Internal Revenue Bulletin:  2004-49 

December 6, 2004 

Rev. Proc. 2004-69


SECTION 1. PURPOSE

This revenue procedure prescribes the loss payment patterns and discount factors for the 2004 accident year. These factors will be used for computing discounted unpaid losses under § 846 of the Internal Revenue Code. See Rev. Proc. 2003-17, 2003-1 C.B. 427, for background concerning the loss payment patterns and application of the discount factors.

SECTION 2. SCOPE

This revenue procedure applies to any taxpayer that is required to discount its unpaid losses under § 846 for a line of business using discount factors published by the Secretary.

SECTION 3. TABLES OF DISCOUNT FACTORS

.01 The following tables present separately for each line of business the discount factors under § 846 for accident year 2004. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2004, which is 4.82 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 the unpaid losses on the affected lines of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 2000 annual statement. See Rev. Proc. 2003-17, 2003-1 C.B. 427, section 2, for additional background on discounting under section 846 and the use of the Secretary’s tables.

.03 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.

.04 Section 2.03(4) of Rev. Proc 2003-17 requested comments as to whether a methodology should be adopted to smooth the raw payment data and thus produce a more stable pattern of discount factors. This issue will be addressed in the new determination year, which is 2007. Accordingly, taxpayers may still submit comments that should include a reference to Rev. Proc. 2004-69 on this issue to the following address:

CC:PA:LPD (Rev. Proc. 2004-69), room 5207, 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 CC:PA:LPD (Rev. Proc. 2004-69), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC 20224. Alternatively, e-mail comments to Notice.Comments@irscounsel.treas.gov. All comments will be available for public inspection and copying.

.05 Tables.

Tables of Factors to be Used to Discount Unpaid Losses Incurred in Accident Year 2004
(Interest rate: 4.82 percent)
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 97.6738 percent to discount unpaid losses incurred in this line of business in the 2004 accident year and that are outstanding at the end of the 2004 and later taxable years.
Taxpayers that use the composite method of Notice 88-100 should use 97.6738 percent to discount all unpaid losses in this line of business that are outstanding at the end of the 2004 taxable year.
Auto Physical Damage
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 89.6468 89.6468 10.3532 10.0914 97.4716
2005 99.6845 10.0377 0.3155 0.3011 95.4281
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 2004 accident year and that are outstanding at the end of the tax year shown.
2006 and later years 0.1578 0.1578 0.1541 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 97.6738 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2006 taxable year.
Commercial Auto/Truck Liability/Medical
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 28.8244 28.8244 71.1756 64.9524 91.2566
2005 54.9871 26.1626 45.0129 41.2974 91.7455
2006 72.8039 17.8168 27.1961 25.0467 92.0968
2007 85.0572 12.2533 14.9428 13.7089 91.7422
2008 91.6276 6.5704 8.3724 7.6427 91.2848
2009 94.9514 3.3239 5.0486 4.6081 91.2757
2010 97.0453 2.0938 2.9547 2.6865 90.9228
2011 98.1574 1.1121 1.8426 1.6774 91.0343
2012 98.7370 0.5796 1.2630 1.1649 92.2284
2013 99.1070 0.3700 0.8930 0.8422 94.3090
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 2004 accident year and that are outstanding at the end of the tax year shown.
2014 0.3700 0.5230 0.5040 96.3596
2015 and later years 0.3700 0.1530 0.1495 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 96.6098 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Composite
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 40.9985 40.9985 59.0015 52.8260 89.5334
2005 65.8439 24.8454 34.1561 29.9351 87.6422
2006 77.5023 11.6583 22.4977 19.4420 86.4176
2007 84.6221 7.1198 15.3779 13.0897 85.1202
2008 90.2455 5.6234 9.7545 7.9633 81.6370
2009 92.2780 2.0325 7.7220 6.2662 81.1476
2010 94.3974 2.1195 5.6026 4.3983 78.5056
2011 95.2526 0.8552 4.7474 3.7348 78.6702
2012 96.2792 1.0266 3.7208 2.8637 76.9662
2013 96.4323 0.1531 3.5677 2.8450 79.7443
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 2004 accident year and that are outstanding at the end of the tax year shown.
2014 0.1531 3.4145 2.8253 82.7452
2015 0.1531 3.2614 2.8048 85.9988
2016 0.1531 3.1083 2.7832 89.5410
2017 0.1531 2.9551 2.7605 93.4151
2018 and later years 0.1531 2.8020 2.7368 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 88.2038 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Fidelity/Surety
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 38.3328 38.3328 61.6672 57.5027 93.2469
2005 58.8485 20.5156 41.1515 39.2701 95.4281
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 2004 accident year and that are outstanding at the end of the tax year shown.
2006 and later years 20.5758 20.5758 20.0971 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 97.6738 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2006 taxable year.
Financial Guaranty/Mortgage Guaranty
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 4.0723 4.0723 95.9277 89.7666 93.5773
2005 40.7639 36.6916 59.2361 56.5278 95.4281
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 2004 accident year and that are outstanding at the end of the tax year shown.
2006 and later years 29.6180 29.6180 28.9291 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 97.6738 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2006 taxable year.
International (Composite)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 40.9985 40.9985 59.0015 52.8260 89.5334
2005 65.8439 24.8454 34.1561 29.9351 87.6422
2006 77.5023 11.6583 22.4977 19.4420 86.4176
2007 84.6221 7.1198 15.3779 13.0897 85.1202
2008 90.2455 5.6234 9.7545 7.9633 81.6370
2009 92.2780 2.0325 7.7220 6.2662 81.1476
2010 94.3974 2.1195 5.6026 4.3983 78.5056
2011 95.2526 0.8552 4.7474 3.7348 78.6702
2012 96.2792 1.0266 3.7208 2.8637 76.9662
2013 96.4323 0.1531 3.5677 2.8450 79.7443
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 2004 accident year and that are outstanding at the end of the tax year shown.
         
2014 0.1531 3.4145 2.8253 82.7452
2015 0.1531 3.2614 2.8048 85.9988
2016 0.1531 3.1083 2.7832 89.5410
2017 0.1531 2.9551 2.7605 93.4151
2018 and later 0.1531 2.8020 2.7368 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 88.2038 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Medical Malpractice — Claims-Made
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 7.3447 7.3447 92.6553 81.7682 88.2499
2005 29.0191 21.6744 70.9809 63.5188 89.4872
2006 53.3108 24.2917 46.6892 41.7102 89.3358
2007 69.1517 15.8409 30.8483 27.5025 89.1538
2008 82.0981 12.9464 17.9019 15.5733 86.9925
2009 86.3995 4.3014 13.6005 11.9201 87.6445
2010 89.7111 3.3116 10.2889 9.1042 88.4854
2011 92.4688 2.7577 7.5312 6.7196 89.2237
2012 94.5163 2.0475 5.4837 4.9472 90.2171
2013 95.7635 1.2471 4.2365 3.9088 92.2647
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2014 1.2471 2.9894 2.8204 94.3465
2015 1.2471 1.7422 1.6795 96.3974
2016 and later years 1.2471 0.4951 0.4836 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 95.1999 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Medical Malpractice — Occurrence
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 0.8316 0.8316 99.1684 81.9380 82.6251
2005 7.4573 6.6257 92.5427 79.1039 85.4783
2006 23.5575 16.1002 76.4425 66.4331 86.9060
2007 41.0062 17.4487 58.9938 51.7709 87.7565
2008 55.5832 14.5770 44.4168 39.3421 88.5748
2009 68.9413 13.3581 31.0587 27.5622 88.7421
2010 78.2095 9.2682 21.7905 19.4017 89.0375
2011 82.8727 4.6632 17.1273 15.5626 90.8644
2012 86.3178 3.4451 13.6822 12.7855 93.4468
2013 91.0834 4.7656 8.9166 8.5227 95.5829
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2014 and later years 4.7656 4.1510 4.0544 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 97.6738 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Miscellaneous Casualty
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 79.7790 79.7790 20.2210 19.4151 96.0143
2005 94.9417 15.1627 5.0583 4.8271 95.4281
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2006 and later years 2.5292 2.5292 2.4703 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 97.6738 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2006 taxable year.
Multiple Peril Lines (Homeowners/Farmowners, Commercial Multiple Peril, and Special Liability (Ocean Marine, Aircraft (All Perils), Boiler and Machinery))
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 59.7445 59.7445 40.2555 36.9102 91.6900
2005 81.0347 21.2902 18.9653 16.8921 89.0684
2006 87.3325 6.2978 12.6675 11.2585 88.8771
2007 91.0659 3.7334 8.9341 7.9788 89.3078
2008 95.1781 4.1122 4.8219 4.1533 86.1338
2009 95.7605 0.5824 4.2395 3.7572 88.6237
2010 97.0539 1.2933 2.9461 2.6141 88.7309
2011 97.6441 0.5903 2.3559 2.1358 90.6591
2012 98.7037 1.0596 1.2963 1.1539 89.0187
2013 98.6217 -0.0821 1.3783 1.2936 93.8496
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2014 0.5226 0.8558 0.8209 95.9252
2015 and later years 0.5226 0.3332 0.3254 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 96.3566 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Other (Including Credit)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 69.1729 69.1729 30.8271 29.5273 95.7837
2005 91.2168 22.0439 8.7832 8.3817 95.4281
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2006 and later years 4.3916 4.3916 4.2895 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 97.6738 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2006 taxable year.
Other Liability — Claims-Made
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 14.9618 14.9618 85.0382 73.5850 86.5317
2005 36.2113 21.2494 63.7887 55.3763 86.8120
2006 54.2876 18.0763 45.7124 39.5386 86.4942
2007 64.2163 9.9288 35.7837 31.2791 87.4117
2008 73.2732 9.0569 26.7268 23.5142 87.9799
2009 80.5748 7.3016 19.4252 17.1721 88.4011
2010 87.6200 7.0452 12.3800 10.7868 87.1308
2011 89.9155 2.2955 10.0845 8.9565 88.8150
2012 93.3946 3.4791 6.6054 5.8263 88.2049
2013 94.6170 1.2223 5.3830 4.8556 90.2026
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2014 1.2223 4.1607 3.8382 92.2497
2015 1.2223 2.9383 2.7718 94.3309
2016 1.2223 1.7160 1.6539 96.3817
2017 and later years 1.2223 0.4936 0.4822 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 93.4601 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Other Liability — Occurrence
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 19.1133 19.1133 80.8867 67.7758 83.7909
2005 36.4434 17.3301 63.5566 53.2997 83.8618
2006 52.1648 15.7215 47.8352 39.7729 83.1457
2007 63.2383 11.0734 36.7617 30.3528 82.5662
2008 72.0780 8.8397 27.9220 22.7655 81.5325
2009 75.9021 3.8241 24.0979 19.9476 82.7774
2010 82.9305 7.0284 17.0695 13.7133 80.3380
2011 85.1441 2.2136 14.8559 12.1080 81.5027
2012 89.3006 4.1565 10.6994 8.4361 78.8462
2013 89.9898 0.6892 10.0102 8.1371 81.2878
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2014 0.6892 9.3210 7.8237 83.9359
2015 0.6892 8.6318 7.4951 86.8318
2016 0.6892 7.9426 7.1508 90.0309
2017 0.6892 7.2533 6.7898 93.6092
2018 and later years 0.6892 6.5641 6.4114 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 87.9688 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Private Passenger Auto Liability/Medical
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 43.1926 43.1926 56.8074 52.8961 93.1148
2005 72.2008 29.0082 27.7992 25.7467 92.6165
2006 84.5632 12.3625 15.4368 14.3308 92.8353
2007 91.9316 7.3684 8.0684 7.4776 92.6783
2008 95.8729 3.9413 4.1271 3.8029 92.1449
2009 97.7804 1.9075 2.2196 2.0333 91.6058
2010 98.7957 1.0153 1.2043 1.0918 90.6592
2011 99.2491 0.4535 0.7509 0.6802 90.5885
2012 99.5195 0.2703 0.4805 0.4362 90.7769
2013 99.6353 0.1159 0.3647 0.3386 92.8555
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2014 0.1159 0.2488 0.2363 94.9794
2015 0.1159 0.1330 0.1291 97.0963
2016 and later years 0.1159 0.0171 0.0167 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 95.6966 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Products Liability — Claims-Made
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 6.5804 6.5804 93.4196 77.9688 83.4608
2005 26.7183 20.1379 73.2817 61.1094 83.3897
2006 43.1834 16.4652 56.8166 47.1976 83.0701
2007 43.9209 0.7375 56.0791 48.7174 86.8727
2008 54.3806 10.4597 45.6194 40.3568 88.4641
2009 78.3630 23.9824 21.6370 17.7485 82.0282
2010 82.8643 4.5013 17.1357 13.9954 81.6740
2011 68.2184 -14.6459 31.7816 29.6647 93.3392
2012 79.1582 10.9399 20.8418 19.8942 95.4533
2013 89.6963 10.5381 10.3037 10.0640 97.6738
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2014 and later years       97.6738
Taxpayers that use the composite method of Notice 88-100 should use 94.7093 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Products Liability — Occurrence
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 9.4198 9.4198 90.5802 74.1927 81.9083
2005 20.5845 11.1647 79.4155 66.3381 83.5330
2006 36.7807 16.1962 63.2193 52.9537 83.7619
2007 55.5974 18.8167 44.4026 36.2412 81.6196
2008 66.6238 11.0263 33.3762 26.6991 79.9943
2009 77.2636 10.6399 22.7364 17.0927 75.1778
2010 79.1888 1.9251 20.8112 15.9456 76.6201
2011 83.6816 4.4928 16.3184 12.1144 74.2373
2012 85.5507 1.8691 14.4493 10.7846 74.6377
2013 85.7291 0.1784 14.2709 11.1218 77.9334
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 2004 accident year and that are outstanding at the end of the tax year shown.
2014 0.1784 14.0925 11.4752 81.4279
2015 0.1784 13.9141 11.8457 85.1344
2016 0.1784 13.7357 12.2340 89.0671
2017 0.1784 13.5573 12.6410 93.2415
2018 and later years 0.1784 13.3789 13.0677 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 85.1384 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Reinsurance A (Nonproportional Assumed Property)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 25.0571 25.0571 74.9429 68.5209 91.4308
2005 52.0402 26.9831 47.9598 44.1979 92.1560
2006 82.4709 30.4307 17.5291 15.1727 86.5574
2007 85.6387 3.1678 14.3613 12.6608 88.1593
2008 92.7228 7.0840 7.2772 6.0183 82.7002
2009 91.8604 -0.8624 8.1396 7.1913 88.3493
2010 96.5016 4.6412 3.4984 2.7862 79.6410
2011 96.1872 -0.3143 3.8128 3.2423 85.0381
2012 97.6206 1.4333 2.3794 1.9311 81.1586
2013 97.8419 0.2214 2.1581 1.7976 83.2949
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2014 0.2214 1.9367 1.6576 85.5871
2015 0.2214 1.7154 1.5109 88.0776
2016 0.2214 1.4940 1.3571 90.8326
2017 0.2214 1.2727 1.1958 93.9635
2018 and later years 0.2214 1.0513 1.0269 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 87.1588 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Reinsurance B (Nonproportional Assumed Liability)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 8.9223 8.9223 91.0777 73.9275 81.1697
2005 27.3618 18.4395 72.6382 58.6121 80.6905
2006 44.5758 17.2140 55.4242 43.8133 79.0507
2007 53.8781 9.3023 46.1219 36.4012 78.9239
2008 60.8896 7.0115 39.1104 30.9772 79.2046
2009 69.7327 8.8430 30.2673 23.4167 77.3661
2010 76.6292 6.8965 23.3708 17.4846 74.8137
2011 79.4030 2.7738 20.5970 15.4875 75.1928
2012 83.8936 4.4906 16.1064 11.6364 72.2470
2013 80.1707 -3.7229 19.8293 16.0088 80.7332
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2014 1.1805 18.6487 15.5718 83.5005
2015 1.1805 17.4682 15.1137 86.5212
2016 1.1805 16.2877 14.6335 89.8442
2017 1.1805 15.1072 14.1302 93.5333
2018 and later years 1.1805 13.9266 13.6027 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 85.5743 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Reinsurance C (Nonproportional Assumed Financial Lines)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 17.1195 17.1195 82.8805 73.0832 88.1791
2005 46.6590 29.5395 53.3410 46.3628 86.9179
2006 67.7135 21.0545 32.2865 27.0416 83.7552
2007 78.1379 10.4244 21.8621 17.6723 80.8355
2008 89.7346 11.5967 10.2654 6.6512 64.7929
2009 92.1268 2.3921 7.8732 4.5227 57.4441
2010 89.7323 -2.3945 10.2677 7.1922 70.0468
2011 90.0460 0.3137 9.9540 7.2177 72.5104
2012 94.8867 4.8407 5.1133 2.6096 51.0353
2013 86.7041 -8.1827 13.2959 11.1129 83.5811
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2014 1.4277 11.8683 10.1869 85.8328
2015 1.4277 10.4406 9.2162 88.2727
2016 1.4277 9.0129 8.1987 90.9665
2017 1.4277 7.5852 7.1322 94.0277
2018 and later years 1.4277 6.1575 6.0143 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 87.3575 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.
Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Glass, Burglary and Theft)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 62.9320 62.9320 37.0680 35.4425 95.6148
2005 88.4950 25.5631 11.5050 10.9790 95.4281
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2006 and later years 5.7525 5.7525 5.6187 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 97.6738 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2006 taxable year.
Workers’ Compensation
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2004 28.2489 28.2489 71.7511 62.9119 87.6808
2005 57.8739 29.6249 42.1261 35.6138 84.5408
2006 71.2999 13.4260 28.7001 23.5846 82.1759
2007 77.7584 6.4585 22.2416 18.1090 81.4196
2008 81.9301 4.1717 18.0699 14.7108 81.4107
2009 83.7739 1.8437 16.2261 13.5322 83.3977
2010 86.5350 2.7611 13.4650 11.3576 84.3489
2011 88.4367 1.9017 11.5633 9.9580 86.1175
2012 89.5926 1.1559 10.4074 9.2545 88.9229
2013 91.6441 2.0515 8.3559 7.6003 90.9570
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 2004 accident year and that are outstanding at the end of the tax year shown.
           
2014 2.0515 6.3045 5.8663 93.0502
2015 2.0515 4.2530 4.0488 95.1976
2016 2.0515 2.2016 2.1436 97.3675
2017 and later years 2.0515 0.1501 0.1466 97.6738
Taxpayers that use the composite method of Notice 88-100 should use 94.3547 percent to discount unpaid losses incurred in this line of business in 2004 and prior years and that are outstanding at the end of the 2014 taxable year.

DRAFTING INFORMATION

The principal author of this revenue procedure is Katherine A. Hossofsky of the Office of the Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure, contact Ms. Hossofsky at (202) 622-8435 (not a toll-free call).


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