Internal Revenue Bulletin:  2007-3 

January 16, 2007 

Rev. Proc. 2007-9


SECTION 1. PURPOSE

This revenue procedure prescribes the loss payment patterns and discount factors for the 2006 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.

SEC. 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.

SEC. 3. TABLES OF DISCOUNT FACTORS

.01 The following tables present separately for each line of business the discount factors under § 846 for accident year 2006. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2006, which is 3.98 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. 2007-9 on this issue to the following address:

CC:PA:LPD:PR (Rev. Proc. 2007-9), room 5203, 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. 2007-9), 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 2006
 
(Interest rate: 3.98 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 98.0675 percent to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the 2006 and later taxable years.
Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount all unpaid losses in this line of business that are outstanding at the end of the 2006 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 (%)
2006 89.6468 89.6468 10.3532 10.1356 97.8981
2007 99.6845 10.0377 0.3155 0.3035 96.1907
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 2006 accident year and that are outstanding at the end of the tax year shown.
2008 and later years 0.1578 0.1578 0.1547 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 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 (%)
2006 28.8244 28.8244 71.1756 65.9439 92.6497
2007 54.9871 26.1626 45.0129 41.8903 93.0628
2008 72.8039 17.8168 27.1961 25.3896 93.3575
2009 85.0572 12.2533 14.9428 13.9054 93.0572
2010 91.6276 6.5704 8.3724 7.7589 92.6725
2011 94.9514 3.3239 5.0486 4.6784 92.6676
2012 97.0453 2.0938 2.9547 2.7295 92.3768
2013 98.1574 1.1121 1.8426 1.7041 92.4822
2014 98.7370 0.5796 1.2630 1.1809 93.4978
2015 99.1070 0.3700 0.8930 0.8506 95.2504
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   0.3700 0.5230 0.5072 96.9692
2017 and later years 0.3700 0.1530 0.1501 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 97.1689 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 40.9985 40.9985 59.0015 53.7593 91.1153
2007 65.8439 24.8454 34.1561 30.5639 89.4832
2008 77.5023 11.6583 22.4977 19.8923 88.4193
2009 84.6221 7.1198 15.3779 13.4239 87.2935
2010 90.2455 5.6234 9.7545 8.2239 84.3094
2011 92.2780 2.0325 7.7220 6.4788 83.8997
2012 94.3974 2.1195 5.6026 4.5754 81.6658
2013 95.2526 0.8552 4.7474 3.8854 81.8439
2014 96.2792 1.0266 3.7208 2.9933 80.4470
2015 96.4323 0.1531 3.5677 2.9562 82.8624
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   0.1531 3.4145 2.9177 85.4512
2017   0.1531 3.2614 2.8777 88.2363
2018   0.1531 3.1083 2.8361 91.2444
2019   0.1531 2.9551 2.7928 94.5083
2020 and later years 0.1531 2.8020 2.7478 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 88.1508 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 38.3328 38.3328 61.6672 58.1879 94.3581
2007 58.8485 20.5156 41.1515 39.5839 96.1907
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 2006 accident year and that are outstanding at the end of the tax year shown.
2008 and later years 20.5758 20.5758 20.1781 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 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 (%)
2006 4.0723 4.0723 95.9277 90.7812 94.6350
2007 40.7639 36.6916 59.2361 56.9796 96.1907
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 2006 accident year and that are outstanding at the end of the tax year shown.
2008 and later years 29.6180 29.6180 29.0457 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 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 (%)
2006 40.9985 40.9985 59.0015 53.7593 91.1153
2007 65.8439 24.8454 34.1561 30.5639 89.4832
2008 77.5023 11.6583 22.4977 19.8923 88.4193
2009 84.6221 7.1198 15.3779 13.4239 87.2935
2010 90.2455 5.6234 9.7545 8.2239 84.3094
2011 92.2780 2.0325 7.7220 6.4788 83.8997
2012 94.3974 2.1195 5.6026 4.5754 81.6658
2013 95.2526 0.8552 4.7474 3.8854 81.8439
2014 96.2792 1.0266 3.7208 2.9933 80.4470
2015 96.4323 0.1531 3.5677 2.9562 82.8624
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   0.1531 3.4145 2.9177 85.4512
2017   0.1531 3.2614 2.8777 88.2363
2018   0.1531 3.1083 2.8361 91.2444
2019   0.1531 2.9551 2.7928 94.5083
2020 and later years 0.1531 2.8020 2.7478 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 88.1508 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 7.3447 7.3447 92.6553 83.4596 90.0754
2007 29.0191 21.6744 70.9809 64.6798 91.1228
2008 53.3108 24.2917 46.6892 42.4836 90.9925
2009 69.1517 15.8409 30.8483 28.0215 90.8363
2010 82.0981 12.9464 17.9019 15.9352 89.0139
2011 86.3995 4.3014 13.6005 12.1832 89.5793
2012 89.7111 3.3116 10.2889 9.2913 90.3038
2013 92.4688 2.7577 7.5312 6.8490 90.9420
2014 94.5163 2.0475 5.4837 5.0337 91.7950
2015 95.7635 1.2471 4.2365 3.9624 93.5285
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   1.2471 2.9894 2.8483 95.2819
2017   1.2471 1.7422 1.6900 97.0008
2018 and later years 1.2471 0.4951 0.4855 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 95.9709 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 0.8316 0.8316 99.1684 84.5630 85.2721
2007 7.4573 6.6257 92.5427 81.1723 87.7134
2008 23.5575 16.1002 76.4425 67.9856 88.9369
2009 41.0062 17.4487 58.9938 52.8989 89.6685
2010 55.5832 14.5770 44.4168 40.1400 90.3712
2011 68.9413 13.3581 31.0587 28.1163 90.5261
2012 78.2095 9.2682 21.7905 19.7844 90.7937
2013 82.8727 4.6632 17.1273 15.8167 92.3480
2014 86.3178 3.4451 13.6822 12.9332 94.5260
2015 91.0834 4.7656 8.9166 8.5884 96.3200
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016 and later years 4.7656 4.1510 4.0708 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 79.7790 79.7790 20.2210 19.5491 96.6770
2007 94.9417 15.1627 5.0583 4.8656 96.1907
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 2006 accident year and that are outstanding at the end of the tax year shown.
2008 and later years 2.5292 2.5292 2.4803 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 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 (%)
2006 59.7445 59.7445 40.2555 37.4341 92.9914
2007 81.0347 21.2902 18.9653 17.2142 90.7672
2008 87.3325 6.2978 12.6675 11.4775 90.6059
2009 91.0659 3.7334 8.9341 8.1273 90.9698
2010 95.1781 4.1122 4.8219 4.2575 88.2964
2011 95.7605 0.5824 4.2395 3.8331 90.4149
2012 97.0539 1.2933 2.9461 2.6668 90.5202
2013 97.6441 0.5903 2.3559 2.1711 92.1567
2014 98.7037 1.0596 1.2963 1.1770 90.8007
2015 98.6217 -0.0821 1.3783 1.3076 94.8644
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   0.5226 0.8558 0.8267 96.6061
2017 and later years 0.5226 0.3332 0.3267 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 96.9550 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 69.1729 69.1729 30.8271 29.7431 96.4837
2007 91.2168 22.0439 8.7832 8.4487 96.1907
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 2006 accident year and that are outstanding at the end of the tax year shown.
2008 and later years 4.3916 4.3916 4.3068 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 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 (%)
2006 14.9618 14.9618 85.0382 75.3352 88.5898
2007 36.2113 21.2494 63.7887 56.6653 88.8328
2008 54.2876 18.0763 45.7124 40.4881 88.5713
2009 64.2163 9.9288 35.7837 31.9751 89.3567
2010 73.2732 9.0569 26.7268 24.0123 89.8438
2011 80.5748 7.3016 19.4252 17.5225 90.2054
2012 87.6200 7.0452 12.3800 11.0359 89.1433
2013 89.9155 2.2955 10.0845 9.1344 90.5790
2014 93.3946 3.4791 6.6054 5.9503 90.0827
2015 94.6170 1.2223 5.3830 4.9407 91.7827
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   1.2223 4.1607 3.8909 93.5158
2017   1.2223 2.9383 2.7993 95.2689
2018   1.2223 1.7160 1.6643 96.9877
2019 and later years 1.2223 0.4936 0.4841 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 94.6440 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 19.1133 19.1133 80.8867 69.7012 86.1714
2007 36.4434 17.3301 63.5566 54.8037 86.2281
2008 52.1648 15.7215 47.8352 40.9536 85.6140
2009 63.2383 11.0734 36.7617 31.2919 85.1209
2010 72.0780 8.8397 27.9220 23.5235 84.2469
2011 75.9021 3.8241 24.0979 20.5602 85.3195
2012 82.9305 7.0284 17.0695 14.2116 83.2573
2013 85.1441 2.2136 14.8559 12.5200 84.2763
2014 89.3006 4.1565 10.6994 8.7799 82.0597
2015 89.9898 0.6892 10.0102 8.4266 84.1796
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   0.6892 9.3210 8.0591 86.4622
2017   0.6892 8.6318 7.6771 88.9398
2018   0.6892 7.9426 7.2798 91.6560
2019   0.6892 7.2533 6.8668 94.6705
2020 and later years 0.6892 6.5641 6.4373 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 90.4497 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 43.1926 43.1926 56.8074 53.5261 94.2237
2007 72.2008 29.0082 27.7992 26.0766 93.8032
2008 84.5632 12.3625 15.4368 14.5083 93.9856
2009 91.9316 7.3684 8.0684 7.5722 93.8501
2010 95.8729 3.9413 4.1271 3.8546 93.3975
2011 97.7804 1.9075 2.2196 2.0629 92.9415
2012 98.7957 1.0153 1.2043 1.1098 92.1473
2013 99.2491 0.4535 0.7509 0.6915 92.0971
2014 99.5195 0.2703 0.4805 0.4434 92.2703
2015 99.6353 0.1159 0.3647 0.3429 94.0275
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   0.1159 0.2488 0.2384 95.8137
2017   0.1159 0.1330 0.1297 97.5849
2018 and later years 0.1159 0.0171 0.0168 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 96.3943 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 6.5804 6.5804 93.4196 80.2960 85.9520
2007 26.7183 20.1379 73.2817 62.9570 85.9110
2008 43.1834 16.4652 56.8166 48.6731 85.6671
2009 43.9209 0.7375 56.0791 49.8583 88.9071
2010 54.3806 10.4597 45.6194 41.1768 90.2617
2011 78.3630 23.9824 21.6370 18.3607 84.8579
2012 82.8643 4.5013 17.1357 14.5014 84.6271
2013 68.2184 -14.6459 31.7816 30.0132 94.4355
2014 79.1582 10.9399 20.8418 20.0522 96.2118
2015 89.6963 10.5381 10.3037 10.1045 98.0675
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016 and later years       98.0675
Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 9.4198 9.4198 90.5802 76.5659 84.5283
2007 20.5845 11.1647 79.4155 68.2285 85.9133
2008 36.7807 16.1962 63.2193 54.4286 86.0950
2009 55.5974 18.8167 44.4026 37.4074 84.2460
2010 66.6238 11.0263 33.3762 27.6526 82.8511
2011 77.2636 10.6399 22.7364 17.9036 78.7443
2012 79.1888 1.9251 20.8112 16.6531 80.0197
2013 83.6816 4.4928 16.3184 12.7345 78.0378
2014 85.5507 1.8691 14.4493 11.3354 78.4496
2015 85.7291 0.1784 14.2709 11.6047 81.3169
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   0.1784 14.0925 11.8846 84.3329
2017   0.1784 13.9141 12.1757 87.5062
2018   0.1784 13.7357 12.4784 90.8463
2019   0.1784 13.5573 12.7931 94.3632
2020 and later years 0.1784 13.3789 13.1204 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 89.8177 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 25.0571 25.0571 74.9429 69.5252 92.7708
2007 52.0402 26.9831 47.9598 44.7775 93.3645
2008 82.4709 30.4307 17.5291 15.5292 88.5910
2009 85.6387 3.1678 14.3613 12.9170 89.9434
2010 92.7228 7.0840 7.2772 6.2075 85.3001
2011 91.8604 -0.8624 8.1396 7.3339 90.1015
2012 96.5016 4.6412 3.4984 2.8932 82.6989
2013 96.1872 -0.3143 3.8128 3.3288 87.3078
2014 97.6206 1.4333 2.3794 1.9998 84.0432
2015 97.8419 0.2214 2.1581 1.8536 85.8925
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   0.2214 1.9367 1.7017 87.8641
2017   0.2214 1.7154 1.5437 89.9920
2018   0.2214 1.4940 1.3794 92.3296
2019   0.2214 1.2727 1.2086 94.9667
2020 and later years 0.2214 1.0513 1.0310 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 90.9754 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 8.9223 8.9223 91.0777 76.3687 83.8500
2007 27.3618 18.4395 72.6382 60.6053 83.4344
2008 44.5758 17.2140 55.4242 45.4641 82.0294
2009 53.8781 9.3023 46.1219 37.7880 81.9307
2010 60.8896 7.0115 39.1104 32.1422 82.1834
2011 69.7327 8.8430 30.2673 24.4042 80.6288
2012 76.6292 6.8965 23.3708 18.3431 78.4871
2013 79.4030 2.7738 20.5970 16.2447 78.8690
2014 83.8936 4.4906 16.1064 12.3121 76.4422
2015 80.1707 -3.7229 19.8293 16.5983 83.7063
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   1.1805 18.6487 16.0552 86.0925
2017   1.1805 17.4682 15.4904 88.6775
2018   1.1805 16.2877 14.9031 91.4992
2019   1.1805 15.1072 14.2924 94.6071
2020 and later years 1.1805 13.9266 13.6575 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 90.3273 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 17.1195 17.1195 82.8805 74.5159 89.9077
2007 46.6590 29.5395 53.3410 47.3601 88.7874
2008 67.7135 21.0545 32.2865 27.7757 86.0287
2009 78.1379 10.4244 21.8621 18.2513 83.4837
2010 89.7346 11.5967 10.2654 7.1524 69.6754
2011 92.1268 2.3921 7.8732 4.9978 63.4788
2012 89.7323 -2.3945 10.2677 7.6384 74.3925
2013 90.0460 0.3137 9.9540 7.6225 76.5774
2014 94.8867 4.8407 5.1133 2.9898 58.4711
2015 86.7041 -8.1827 13.2959 11.4527 86.1367
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   1.4277 11.8683 10.4527 88.0727
2017   1.4277 10.4406 9.4129 90.1568
2018   1.4277 9.0129 8.3317 92.4421
2019   1.4277 7.5852 7.2075 95.0203
2020 and later years 1.4277 6.1575 6.0385 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 91.0632 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 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 (%)
2006 62.9320 62.9320 37.0680 35.7122 96.3422
2007 88.4950 25.5631 11.5050 11.0667 96.1907
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 2006 accident year and that are outstanding at the end of the tax year shown.
2008 and later years 5.7525 5.7525 5.6413 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 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 (%)
2006 28.2489 28.2489 71.7511 64.2325 89.5214
2007 57.8739 29.6249 42.1261 36.5803 86.8351
2008 71.2999 13.4260 28.7001 24.3455 84.8274
2009 77.7584 6.4585 22.2416 18.7287 84.2059
2010 81.9301 4.1717 18.0699 15.2202 84.2298
2011 83.7739 1.8437 16.2261 13.9459 85.9472
2012 86.5350 2.7611 13.4650 11.6854 86.7836
2013 88.4367 1.9017 11.5633 10.2113 88.3080
2014 89.5926 1.1559 10.4074 9.4390 90.6955
2015 91.6441 2.0515 8.3559 7.7228 92.4232
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 2006 accident year and that are outstanding at the end of the tax year shown.
2016   2.0515 6.3045 5.9383 94.1919
2017   2.0515 4.2530 4.0828 95.9970
2018   2.0515 2.2016 2.1534 97.8116
2019 and later years 2.0515 0.1501 0.1472 98.0675
Taxpayers that use the composite method of Notice 88-100 should use 95.2214 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

DRAFTING INFORMATION

The principal author of this revenue procedure is Katherine A. Hossofsky of the Office of 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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