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IRS Issues Loss Payment Patterns, Discount Factors for 2012

NOV. 9, 2012

Rev. Proc. 2012-44; 2012-49 I.R.B. 645

DATED NOV. 9, 2012
DOCUMENT ATTRIBUTES
Citations: Rev. Proc. 2012-44; 2012-49 I.R.B. 645

Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.201: Rulings and determination letters.

(Also: Part I, Sections 846; 1.846-1.)

SECTION 1. PURPOSE

This revenue procedure prescribes the loss payment patterns and discount factors for the 2012 determination year. These factors will be used to compute discounted unpaid losses under § 846 of the Internal Revenue Code.

SECTION 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 property 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 2012 determination year that, pursuant to § 846(d)(1), must be applied through the 2016 accident year.

.03 The loss payment patterns for the 2012 determination year are based on the aggregate loss payment information reported on the 2010 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) NAIC Changes in Lines of Business. The NAIC has changed the reporting of unpaid loss experience on the annual statement for warranty companies. These changes are reflected in the lines of business set forth below.

(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, 2002-2 C.B. 980.

SECTION 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.

SECTION 4. TABLES OF DISCOUNT FACTORS

.01 The following tables present separately for each line of business the discount factors under § 846 for accident year 2012. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2012, 2.89 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 2012 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 98.5856 percent to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the 2012 and later taxable years.

Taxpayers that use the composite method of Notice 88-100 should use 98.5856 percent to discount all unpaid losses in this line of business that are outstanding at the end of the 2012 taxable year.

Auto Physical Damage

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)           (%)            (%)         (%)             (%)

 

 ______________________________________________________________________________

 

 

 2012          90.2657       90.2657        9.7343      9.5863        98.4790

 

 2013          99.7478        9.4822        0.2522      0.2451        97.2010

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

     2014 and later years    0.1261    0.1261    0.1243     98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.5856 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2014 taxable year. g Commercial Auto/Truck Liability/Medical

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)           (%)

 

 ______________________________________________________________________________

 

 

 2012         25.7034        25.7034        74.2966      69.8790       94.0541

 

 2013         48.2664        22.5629        51.7336      49.0119       94.7389

 

 2014         67.8834        19.6171        32.1166      30.5298       95.0593

 

 2015         82.0630        14.1795        17.9370      17.0291       94.9384

 

 2016         90.4161         8.3532         9.5839       9.0483       94.4114

 

 2017         94.6293         4.2132         5.3707       5.0362       93.7708

 

 2018         97.0203         2.3910         2.9797       2.7564       92.5056

 

 2019         98.2283         1.2081         1.7717       1.6107       90.9135

 

 2020         98.6653         0.4370         1.3347       1.2140       90.9566

 

 2021         98.8635         0.1982         1.1365       1.0480       92.2160

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                     0.1982    0.9382      0.8772       93.4963

 

 2023                     0.1982    0.7400      0.7015       94.7956

 

 2024                     0.1982    0.5417      0.5207       96.1082

 

 2025                     0.1982    0.3435      0.3346       97.4146

 

 2026 and later years     0.1982    0.1453      0.1432       98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 94.9072 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Composite

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          39.5281       39.5281        60.4719     55.7933       92.2631

 

 2013          62.0267       22.4986        37.9733     34.5843       91.0753

 

 2014          73.7017       11.6750        26.2983     23.7413       90.2768

 

 2015          80.0846        6.3830        19.9154     17.9529       90.1459

 

 2016          85.7818        5.6971        14.2182     12.6929       89.2717

 

 2017          90.2809        4.4992         9.7191      8.4960       87.4154

 

 2018          91.9588        1.6778         8.0412      7.0396       87.5436

 

 2019          92.9722        1.0134         7.0278      6.2151       88.4353

 

 2020          94.0835        1.1113         5.9165      5.2674       89.0295

 

 2021          94.7469        0.6634         5.2531      4.7468       90.3608

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                   0.6634      4.5898       4.2111      91.7492

 

 2023                   0.6634      3.9264       3.6599      93.2124

 

 2024                   0.6634      3.2631       3.0928      94.7824

 

 2025                   0.6634      2.5997       2.5093      96.5231

 

 2026 and later years   0.6634      1.9364       1.9090      98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 93.7821 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Fidelity/Surety

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012         22.8449       22.8449        77.1551     74.2475       96.2315

 

 2013         55.8585       33.0137        44.1415     42.9060       97.2010

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2014 and later years     22.0707     22.0707     21.7586    98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.5856 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2014 taxable year.

Financial Guaranty/Mortgage Guaranty

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          6.2515        6.2515         93.7485     90.0777       96.0845

 

 2013         43.0154       36.7639         56.9846     55.3896       97.2010

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2014 and later years    28.4923     28.4923     28.0893     98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.5856 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2014 taxable year.

International (Composite)

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          39.5281       39.5281        60.4719     55.7933       92.2631

 

 2013          62.0267       22.4986        37.9733     34.5843       91.0753

 

 2014          73.7017       11.6750        26.2983     23.7413       90.2768

 

 2015          80.0846        6.3830        19.9154     17.9529       90.1459

 

 2016          85.7818        5.6971        14.2182     12.6929       89.2717

 

 2017          90.2809        4.4992         9.7191      8.4960       87.4154

 

 2018          91.9588        1.6778         8.0412      7.0396       87.5436

 

 2019          92.9722        1.0134         7.0278      6.2151       88.4353

 

 2020          94.0835        1.1113         5.9165      5.2674       89.0295

 

 2021          94.7469        0.6634         5.2531      4.7468       90.3608

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                     0.6634      4.5898     4.2111     91.7492

 

 2023                     0.6634      3.9264     3.6599     93.2124

 

 2024                     0.6634      3.2631     3.0928     94.7824

 

 2025                     0.6634      2.5997     2.5093     96.5231

 

 2026 and later years     0.6634      1.9364     1.9090     98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 93.7821 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Medical Professional Liability -- Claims-Made

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012           6.3462         6.3462       93.6538     85.6244       91.4266

 

 2013          23.0958        16.7496       76.9042     71.1091       92.4645

 

 2014          41.6827        18.5868       58.3173     54.3106       93.1295

 

 2015          56.5267        14.8440       43.4733     40.8232       93.9041

 

 2016          71.2882        14.7615       28.7118     27.0298       94.1415

 

 2017          82.3023        11.0141       17.6977     16.6387       94.0165

 

 2018          86.5143         4.2120       13.4857     12.8472       95.2653

 

 2019          91.1422         4.6279        8.8578      8.5242       96.2335

 

 2020          94.8664         3.7242        5.1336      4.9929       97.2591

 

 2021          97.5408         2.6745        2.4592      2.4244       98.5856

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022 and later years        2.4592    --       --       98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.5856 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Medical Professional Liability -- Occurrence

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012           1.2044        1.2044         98.7956      86.1709     87.2213

 

 2013           4.3376        3.1332         95.6624      85.4830     89.3591

 

 2014          11.8161        7.4785         88.1839      80.3677     91.1365

 

 2015          24.7088       12.8928         75.2912      69.6126     92.4579

 

 2016          42.3863       17.6774         57.6137      53.6934     93.1954

 

 2017          57.1600       14.7738         42.8400      40.2594     93.9762

 

 2018          68.9797       11.8196         31.0203      29.4337     94.8851

 

 2019          82.4247       13.4450         17.5753      16.6464     94.7145

 

 2020          86.7084        4.2837         13.2916      12.7823     96.1682

 

 2021          91.6701        4.9617          8.3299       8.1188     97.4659

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022 and later years    4.9617    3.3683    3.3206    98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 93.6211 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Miscellaneous Casualty

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          69.0731       69.0731        30.9269     29.8935       96.6586

 

 2013          85.5169       16.4438        14.4831     14.0777       97.2010

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2014 and later years        7.2415     7.2415     7.1391     98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.5856 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2014 taxable 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

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          60.9719       60.9719        39.0281     37.0187       94.8513

 

 2013          82.9059       21.9341        17.0941     15.8398       92.6624

 

 2014          89.2783        6.3724        10.7217      9.8337       91.7181

 

 2015          91.5605        2.2822         8.4395      7.8029       92.4579

 

 2016          94.4255        2.8649         5.5745      5.1224       91.8898

 

 2017          96.5899        2.1644         3.4101      3.0750       90.1726

 

 2018          97.6023        1.0124         2.3977      2.1369       89.1235

 

 2019          98.0034        0.4011         1.9966      1.7918       89.7436

 

 2020          98.3410        0.3376         1.6590      1.5012       90.4859

 

 2021          98.5727        0.2317         1.4273      1.3096       91.7483

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                     0.2317     1.1957     1.1124      93.0370

 

 2023                     0.2317     0.9640     0.9096      94.3539

 

 2024                     0.2317     0.7324     0.7009      95.7035

 

 2025                     0.2317     0.5007     0.4862      97.0975

 

 2026 and later years     0.2317     0.2691     0.2653      98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 93.1358 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Other (Including Credit)

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          54.6589       54.6589        45.3411     44.0509       97.1546

 

 2013          84.2314       29.5725        15.7686     15.3272       97.2010

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2014 and later years     7.8843      7.8843      7.7728      98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.5856 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2014 taxable year.

Other Liability -- Claims-Made

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012           7.4270        7.4270         92.5730     84.1387      90.8891

 

 2013          25.2808       17.8538         74.7192     68.4604      91.6236

 

 2014          44.2108       18.9301         55.7892     51.2373      91.8409

 

 2015          56.4956       12.2848         43.5044     40.2571      92.5355

 

 2016          69.2838       12.7883         30.7162     28.4487      92.6181

 

 2017          77.6662        8.3823         22.3338     20.7683      92.9904

 

 2018          83.1572        5.4910         16.8428     15.7987      93.8010

 

 2019          88.1777        5.0205         11.8223     11.1628      94.4213

 

 2020          93.1315        4.9539          6.8685      6.4605      94.0597

 

 2021          92.9490       -0.1826          7.0510      6.8324      96.8986

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                     3.2639      3.7871       3.7191      98.2030

 

 2023 and later years     3.2639      0.5232       0.5158      98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.2239 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Other Liability -- Occurrence

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          10.0721       10.0721        89.9279     79.6509       88.5720

 

 2013          24.3995       14.3274        75.6005     67.4199       89.1791

 

 2014          37.3366       12.9372        62.6634     56.2456       89.7583

 

 2015          52.4142       15.0776        47.5858     42.5771       89.4745

 

 2016          64.3437       11.9295        35.6563     31.7069       88.9239

 

 2017          73.7950        9.4512        26.2050     23.0365       87.9085

 

 2018          79.7756        5.9807        20.2244     17.6357       87.2005

 

 2019          84.0963        4.3206        15.9037     13.7628       86.5381

 

 2020          85.6878        1.5915        14.3122     12.5462       87.6607

 

 2021          86.9224        1.2346        13.0776     11.6565       89.1329

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                     1.2346       11.8431     10.7411       90.6950

 

 2023                     1.2346       10.6085      9.7992       92.3713

 

 2024                     1.2346        9.3740      8.8302       94.1988

 

 2025                     1.2346        8.1394      7.8331       96.2365

 

 2026 and later years     1.2346        6.9048      6.8072       98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 92.6009 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Private Passenger Auto Liability/Medical

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          42.9881       42.9881        57.0119     54.6061       95.7801

 

 2013          71.9931       29.0051        28.0069     26.7630       95.5587

 

 2014          84.8250       12.8318        15.1750     14.5205       95.6868

 

 2015          92.3500        7.5251         7.6500      7.3071       95.5183

 

 2016          96.2665        3.9165         3.7335      3.5456       94.9681

 

 2017          97.9880        1.7214         2.0120      1.9019       94.5282

 

 2018          98.7958        0.8078         1.2042      1.1375       94.4596

 

 2019          99.2445        0.4487         0.7555      0.7152       94.6679

 

 2020          99.4543        0.2097         0.5457      0.5231       95.8548

 

 2021          99.6370        0.1827         0.3630      0.3529       97.2105

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022 and later years      0.1827      0.1803      0.1777      98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.5029 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Products Liability -- Claims-Made

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          4.5270         4.5270        95.4730     83.8330       87.8080

 

 2013         16.0134        11.4865        83.9866     74.6045       88.8291

 

 2014         45.1313        29.1179        54.8687     47.2249       86.0690

 

 2015         39.2459        -5.8854        60.7541     54.5596       89.8039

 

 2016         44.8357         5.5898        55.1643     50.4663       91.4837

 

 2017         72.1615        27.3258        27.8385     24.2070       86.9550

 

 2018         80.4448         8.2834        19.5552     16.5044       84.3991

 

 2019         73.2957        -7.1491        26.7043     24.2330       90.7459

 

 2020         87.4824        14.1866        12.5176     10.5432       84.2267

 

 2021         87.7500         0.2677        12.2500     10.5764       86.3381

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                     0.2677    11.9823    10.6106     88.5517

 

 2023                     0.2677    11.7147    10.6457     90.8750

 

 2024                     0.2677    11.4470    10.6819     93.3158

 

 2025                     0.2677    11.1793    10.7191     95.8828

 

 2026 and later years     0.2677    10.9117    10.7573     98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 92.8642 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Products Liability -- Occurrence

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          7.1936         7.1936        92.8064      80.9429      87.2170

 

 2013         16.9555         9.7619        83.0445      73.3802      88.3625

 

 2014         28.3624        11.4069        71.6376      63.9304      89.2413

 

 2015         39.7945        11.4321        60.2055      54.1818      89.9948

 

 2016         54.3906        14.5961        45.6094      40.9422      89.7670

 

 2017         60.9060         6.5154        39.0940      35.5165      90.8490

 

 2018         67.7760         6.8700        32.2240      29.5744      91.7775

 

 2019         75.7119         7.9359        24.2881      22.3793      92.1411

 

 2020         79.5966         3.8847        20.4034      19.0856      93.5415

 

 2021         83.9430         4.3464        16.0570      15.2285      94.8401

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                     4.3464        11.7107       11.2599       96.1507

 

 2023                     4.3464         7.3643        7.1766       97.4508

 

 2024 and later years     4.3464         3.0179        2.9752       98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 96.3135 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Reinsurance -- Nonproportional Assumed Property

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          20.1003       20.1003        79.8997     75.4585       94.4415

 

 2013          59.2833       39.1830        40.7167     37.8941       93.0676

 

 2014          73.0867       13.8034        26.9133     24.9877       92.8453

 

 2015          80.3675        7.2808        19.6325     18.3246       93.3382

 

 2016          87.7278        7.3603        12.2722     11.3883       92.7976

 

 2017          94.4454        6.7175         5.5546      4.9035       88.2774

 

 2018          96.5143        2.0689         3.4857      2.9466       84.5335

 

 2019          97.9468        1.4326         2.0532      1.5786       76.8884

 

 2020          97.4560       -0.4909         2.5440      2.1222       83.4180

 

 2021          97.0652       -0.3908         2.9348      2.5799       87.9068

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                     0.1836       2.7512       2.4682      89.7139

 

 2023                     0.1836       2.5675       2.3533      91.6537

 

 2024                     0.1836       2.3839       2.2350      93.7531

 

 2025                     0.1836       2.2003       2.1133      96.0476

 

 2026 and later years     0.1836       2.0166       1.9881      98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 89.7139 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Reinsurance -- Nonproportional Assumed Liability

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          3.4987        3.4987         96.5013     84.4091       87.4694

 

 2013         23.2170       19.7183         76.7830     66.8474       87.0601

 

 2014         43.7483       20.5313         56.2517     47.9534       85.2478

 

 2015         38.9131       -4.8352         61.0869     54.2434       88.7977

 

 2016         47.9298        9.0167         52.0702     46.6654       89.6201

 

 2017         80.0315       32.1017         19.9685     15.4517       77.3805

 

 2018         76.5053       -3.5292         23.4947     19.4751       82.8913

 

 2019         78.1701        1.6649         21.8299     18.3492       84.0554

 

 2020         80.0717        1.9015         19.9283     16.9507       85.0580

 

 2021         79.8791       -0.1926         20.1209     17.6359       87.6494

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                     1.1246        18.9963        17.0048      89.5164

 

 2023                     1.1246        17.8717        16.3555      91.5162

 

 2024                     1.1246        16.7471        15.6875      93.6726

 

 2025                     1.1246        15.6225        15.0001      96.0158

 

 2026 and later years     1.1246        14.4979        14.2928      98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 91.3700 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Reinsurance -- Nonproportional Assumed Financial Lines

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          1.5423         1.5423        98.4577     88.8020       90.1930

 

 2013         20.9273        19.3850        79.0727     71.7053       90.6827

 

 2014         30.4705         9.5433        69.5295     64.0974       92.1873

 

 2015         46.3043        15.8337        53.6957     49.8889       92.9103

 

 2016         51.8464         5.5421        48.1536     45.7090       94.9234

 

 2017         72.7869        20.9405        27.2131     25.7890       94.7671

 

 2018         82.0967         9.3097        17.9033     17.0911       95.4629

 

 2019         89.2630         7.1664        10.7370     10.3158       96.0773

 

 2020         95.3692         6.1062         4.6308      4.4201       95.4510

 

 2021         96.7995         1.4303         3.2005      3.0970       96.7682

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                     1.4303       1.7702       1.7357      98.0539

 

 2023 and later years     1.4303       0.3399       0.3351      98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0539 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Burglary and Theft)

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          55.6145       55.6145        44.3855     43.3187       97.5967

 

 2013          89.3328       33.7182        10.6672     10.3687       97.2010

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2014 and later years         5.3336      5.3336      5.2582      98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.5856 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2014 taxable year.

Warranty

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          85.4101       85.4101        14.5899     14.3645       98.4555

 

 2013          99.5388       14.1287         0.4612      0.4483       97.2010

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2014 and later years        0.2306      0.2306      0.2273      98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.5856 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2014 taxable year.

Workers' Compensation

              Estimated                                Discounted

 

              Cumulative    Estimated      Unpaid      Unpaid

 

              Losses        Losses Paid    Losses at   Losses at     Discount

 

              Paid          Each Year      Year End    Year End      Factors

 

 Tax Year      (%)            (%)            (%)         (%)            (%)

 

 ______________________________________________________________________________

 

 

 2012          21.8973       21.8973        78.1027     68.3810       87.5527

 

 2013          43.4962       21.5989        56.5038     48.4485       85.7437

 

 2014          56.0061       12.5099        43.9939     37.1592       84.4646

 

 2015          63.5544        7.5482        36.4456     30.5766       83.8965

 

 2016          68.9880        5.4337        31.0120     25.9486       83.6730

 

 2017          73.9567        4.9687        26.0433     21.6586       83.1638

 

 2018          76.0580        2.1013        23.9420     20.1531       84.1746

 

 2019          77.6365        1.5785        22.3635     19.1344       85.5607

 

 2020          80.1194        2.4828        19.8806     17.1689       86.3597

 

 2021          81.3456        1.2262        18.6544     16.4212       88.0286

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2012 accident year and that are outstanding at the end of the tax year shown.

 2022                     1.2262         17.4281        15.6519       89.8084

 

 2023                     1.2262         16.2019        14.8604       91.7203

 

 2024                     1.2262         14.9757        14.0461       93.7927

 

 2025                     1.2262         13.7494        13.2082       96.0635

 

 2026 and later years     1.2262         12.5232        12.3460       98.5856

 

 

Taxpayers that use the composite method of Notice 88-100 should use 92.3332 percent to discount unpaid losses incurred in this line of business in 2012 and prior years and that are outstanding at the end of the 2022 taxable year.

SECTION 5. DRAFTING INFORMATION

The principal author of this revenue procedure is David Remus of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure contact Mr. Remus on (202) 622-3970 (not a toll free call).

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