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IRS Supplements Interest Rate Schedules For Insurance Reserve Computation.

FEB. 2, 2009

Rev. Rul. 2009-3; 2009-5 I.R.B. 382

DATED FEB. 2, 2009
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Code Sections
  • Subject Areas/Tax Topics
  • Industry Groups
    Insurance
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2009-1931
  • Tax Analysts Electronic Citation
    2009 TNT 19-7
Citations: Rev. Rul. 2009-3; 2009-5 I.R.B. 382

For purposes of § 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 2007, this ruling supplements the schedules of prevailing state assumed interest rates set forth in Rev. Rul. 92-19, 1992-1 C.B. 227. This information is to be used by insurance companies in computing their reserves for (1) life insurance and supplementary total and permanent disability benefits, (2) individual annuities and pure endowments, and (3) group annuities and pure endowments. As § 807(d)(2)(B) requires that the interest rate used to compute these reserves be the greater of (1) the applicable federal interest rate, or (2) the prevailing state assumed interest rate, the table of applicable federal interest rates in Rev. Rul. 92-19 is also supplemented.

Following are supplements to schedules A, B, C, and D to Part III of Rev. Rul. 92-19, providing prevailing state assumed interest rates for insurance products with different features issued in 2008 and 2009, and a supplement to the table in Part IV of Rev. Rul. 92-19, providing the applicable federal interest rates under § 807(d) for 2008 and 2009. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.

This is the seventeenth supplement to the interest rates provided in Rev. Rul. 92-19. Earlier supplements were published in Rev. Rul. 93-58, 1993-2 C.B. 241 (interest rates for insurance products issued in 1992 and 1993); Rev. Rul. 94-11, 1994-1 C.B. 196 (1993 and 1994); Rev. Rul. 95-4, 1995-1 C.B. 141 (1994 and 1995); Rev. Rul. 96-2, 1996-1 C.B. 141 (1995 and 1996); Rev. Rul. 97-2, 1997-1 C.B. 134 (1996 and 1997); Rev. Rul. 98-2, 1998-1 C.B. 259 (1997 and 1998); Rev. Rul. 99-10, 1999-1 C.B. 671 (1998 and 1999); Rev. Rul. 2000-17, 2000-1 C.B. 842 (1999 and 2000); Rev. Rul. 2001-11, 2001-1 C.B. 780 (2000 and 2001); Rev. Rul. 2002-12, 2002-1 C.B. 624 (2001 and 2002); Rev. Rul. 2003-24, 2003-1 C.B. 557 (2002 and 2003); Rev. Rul. 2004-14, 2004-1 C.B. 511 (2003 and 2004); Rev. Rul. 2005-29, 2005-1 C.B. 1080 (2004 and 2005); Rev. Rul. 2006-25, 2006-1 C.B. 882 (May 15, 2006) (2005 and 2006); Rev. Rul. 2007-10, 2007-1 C.B. 660 (Mar. 5, 2007) (2006 and 2007); and Rev. Rul. 2008-19, 2008-13 I.R.B. 669 (Mar. 31, 2008) (2007 and 2008).

 Part III. Prevailing State Assumed Interest Rates -- Products

 

 Issued in Years After 1982.*

 

 

                           Schedule A

 

 

                  STATUTORY VALUATION INTEREST RATES

 

                  BASED ON THE 1980 AMENDMENTS TO THE

 

                  NAIC STANDARD VALUATION LAW

 

 

 A. Life insurance valuation:

 

 

 Guarantee Duration (years)              Calendar Year of Issue

 

 

                                        2009                2008***

 

 

 10 or fewer                            4.50**              4.50

 

 More than 10 but not more

 

  than 20                               4.25**              4.25

 

 More than 20                           4.00**              4.00

 

 

 Source: Rates calculated from the monthly averages, ending June 30,

 

 2008, of Moody's Composite Yield on Seasoned Corporate Bonds.

 

 

      * The terms used in the schedules in this ruling and in

 

 Part III of Rev. Rul. 92-19

 

 are those used in the Standard Valuation Law; the terms are defined in

 

 Rev. Rul. 92-19.

 

 

      ** As these rates exceed the applicable federal

 

 interest rate for 2009 of 4.06 percent, the valuation interest rate

 

 to be used for this product under § 807 is the applicable rate

 

 specified in this table.

 

 

      *** The valuation interest rates for life insurance

 

 contracts issued in 2008 as set forth in Schedule A of Rev. Rul.

 

 2008-19, 2008-13 I.R.B. 669 (Mar. 31, 2008) are corrected by the

 

 numbers set forth in this Schedule A.

 

 

 Part III, Schedule B

 

 

                  STATUTORY VALUATION INTEREST RATES

 

                  BASED ON THE 1980 AMENDMENTS TO THE

 

                  NAIC STANDARD VALUATION LAW

 

 

 B. Single premium immediate annuities and annuity benefits involving

 

 life contingencies arising from other annuities with cash settlement

 

 options and from guaranteed interest contracts with cash settlement

 

 options:

 

 

 Calendar Year of Issue             Valuation Interest Rate

 

 

 2008                                        5.50*

 

 

 Source: Rates calculated from the monthly averages, ending June 30,

 

 2008, of Moody's Composite Yield on Seasoned Corporate Bonds

 

 (formerly known as Moody's Corporate Bond Yield Average --

 

 Monthly Average Corporates). The terms used in this schedule are

 

 those used in the Standard Valuation Law as defined in Rev. Rul. 92-

 

 19.

 

 

      * As this prevailing state assumed interest exceeds the

 

 applicable federal interest rate for 2008 of 4.06 percent, the

 

 valuation interest rate of 5.50 percent is to be used for this

 

 product under § 807.

 

 

 Part III, Schedule C24 -- 2008

 

 

                  STATUTORY VALUATION INTEREST RATES

 

                 BASED ON NAIC STANDARD VALUATION LAW

 

                FOR 2008 CALENDAR YEAR BUSINESS

 

                GOVERNED BY THE 1980 AMENDMENTS

 

 

 C. Valuation interest rates for other annuities and guaranteed

 

 interest contracts that are valued on an issue year basis:

 

 

 Cash         Future      Guarantee    Valuation Interest Rate (%)

 

 Settlement   Interest    Duration          For Plan Type

 

 Options?     Guarantee?  (years)         A        B       C

 

 

 Yes          Yes          5.50*   5.00*    4.50*Q

 

 

                           5.50*   5.00*   4.50*

 

 

                           5.00*   4.50*   4.25*

 

                           4.25*   4.00    4.00

 

 Yes          No           5.75*   5.00*   4.75*

 

 

                           5.50*   5.00*   4.75*

 

 

                           5.00*   4.75*   4.50*

 

                           4.50*   4.25*   4.25*

 

 No       Yes or No        5.50*

 

 

                            5.50*  NOT APPLICABLE

 

 

                           5.00*

 

                           4.50*

 

 

 Source: Rates calculated from the monthly averages, ending June 30,

 

 2008, of Moody's Composite Yield on Seasoned Corporate Bonds.

 

 

      * As these rates exceed the applicable federal interest rate for

 

 2008 of 4.06 percent, the valuation interest rate to be used for this

 

 product under § 807 is the applicable rate specified in the above

 

 table.

 

 

 Part III, Schedule D24 -- 2008

 

 

                  STATUTORY VALUATION INTEREST RATES

 

                 BASED ON NAIC STANDARD VALUATION LAW

 

                FOR 2008 CALENDAR YEAR BUSINESS

 

                GOVERNED BY THE 1980 AMENDMENTS

 

 

 D. Valuation interest rates for other annuities and guaranteed

 

 interest contracts that are contracts with cash settlement options

 

 and that are valued on a change in fund basis:

 

 

 Cash         Future      Guarantee    Valuation Interest Rate (%)

 

 Settlement   Interest    Duration          For Plan Type

 

 Options?     Guarantee?  (years)         A        B       C

 

 

 Yes          Yes         5 or fewer    6.00     5.75    4.75

 

                          More than 5,

 

                          but not

 

                          more than 10  6.00     5.75    4.75

 

                          More than 10,

 

                          but not

 

                          more than 20  5.50     5.50    4.50

 

                          More than 20  5.00     5.00    4.25*

 

 Yes          No          5 or fewer    6.25     6.00    5.00

 

                          More than 5,

 

                          but not

 

                          more than 10  6.00     6.00    5.00

 

                          More than 10,

 

                          but not

 

                          more than 20  5.75     5.50    4.75

 

                          More than 20  5.00     5.00    4.50*

 

 

 Source: Rates calculated from the monthly averages, ending June 30,

 

 2008, of Moody's Composite Yield on Seasoned Corporate Bonds.

 

 

      * As the applicable federal interest rate for 2008 of 4.06

 

 percent is less than the prevailing state assumed interest rate, the

 

 valuation interest rate to be used for this product under § 807

 

 is the applicable rate specified in the above table.

 

 

 Part IV. Applicable Federal Interest Rates.

 

 

                               TABLE OF

 

                   APPLICABLE FEDERAL INTEREST RATES

 

                   FOR PURPOSES OF § 807

 

 

      Year                                     Interest  Rate

 

 

      2008                                         4.06

 

      2009                                         4.06

 

 

 Sources: Rev. Rul. 2004-106,

 

 2004-2 C.B. 893, for the 2005 rate; Rev.

 

 Rul. 2005-77, 2005-2 C.B. 1071, for the 2006 rate;

 

 Rev. Rul. 2006-61,

 

 2006-2 C.B. 1028 (Dec. 11, 2006) for the 2007 rate; Rev. Rul. 2007-

 

 70, 2007-50 C.B. 1158 (Nov. 20, 2007) for the 2008 rate; and Rev.

 

 Rul. 2008-53, 2008-49 I.R.B. 1231 (Nov. 19, 2008) for the 2009 rate.

 

 

EFFECT ON OTHER REVENUE RULINGS

Rev. Rul. 92-19 is supplemented by the addition to Part III of that ruling of prevailing state assumed interest rates under § 807 for certain insurance products issued in 2008 and 2009 and is further supplemented by an addition to the table in Part IV of Rev. Rul. 92-19 listing applicable federal interest rates. Parts I and II of Rev. Rul. 92-19 are not affected by this ruling. Rev. Rul. 2008-19 is modified in that the valuation interest rates set forth in Schedule A of this ruling for contracts issued in 2008 correct and replace those set forth in Schedule A of Rev. Rul. 2008-19.

DRAFTING INFORMATION

The principal author of this revenue ruling is Josephine H. Firehock of the Office of Associate Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling, contact her at (202) 622-3970 (not a toll-free call).

DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Code Sections
  • Subject Areas/Tax Topics
  • Industry Groups
    Insurance
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2009-1931
  • Tax Analysts Electronic Citation
    2009 TNT 19-7
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