IRS Supplements Interest Rate Schedules For Insurance Reserve Computation.

Rev. Rul. 2002-12

[1] For purposes of § 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 2000, 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.

[2] 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 2001 and 2002, and a supplement to the table in Part IV of Rev. Rul. 92-19, providing the applicable federal interest rate under § 807(d) for 2000 and 2001. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.

[3] This is the tenth 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. 8 (1996 and 1997); Rev. Rul. 98-2, 1998-2 I.R.B. 15 (1997 and 1998); Rev. Rul. 99-10, 1999-10 I.R.B. 10 (1998 and 1999); Rev. Rul. 2000-17, 2000-1 C.B. 842 (1999 and 2000); and Rev. Rul. 2001-11, 2001-10 I.R.B. 780.

             Guarantee Duration

** As the applicable federal interest rate for 2002 of 5.71 percent exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under § 807 is 5.71 percent.

* 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.

Part III, Schedule B

      Calendar Year of Issue   Valuation Interest Rate

*As this prevailing state assumed interest exceeds the applicable federal interest rate for 2001 of 6.00 percent, the valuation interest rate of 6.75 percent is to be used for this product under § 807.

 _________________________________________________________________________

*As the applicable federal interest rate for 2001 of 5.71 percent exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under § 807 is 5.71 percent.

Part III, Schedule D19 -- 2001

 _________________________________________________________________________

*As the applicable federal interest rate for 2001 of 5.71 percent is equal to or exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under § 807 is 5.71 percent.

Part IV. Applicable Federal Interest Rates.

EFFECT ON OTHER REVENUE RULINGS

[4] 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 2001 and 2002 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.

DRAFTING INFORMATION

[5] The principal author of this revenue ruling is Ann H. Logan 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).