IRS Publishes Loss Payment Patterns And Discount Factors For 2002.
Rev. Proc. 2003-17; 2003-1 C.B. 427
- Institutional AuthorsInternal Revenue Service
- Cross-ReferencePart III
Administrative, Procedural, and Miscellaneous
26 CFR 601.201: Rulings and determination letters.
(Also Part 1, Section 846; 1.846-1.) - Code Sections
- Subject Areas/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2003-1820 (24 original pages)
- Tax Analysts Electronic Citation2003 TNT 13-12
Rev. Proc. 2003-17
SECTION 1. PURPOSE
This revenue procedure prescribes the loss payment patterns and discount factors for the 2002 determination year. These factors will be used to compute discounted unpaid losses under § 846 of the Internal Revenue Code.
SEC. 2. BACKGROUND
.01 Section 846 provides that discounted unpaid losses must be separately determined for each accident year of each line of business by applying an interest rate determined under § 846(c) and the appropriate loss payment pattern to the amount of unpaid losses as measured at the end of the tax year.
Section 846(d) directs the Secretary to use the most recent aggregate loss payment data of property and casualty insurance companies to determine and publish a loss payment pattern for each line of business every five years. This payment pattern is used to discount unpaid losses for the accident year ending with a determination year and for each of the four succeeding accident years.
Section 846(e) allows a taxpayer to make an election in each determination year to use its own historical payment pattern instead of the Secretary's tables. This election does not apply to any international insurance or reinsurance line of business.
Section 846(f)(4) defines the term "line of business" as a category for the reporting of loss payment patterns on the annual statement for fire and casualty companies approved by the National Association of Insurance Commissioners (NAIC), except that the multiple peril lines shall be treated as a single line of business. Section 846(f)(5) states that the term "multiple peril lines" means the lines of business relating to farmowners multiple peril, homeowners multiple peril, commercial multiple peril, ocean marine, aircraft (all perils) and boiler and machinery.
.02 Pursuant to § 846(d), the Secretary has determined a loss payment pattern for each property and casualty line of business for the 2002 determination year that, pursuant to § 846(d)(1), must be applied through the 2006 accident year.
.03 The loss payment patterns for the 2002 determination year are based on the aggregate loss payment information reported on the 2000 annual statements of property and casualty insurance companies and compiled by A.M. Best and Co. The tables are arranged in alphabetical order. Following is an additional explanation of some of the tables and changes to the tables.
(1) Lines of Business. The lines of business for the 2002 determination year are the same as the lines of business for the 1997 determination year. See Rev. Proc. 98-11, section 2.03, 1998-1 C.B. 358.
(2) Format of the Tables. To simplify the tables, the columns entitled Tax Year provide the actual tax years, rather than AY+0, AY+1, and so on.
(3) Accident Years Not Separately Reported on the NAIC Annual Statement. Section V of Notice 88-100, 1988-2 C.B. 439, sets forth a composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. The tables separately provide discount factors for taxpayers who elect to use the composite method of section V of Notice 88-100. See Rev. Proc. 2002-74, 2002-51 I.R.B. 980.
(4) Comments Requested on Smoothing Data. In some cases, the methodology currently used to estimate unpaid losses and salvage patterns may produce negative discount factors, discount factors that exceed one, or large year-to-year differences in discount factors. (See, for example, the unpaid loss discount factors for Reinsurance C.) Notice 88-100, section IV, sets forth a methodology to replace such factors by a positive discount factor. Notice 88-100 does not extend this methodology to situations with positive, yet small, discount factors, discount factors in excess of one, or factors that change substantially from year to year. Comments are requested as to whether a methodology should be adopted to smooth the raw payment data and thus produce a more stable pattern of discount factors. Comments should be sent to CC:ITA:RU (Rev. Proc. 2003-17), room 5226, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Comments may be hand delivered between the hours of 8 a.m. and 4 p.m. to CCF:ITA:RU (Rev. Proc. 2003-17), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC 20224. In the alternative, e-mail comments to Notice.Comments@irscounsel.treas.gov.
SEC. 3. SCOPE
This revenue procedure applies to any taxpayer that is required to discount unpaid losses under § 846 for a line of business using the discount factors published by the Secretary.
SEC. 4. TABLES OF DISCOUNT FACTORS
.01 The following tables present separately for each line of business the discount factors under § 846 for accident year 2002. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2002, 5.71 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 change, taxpayers must discount unpaid losses on the resulting line of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 2002 annual statement.
.03 Tables
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 97.2617 percent to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the 2002 and later tax years.
Taxpayers that use the composite method of Notice 88-100 should use 97.2617 percent to discount all unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2002 tax year.
Auto Physical Damage
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 89.6468 89.6468 10.3532 10.0453 97.0259
2003 99.6845 10.0377 0.3155 0.2986 94.6349
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2004 and later years 0.1578 0.1578 0.1534 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 97.2617 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2004 tax year.
Commercial Auto/Truck Liability/Medical
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 28.8244 28.8244 71.1756 63.9395 89.8335
2003 54.9871 26.1626 45.0129 40.6913 90.3990
2004 72.8039 17.8168 27.1961 24.6963 90.8082
2005 85.0572 12.2533 14.9428 13.5082 90.3992
2006 91.6276 6.5704 8.3724 7.5241 89.8680
2007 94.9514 3.3239 5.0486 4.5363 89.8537
2008 97.0453 2.0938 2.9547 2.6426 89.4349
2009 98.1574 1.1121 1.8426 1.6500 89.5481
2010 98.7370 0.5796 1.2630 1.1483 90.9194
2011 99.1070 0.3700 0.8930 0.8335 93.3331
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 0.3700 0.5230 0.5007 95.7246
2013 and later years 0.3700 0.1530 0.1488 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 96.4013 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Composite
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 40.9985 40.9985 59.0015 51.8901 87.9471
2003 65.8439 24.8454 34.1561 29.3081 85.8065
2004 77.5023 11.6583 22.4977 18.9950 84.4309
2005 84.6221 7.1198 15.3779 12.7594 82.9722
2006 90.2455 5.6234 9.7545 7.7062 79.0017
2007 92.2780 2.0325 7.7220 6.0566 78.4322
2008 94.3974 2.1195 5.6026 4.2232 75.3807
2009 95.2526 0.8552 4.7474 3.5851 75.5182
2010 96.2792 1.0266 3.7208 2.7343 73.4885
2011 96.4323 0.1531 3.5677 2.7330 76.6061
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 0.1531 3.4145 2.7317 80.0010
2013 0.1531 3.2614 2.7302 83.7124
2014 0.1531 3.1083 2.7286 87.7867
2015 0.1531 2.9551 2.7270 92.2803
2016 and later years 0.1531 2.8020 2.7253 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 88.0794 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Fidelity/Surety
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 38.3328 38.3328 61.6672 56.7940 92.0976
2003 58.8485 20.5156 41.1515 38.9437 94.6349
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2004 and later years 20.5758 20.5758 20.0123 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 97.2617 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2004 tax year.
Financial Guaranty/Mortgage Guaranty
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 4.0723 4.0723 95.9277 88.7169 92.4831
2003 40.7639 36.6916 59.2361 56.0580 94.6349
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2004 and later years 29.6180 29.6180 28.8070 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 97.2617 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2004 tax year.
International (Composite)
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 40.9985 40.9985 59.0015 51.8901 87.9471
2003 65.8439 24.8454 34.1561 29.3081 85.8065
2004 77.5023 11.6583 22.4977 18.9950 84.4309
2005 84.6221 7.1198 15.3779 12.7594 82.9722
2006 90.2455 5.6234 9.7545 7.7062 79.0017
2007 92.2780 2.0325 7.7220 6.0566 78.4322
2008 94.3974 2.1195 5.6026 4.2232 75.3807
2009 95.2526 0.8552 4.7474 3.5851 75.5182
2010 96.2792 1.0266 3.7208 2.7343 73.4885
2011 96.4323 0.1531 3.5677 2.7330 76.6061
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 0.1531 3.4145 2.7317 80.0010
2013 0.1531 3.2614 2.7302 83.7124
2014 0.1531 3.1083 2.7286 87.7867
2015 0.1531 2.9551 2.7270 92.2803
2016 and later 0.1531 2.8020 2.7253 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 88.0794 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Medical Malpractice -- Claims-Made
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 7.3447 7.3447 92.6553 80.0569 86.4030
2003 29.0191 21.6744 70.9809 62.3436 87.8315
2004 53.3108 24.2917 46.6892 40.9278 87.6600
2005 69.1517 15.8409 30.8483 26.9779 87.4534
2006 82.0981 12.9464 17.9019 15.2074 84.9486
2007 86.3995 4.3014 13.6005 11.6532 85.6826
2008 89.7111 3.3116 10.2889 8.9138 86.6354
2009 92.4688 2.7577 7.5312 6.5875 87.4691
2010 94.5163 2.0475 5.4837 4.8584 88.5983
2011 95.7635 1.2471 4.2365 3.8536 90.9614
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 1.2471 2.9894 2.7914 93.3767
2013 1.2471 1.7422 1.6685 95.7688
2014 and later years 1.2471 0.4951 0.4815 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 93.3767 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Medical Malpractice -- Occurrence
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 0.8316 0.8316 99.1684 79.3040 79.9691
2003 7.4573 6.6257 92.5427 77.0201 83.2266
2004 23.5575 16.1002 76.4425 64.8645 84.8539
2005 41.0062 17.4487 58.9938 50.6283 85.8197
2006 55.5832 14.5770 44.4168 38.5318 86.7505
2007 68.9413 13.3581 31.0587 26.9978 86.9250
2008 78.2095 9.2682 21.7905 19.0102 87.2408
2009 82.8727 4.6632 17.1273 15.3012 89.3380
2010 86.3178 3.4451 13.6822 12.6328 92.3302
2011 91.0834 4.7656 8.9166 8.4543 94.8160
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 and later years 4.7656 4.1510 4.0373 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 97.1845 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Miscellaneous Casualty
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 79.7790 79.7790 20.2210 19.2759 95.3259
2003 94.9417 15.1627 5.0583 4.7869 94.6349
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2004 and later years 2.5292 2.5292 2.4599 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 97.2617 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2004 tax year.
Multiple Peril Lines (Homeowners/Farmowners, Commercial Multiple
Peril, and Special Liability (Ocean Marine, Aircraft (All Perils),
Boiler and Machinery))
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 59.7445 59.7445 40.2555 36.3785 90.3691
2003 81.0347 21.2902 18.9653 16.5661 87.3498
2004 87.3325 6.2978 12.6675 11.0369 87.1282
2005 91.0659 3.7334 8.9341 7.8286 87.6268
2006 95.1781 4.1122 4.8219 4.0477 83.9442
2007 95.7605 0.5824 4.2395 3.6800 86.8035
2008 97.0539 1.2933 2.9461 2.5604 86.9067
2009 97.6441 0.5903 2.3559 2.0997 89.1265
2010 98.7037 1.0596 1.2963 1.1302 87.1862
2011 98.6217 -0.0821 1.3783 1.2791 92.7987
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 0.5226 0.8558 0.8148 95.2164
2013 and later years 0.5226 0.3332 0.3240 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 95.2688 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Other (Including Credit)
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 69.1729 69.1729 30.8271 29.3033 95.0568
2003 91.2168 22.0439 8.7832 8.3120 94.6349
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2004 and later years 4.3916 4.3916 4.2714 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 97.2617 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2004 tax year.
Other Liability -- Claims-Made
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 14.9618 14.9618 85.0382 71.8257 84.4629
2003 36.2113 21.2494 63.7887 54.0793 84.7787
2004 54.2876 18.0763 45.7124 38.5820 84.4015
2005 64.2163 9.9288 35.7837 30.5767 85.4488
2006 73.2732 9.0569 26.7268 23.0108 86.0964
2007 80.5748 7.3016 19.4252 16.8175 86.5760
2008 87.6200 7.0452 12.3800 10.5343 85.0912
2009 89.9155 2.2955 10.0845 8.7757 87.0214
2010 93.3946 3.4791 6.6054 5.6997 86.2886
2011 94.6170 1.2223 5.3830 4.7684 88.5817
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 1.2223 4.1607 3.7839 90.9440
2013 1.2223 2.9383 2.7432 93.3586
2014 1.2223 1.7160 1.6431 95.7504
2015 and later years 1.2223 0.4936 0.4801 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 90.9440 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Other Liability -- Occurrence
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 19.1133 19.1133 80.8867 65.8673 81.4315
2003 36.4434 17.3301 63.5566 51.8103 81.5183
2004 52.1648 15.7215 47.8352 38.6046 80.7033
2005 63.2383 11.0734 36.7617 29.4237 80.0389
2006 72.0780 8.8397 27.9220 22.0152 78.8453
2007 75.9021 3.8241 24.0979 19.3405 80.2579
2008 82.9305 7.0284 17.0695 13.2186 77.4395
2009 85.1441 2.2136 14.8559 11.6974 78.7391
2010 89.3006 4.1565 10.6994 8.0918 75.6286
2011 89.9898 0.6892 10.0102 7.8453 78.3725
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 0.6892 9.3210 7.5846 81.3711
2013 0.6892 8.6318 7.3090 84.6761
2014 0.6892 7.9426 7.0178 88.3566
2015 0.6892 7.2533 6.7099 92.5073
2016 and later years 0.6892 6.5641 6.3844 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 88.5630 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Private Passenger Auto Liability/Medical
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 43.1926 43.1926 56.8074 52.2499 91.9773
2003 72.2008 29.0082 27.7992 25.4085 91.4000
2004 84.5632 12.3625 15.4368 14.1488 91.6566
2005 91.9316 7.3684 8.0684 7.3809 91.4792
2006 95.8729 3.9413 4.1271 3.7501 90.8651
2007 97.7804 1.9075 2.2196 2.0030 90.2423
2008 98.7957 1.0153 1.2043 1.0735 89.1398
2009 99.2491 0.4535 0.7509 0.6686 89.0445
2010 99.5195 0.2703 0.4805 0.4288 89.2424
2011 99.6353 0.1159 0.3647 0.3342 91.6449
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 0.1159 0.2488 0.2342 94.1130
2013 0.1159 0.1330 0.1284 96.5863
2014 and later years 0.1159 0.0171 0.0166 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 95.0993 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Products Liability -- Claims-Made
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 6.5804 6.5804 93.4196 75.6441 80.9723
2003 26.7183 20.1379 73.2817 59.2585 80.8639
2004 43.1834 16.4652 56.8166 45.7134 80.4579
2005 43.9209 0.7375 56.0791 47.5654 84.8185
2006 54.3806 10.4597 45.6194 39.5272 86.6457
2007 78.3630 23.9824 21.6370 17.1267 79.1545
2008 82.8643 4.5013 17.1357 13.4765 78.6460
2009 68.2184 -14.6459 31.7816 29.3043 92.2052
2010 79.1582 10.9399 20.8418 19.7298 94.6644
2011 89.6963 10.5381 10.3037 10.0215 97.2617
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 and later years 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 90.3597 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Products Liability -- Occurrence
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 9.4198 9.4198 90.5802 71.8513 79.3234
2003 20.5845 11.1647 79.4155 64.4750 81.1869
2004 36.7807 16.1962 63.2193 51.5043 81.4693
2005 55.5974 18.8167 44.4026 35.0987 79.0466
2006 66.6238 11.0263 33.3762 25.7661 77.1990
2007 77.2636 10.6399 22.7364 16.2979 71.6822
2008 79.1888 1.9251 20.8112 15.2492 73.2740
2009 83.6816 4.4928 16.3184 11.5007 70.4765
2010 85.5507 1.8691 14.4493 10.2356 70.8380
2011 85.7291 0.1784 14.2709 10.6366 74.5336
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 0.1784 14.0925 11.0605 78.4854
2013 0.1784 13.9141 11.5087 82.7124
2014 0.1784 13.7357 11.9824 87.2355
2015 0.1784 13.5573 12.4832 92.0772
2016 and later years 0.1784 13.3789 13.0126 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 87.5350 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Reinsurance A (Nonproportional Assumed Property)
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 25.0571 25.0571 74.9429 67.5012 90.0701
2003 52.0402 26.9831 47.9598 43.6127 90.9360
2004 82.4709 30.4307 17.5291 14.8155 84.5198
2005 85.6387 3.1678 14.3613 12.4045 86.3747
2006 92.7228 7.0840 7.2772 5.8293 80.1036
2007 91.8604 -0.8624 8.1396 7.0488 86.5992
2008 96.5016 4.6412 3.4984 2.6795 76.5908
2009 96.1872 -0.3143 3.8128 3.1557 82.7657
2010 97.6206 1.4333 2.3794 1.8622 78.2609
2011 97.8419 0.2214 2.1581 1.7409 80.6694
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 0.2214 1.9367 1.6127 83.2710
2013 0.2214 1.7154 1.4772 86.1173
2014 0.2214 1.4940 1.3340 89.2892
2015 0.2214 1.2727 1.1826 92.9218
2016 and later years 0.2214 1.0513 1.0225 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 91.2226 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Reinsurance B (Nonproportional Assumed Liability)
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 8.9223 8.9223 91.0777 71.5358 78.5436
2003 27.3618 18.4395 72.6382 56.6618 78.0055
2004 44.5758 17.2140 55.4242 42.1986 76.1374
2005 53.8781 9.3023 46.1219 35.0439 75.9810
2006 60.8896 7.0115 39.1104 29.8360 76.2865
2007 69.7327 8.8430 30.2673 22.4476 74.1644
2008 76.6292 6.8965 23.3708 16.6387 71.1942
2009 79.4030 2.7738 20.5970 14.7368 71.5484
2010 83.8936 4.4906 16.1064 10.9612 68.0553
2011 80.1707 -3.7229 19.8293 15.4148 77.7378
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 1.1805 18.6487 15.0812 80.8701
2013 1.1805 17.4682 14.7286 84.3167
2014 1.1805 16.2877 14.3559 88.1394
2015 1.1805 15.1072 13.9618 92.4186
2016 and later years 1.1805 13.9266 13.5453 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 90.3328 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Reinsurance C (Nonproportional Assumed Financial Lines)
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 17.1195 17.1195 82.8805 71.6629 86.4654
2003 46.6590 29.5395 53.3410 45.3837 85.0823
2004 67.7135 21.0545 32.2865 26.3279 81.5446
2005 78.1379 10.4244 21.8621 17.1133 78.2786
2006 89.7346 11.5967 10.2654 6.1673 60.0786
2007 92.1268 2.3921 7.8732 4.0600 51.5667
2008 89.7323 -2.3945 10.2677 6.7537 65.7759
2009 90.0460 0.3137 9.9540 6.8167 68.4827
2010 94.8867 4.8407 5.1133 2.2290 43.5925
2011 86.7041 -8.1827 13.2959 10.7693 80.9970
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 1.4277 11.8683 9.9164 83.5537
2013 1.4277 10.4406 9.0147 86.3430
2014 1.4277 9.0129 8.0616 89.4449
2015 1.4277 7.5852 7.0540 92.9969
2016 and later years 1.4277 6.1575 5.9889 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 83.5537 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
Special Property (Fire, Allied Lines, Inland Marine, Earthquake,
Glass, Burglary and Theft)
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 62.9320 62.9320 37.0680 35.1627 94.8599
2003 88.4950 25.5631 11.5050 10.8877 94.6349
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2004 and later years 5.7525 5.7525 5.5950 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 97.2617 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2004 tax year.
Workers' Compensation
Estimated Discounted
Cumulative Estimated Unpaid Unpaid
Losses Losses Paid Losses at Losses at Discount
Tax Year Paid Each Year Year End Year End Factors
(%) (%) (%) (%) (%)
2002 28.2489 28.2489 71.7511 61.5953 85.8458
2003 57.8739 29.6249 42.1261 34.6534 82.2611
2004 71.2999 13.4260 28.7001 22.8281 79.5402
2005 77.7584 6.4585 22.2416 17.4913 78.6421
2006 81.9301 4.1717 18.0699 14.2009 78.5885
2007 83.7739 1.8437 16.2261 13.1161 80.8329
2008 86.5350 2.7611 13.4650 11.0261 81.8872
2009 88.4367 1.9017 11.5633 9.7005 83.8901
2010 89.5926 1.1559 10.4074 9.0659 87.1103
2011 91.6441 2.0515 8.3559 7.4743 89.4497
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses that are incurred in this line of business in the 2002 accident year and that are outstanding at the end of the tax year shown.
2012 2.0515 6.3045 5.7919 91.8701
2013 2.0515 4.2530 4.0134 94.3668
2014 2.0515 2.2016 2.1334 96.9035
2015 and later years 2.0515 0.1501 0.1460 97.2617
Taxpayers that use the composite method of Notice 88-100 should use 89.5412 percent to discount unpaid losses that are incurred in this line of business in 2002 and that are outstanding at the end of the 2012 tax year.
DRAFTING INFORMATION
The principal author of this revenue procedure is Katherine A. Hossofsky of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure, contact Ms. Hossofsky at (202) 622-3577 (not a toll-free call).
- Institutional AuthorsInternal Revenue Service
- Cross-ReferencePart III
Administrative, Procedural, and Miscellaneous
26 CFR 601.201: Rulings and determination letters.
(Also Part 1, Section 846; 1.846-1.) - Code Sections
- Subject Areas/Tax Topics
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2003-1820 (24 original pages)
- Tax Analysts Electronic Citation2003 TNT 13-12
