY+11 N/A 0.4371 0.0000 0.0000 N/A
Workers' Compensation
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 22.3366 22.3366 63.0279 77.6634 81.1552
AY+ 1 50.6941 28.3575 38.3286 49.3059 77.7364
AY+ 2 66.1886 15.4945 25.1228 33.8114 74.3028
AY+ 3 74.4228 8.2342 18.4590 25.5772 72.1699
AY+ 4 79.5663 5.1434 14.5026 20.4337 70.9739
AY+ 5 83.7227 4.1564 11.2746 16.2773 69.2656
AY+ 6 86.1316 2.4089 9.6175 13.8684 69.3485
AY+ 7 88.4452 2.3136 7.9358 11.5548 68.6796
AY+ 8 88.9625 0.5173 7.9908 11.0375 72.3967
AY+ 9 89.9266 0.9641 7.5867 10.0734 75.3145
AY+10 N/A 0.9641 7.1526 9.1093 78.5196
AY+11 N/A 0.9641 6.6861 8.1453 82.0862
AY+12 N/A 0.9641 6.1849 7.1812 86.1266
AY+13 N/A 0.9641 5.6463 6.2171 90.8194
AY+14 N/A 0.9641 5.0676 5.2530 96.4710
AY+15 N/A 5.2530 0.0000 0.0000 N/A
Commercial Multiple Peril
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 33.4193 33.4193 55.7810 66.5807 83.7795
AY+ 1 59.1296 25.7103 33.2859 40.8704 81.4425
AY+ 2 67.4080 8.2784 27.1844 32.5920 83.4082
AY+ 3 75.7571 8.3491 20.5552 24.2429 84.7883
AY+ 4 83.8673 8.1102 13.6797 16.1327 84.7944
AY+ 5 89.5799 5.7126 8.7772 10.4201 84.2331
AY+ 6 93.4124 3.8325 5.4584 6.5876 82.8585
AY+ 7 95.6455 2.2331 3.5503 4.3545 81.5306
AY+ 8 96.9571 1.3116 2.4552 3.0429 80.6852
AY+ 9 97.4497 0.4926 2.1275 2.5503 83.4200
AY+10 N/A 0.4926 1.7754 2.0577 86.2776
AY+11 N/A 0.4926 1.3970 1.5651 89.2580
AY+12 N/A 0.4926 0.9904 1.0725 92.3478
AY+13 N/A 0.4926 0.5536 0.5799 95.4643
AY+14 N/A 0.4926 0.0842 0.0873 96.4710
AY+15 N/A 0.0873 0.0000 0.0000 N/A
Medical Malpractice
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 3.7026 3.7026 67.2266 96.2974 69.8114
AY+ 1 11.5535 7.8510 64.0968 88.4465 72.4696
AY+ 2 21.9296 10.3761 58.1164 78.0704 74.4410
AY+ 3 32.8555 10.9259 51.1205 67.1445 76.1350
AY+ 4 46.6164 13.7609 40.6647 53.3836 76.1745
AY+ 5 60.9092 14.2928 28.8786 39.0908 73.8756
AY+ 6 69.2349 8.3257 22.3998 30.7651 72.8089
AY+ 7 71.6574 2.4225 21.5574 28.3426 76.0601
AY+ 8 73.7610 2.1036 20.9829 26.2390 79.9683
AY+ 9 77.8395 4.0786 18.3184 22.1605 82.6624
AY+10 N/A 4.0786 15.4553 18.0819 85.4740
AY+11 N/A 4.0786 12.3790 14.0033 88.4002
AY+12 N/A 4.0786 9.0734 9.9248 91.4223
AY+13 N/A 4.0786 5.5216 5.8462 94.4486
AY+14 N/A 4.0786 1.7052 1.7676 96.4710
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
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 31.2231 31.2231 60.3989 68.7769 87.8185
AY+ 1 68.2247 37.0016 26.5434 31.7753 83.5346
AY+ 2 80.2858 12.0611 16.0185 19.7142 81.2538
AY+ 3 85.4166 5.1308 11.8934 14.5834 81.5546
AY+ 4 89.4028 3.9862 8.6475 10.5972 81.6016
AY+ 5 93.2493 3.8465 5.3045 6.7507 78.5772
AY+ 6 94.0515 0.8022 4.8681 5.9485 81.8383
AY+ 7 95.8901 1.8386 3.3249 4.1099 80.9013
AY+ 8 97.7995 1.9093 1.5934 2.2005 72.4125
AY+ 9 97.9920 0.1925 1.5126 2.0080 75.3288
AY+10 N/A 0.1925 1.4257 1.8155 78.5317
AY+11 N/A 0.1925 1.3324 1.6230 82.0958
AY+12 N/A 0.1925 1.2321 1.4304 86.1331
AY+13 N/A 0.1925 1.1243 1.2379 90.8225
AY+14 N/A 0.1925 1.0085 1.0454 96.4710
AY+15 N/A 1.0454 0.0000 0.0000 N/A
Other Liability
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 9.9737 9.9737 66.3981 90.0263 73.7541
AY+ 1 21.8819 11.9082 59.0009 78.1181 75.5278
AY+ 2 32.5583 10.6764 52.3295 67.4417 77.5922
AY+ 3 41.4543 8.8960 47.0067 58.5457 80.2905
AY+ 4 56.3583 14.9040 35.0594 43.6417 80.3347
AY+ 5 71.6763 15.3180 21.7931 28.3237 76.9427
AY+ 6 78.0397 6.3635 16.8204 21.9603 76.5946
AY+ 7 82.2566 4.2168 13.7024 17.7434 77.2252
AY+ 8 85.2754 3.0188 11.5940 14.7246 78.7388
AY+ 9 87.4014 2.1260 10.2540 12.5986 81.3897
AY+10 N/A 2.1260 8.8142 10.4727 84.1636
AY+11 N/A 2.1260 7.2671 8.3467 87.0655
AY+12 N/A 2.1260 5.6047 6.2207 90.0980
AY+13 N/A 2.1260 3.8186 4.0948 93.2550
AY+14 N/A 2.1260 1.8993 1.9688 96.4710
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
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 57.7817 57.7817 39.5855 42.2183 93.7638
AY+ 1 88.3390 30.5573 10.8595 11.6610 93.1266
AY+ 2 N/A 5.8305 5.6247 5.8305 96.4710
AY+ 3 N/A 5.8305 0.0000 0.0000 N/A
Auto Physical Damage
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 84.1827 84.1827 15.1483 15.8173 95.7706
AY+ 1 98.8697 14.6870 1.0526 1.1303 93.1266
AY+ 2 N/A 0.5651 0.5452 0.5651 96.4710
AY+ 3 N/A 0.5651 0.0000 0.0000 N/A
Fidelity, Surety, Financial Guaranty, Mortgage Guaranty
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 25.1728 25.1728 68.0335 74.8272 90.9209
AY+ 1 57.6281 32.4553 39.4595 42.3719 93.1266
AY+ 2 N/A 21.1859 20.4383 21.1859 96.4710
AY+ 3 N/A 21.1859 0.0000 0.0000 N/A
Other (including Credit, Accident and Health)
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 63.6725 63.6725 33.9568 36.3275 93.4742
AY+ 1 88.8927 25.2202 10.3438 11.1073 93.1266
AY+ 2 N/A 5.5536 5.3576 5.5536 96.4710
AY+ 3 N/A 5.5536 0.0000 0.0000 N/A
International (Composite)
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 30.8006 30.8006 57.5989 69.1994 83.2362
AY+ 1 56.9235 26.1229 34.8116 43.0765 80.8133
AY+ 2 68.6906 11.7671 25.2075 31.3094 80.5108
AY+ 3 76.7697 8.0791 18.7108 23.2303 80.5447
AY+ 4 83.5336 6.7639 13.0935 16.4664 79.5160
AY+ 5 88.9725 5.4390 8.4310 11.0275 76.4543
AY+ 6 91.6218 2.6493 6.3129 8.3782 75.3490
AY+ 7 93.4305 1.8087 4.9083 6.5695 74.7139
AY+ 8 94.3638 0.9333 4.3065 5.6362 76.4090
AY+ 9 95.0595 0.6957 3.9063 4.9405 79.0661
AY+10 N/A 0.6957 3.4762 4.2448 81.8915
AY+11 N/A 0.6957 3.0140 3.5492 84.9219
AY+12 N/A 0.6957 2.5174 2.8535 88.2232
AY+13 N/A 0.6957 1.9839 2.1578 91.9386
AY+14 N/A 0.6957 1.4106 1.4622 96.4710
AY+15 N/A 1.4622 0.0000 0.0000 N/A
Reinsurance A
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 35.8044 35.8044 58.1714 64.1956 90.6159
AY+ 1 72.2671 36.4628 24.7086 27.7329 89.0950
AY+ 2 79.1294 6.8622 19.4361 20.8706 93.1266
AY+ 3 N/A 10.4353 10.0670 10.4353 96.4710
AY+ 4 N/A 10.4353 0.0000 0.0000 N/A
Reinsurance B (Composite)
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 30.8006 30.8006 57.5989 69.1994 83.2362
AY+ 1 56.9235 26.1229 34.8116 43.0765 80.8133
AY+ 2 68.6906 11.7671 25.2075 31.3094 80.5108
AY+ 3 76.7697 8.0791 18.7108 23.2303 80.5447
AY+ 4 83.5336 6.7639 13.0935 16.4664 79.5160
AY+ 5 88.9725 5.4390 8.4310 11.0275 76.4543
AY+ 6 91.6218 2.6493 6.3129 8.3782 75.3490
AY+ 7 93.4305 1.8087 4.9083 6.5695 74.7139
AY+ 8 94.3638 0.9333 4.3065 5.6362 76.4090
AY+ 9 95.0595 0.6957 3.9063 4.9405 79.0661
AY+10 N/A 0.6957 3.4762 4.2448 81.8915
AY+11 N/A 0.6957 3.0140 3.5492 84.9219
AY+12 N/A 0.6957 2.5174 2.8535 88.2232
AY+13 N/A 0.6957 1.9839 2.1578 91.9386
AY+14 N/A 0.6957 1.4106 1.4622 96.4710
AY+15 N/A 1.4622 0.0000 0.0000 N/A
Reinsurance C
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 23.0513 23.0513 68.2516 76.9487 88.6976
AY+ 1 47.1565 24.1051 48.3494 52.8435 91.4954
AY+ 2 73.1742 26.0177 24.9820 26.8258 93.1266
AY+ 3 N/A 13.4129 12.9396 13.4129 96.4710
AY+ 4 N/A 13.4129 0.0000 0.0000 N/A
Miscellaneous Casualty (Composite)
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 73.9503 73.9503 24.5188 26.0497 94.1232
AY+ 1 93.7601 19.8099 5.8110 6.2399 93.1266
AY+ 2 N/A 3.1199 3.0098 3.1199 96.4710
AY+ 3 N/A 3.1199 0.0000 0.0000 N/A
Long Lines (Composite)
Discounted
Cumulative Estimated Unpaid Unpaid
Tax Losses Losses Paid Losses at Losses at Discount
Year Paid Each Year Year End Year End Factor
(%) (%) (%) (%) (%)
AY+ 0 30.8006 30.8006 57.5989 69.1994 83.2362
AY+ 1 56.9235 26.1229 34.8116 43.0765 80.8133
AY+ 2 68.6906 11.7671 25.2075 31.3094 80.5108
AY+ 3 76.7697 8.0791 18.7108 23.2303 80.5447
AY+ 4 83.5336 6.7639 13.0935 16.4664 79.5160
AY+ 5 88.9725 5.4390 8.4310 11.0275 76.4543
AY+ 6 91.6218 2.6493 6.3129 8.3782 75.3490
AY+ 7 93.4305 1.8087 4.9083 6.5695 74.7139
AY+ 8 94.3638 0.9333 4.3065 5.6362 76.4090
AY+ 9 95.0595 0.6957 3.9063 4.9405 79.0661
AY+10 N/A 0.6957 3.4762 4.2448 81.8915
AY+11 N/A 0.6957 3.0140 3.5492 84.9219
AY+12 N/A 0.6957 2.5174 2.8535 88.2232
AY+13 N/A 0.6957 1.9839 2.1578 91.9386
AY+14 N/A 0.6957 1.4106 1.4622 96.4710
AY+15 N/A 1.4622 0.0000 0.0000 N/A
_____________________________________________________________________
DRAFTING INFORMATION
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-ReferencePart 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 94-6656
- Tax Analysts Electronic Citation94 TNT 138-12
