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IRS Supplements Interest Rate Schedules For Insurance Reserve Computation.

FEB. 6, 2001

Rev. Rul. 2001-11; 2001-1 C.B. 780

DATED FEB. 6, 2001
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Cross-Reference
    Rev. Rul. 92-19, 1992-1 C.B. 227

    Part I

    Section 807. -- Rules for Certain Reserves
  • Code Sections
  • Subject Areas/Tax Topics
  • Index Terms
    insurance companies, life, reserves
  • Industry Groups
    Insurance
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2001-3716 (7 original pages)
  • Tax Analysts Electronic Citation
    2001 TNT 26-6
Citations: Rev. Rul. 2001-11; 2001-1 C.B. 780

Rev. Rul. 2001-11

[1] For purposes of section 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 1999, 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 section 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 2000 and 2001, and a supplement to the table in Part IV of Rev. Rul. 92-19, providing the applicable federal interest rate under section 807(d) for 2000 and 2001. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.

[3] This is the ninth 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), and Rev. Rul. 2000-17, 2000-1 C.B. 842 (1999 and 2000).

 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

 

      __________________                 ______________________

 

 

                                                  2001

 

                                                  ____

 

 

         10 or fewer                             5.00 /**/

 

         More than 10                            4.75 /**/

 

           but not more than 20

 

         More than 20                            4.50 /**/

 

 

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

 

 2000, of Moody's Corporate Bond Yield Average -- Monthly Average

 

 Corporates.

 

 

                               FOOTNOTES

 

 

      /**/  As the applicable federal interest rate for 2001 of 6.00

 

 percent exceeds this  prevailing state assumed interest rate, the

 

 interest rate to be used for this product under section 807 is 6.00

 

 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

 

 

                  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

 

      ______________________             _______________________

 

              2000                                7.00 /*/

 

 

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

 

 2000, of 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.

 

 

                               FOOTNOTE

 

 

      /*/ As this prevailing state assumed interest exceeds the

 

 applicable federal interest rate for 2000 of 6.09 percent, the

 

 valuation interest rate of 7.00 percent is to be used for  this

 

 product under section 807.

 

 

                    PART III, SCHEDULE C18 -- 2000

 

 

                  STATUTORY VALUATION INTEREST RATES

 

                 BASED ON NAIC STANDARD VALUATION LAW

 

                    FOR 2000 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                        Valuation Interest Rate

 

 Settlement   Interest    Guarantee Duration      For Plan Type

 

  Options?    Guarantee?        (years)         A      B        C

 

 __________   __________  __________________ _______________________

 

 

     Yes         Yes      5 or fewer           7.00   6.00 /*/ 5.50 /*/

 

 

                          More than 5, but     6.75   6.00 /*/ 5.50 /*/

 

                            not more than 10

 

                          More than 10, but    5.75   5.25 /*/ 5.00 /*/

 

                            not more than 20   /*/

 

                          More than 20         5.00   4.50 /*/ 4.50 /*/

 

                                               /*/

 

 

      Yes         No      5 or fewer           7.25   6.25     5.75 /*/

 

 

                          More than 5, but     7.00   6.25     5.75 /*/

 

                            not more than 10

 

                          More than 10, but    6.00   5.50 /*/ 5.25 /*/

 

                            not more than 20    /*/

 

                          More than 20         5.25   4.75 /*/ 4.75 /*/

 

                                                /*/

 

 

      No      Yes or No   5 or fewer           7.00

 

 

                          More than 5, but     6.75  NOT APPLICABLE

 

                            not more than 10

 

                          More than 10, but    6.25

 

                            not more than 20

 

                          More than 20         5.25 /*/

 

 

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

 

 2000 of Moody's Corporate Bond Yield Average -- Monthly Average

 

 Corporates.

 

 

                               FOOTNOTE

 

 

      /*/ As the applicable federal interest rate for 2000 of 6.09

 

 percent exceeds this prevailing state assumed interest rate, the

 

 interest rate to be used for this product under section 807 is 6.09

 

 percent.

 

 

                    PART III, SCHEDULE D18 -- 2000

 

 

                  STATUTORY VALUATION INTEREST RATE2S

 

                 BASED ON NAIC STANDARD VALUATION LAW

 

                    FOR 2000 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                        Valuation Interest Rate

 

 Settlement   Interest    Guarantee Duration      For Plan Type

 

  Options?    Guarantee?        (years)         A      B        C

 

 __________   __________  __________________ _______________________

 

 

     Yes          Yes     5 or fewer          7.75    7.25     5.75 /*/

 

 

                          More than 5, but    7.50    7.25     5.75 /*/

 

                            not more than 10

 

                          More than 10, but   7.00    6.75     5.50 /*/

 

                            not more than 20

 

                          More than 20        6.00    6.00 /*/ 5.00 /*/

 

                                               /*/

 

 

      Yes         No      5 or fewer          8.00    7.50     6.00 /*/

 

 

                          More than 5, but    7.75    7.50     6.00 /*/

 

                            not more than 10

 

                          More than 10, but   7.25    7.00     5.75 /*/

 

                            not more than 20

 

                          More than 20        6.25    6.25     5.25 /*/

 

 

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

 

 2000, of Moody's Corporate Bond Yield Average -- Monthly Average

 

 Corporates.

 

 

                               FOOTNOTE

 

 

      /*/ As the applicable federal interest rate for 2000 of 6.09

 

 percent exceeds this prevailing state assumed interest rate, the

 

 interest rate to be used for this product under section 807 is 6.09

 

 percent.

 

 

 PART IV.  APPLICABLE FEDERAL INTEREST RATES.

 

 

                               TABLE OF

 

                   APPLICABLE FEDERAL INTEREST RATES

 

                      FOR PURPOSES OF SECTION 807

 

 

      Year                     Interest Rate

 

      ____                     _____________

 

      2000                          6.09

 

      2001                          6.00

 

 

 Sources:  Rev. Rul. 99-48, 2000-49 I.R.B. 600 for the 2000 rate and

 

 Rev. Rul. 2000-54, 2000-49 I.R.B. 566 for the 2001 rate.

 

 

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 section 807 for certain insurance products issued in 2000 and 2001 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 Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling contact her on (202) 622-3970 (not a toll-free call).

DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Cross-Reference
    Rev. Rul. 92-19, 1992-1 C.B. 227

    Part I

    Section 807. -- Rules for Certain Reserves
  • Code Sections
  • Subject Areas/Tax Topics
  • Index Terms
    insurance companies, life, reserves
  • Industry Groups
    Insurance
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2001-3716 (7 original pages)
  • Tax Analysts Electronic Citation
    2001 TNT 26-6
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