Rev. Rul. 89-66A
1989-1 C.B. 220, 1989-24 I.R.B. 50.
Internal Revenue Service
Revenue Ruling
INSURANCE COMPANIES; LOSS RESERVES; DISCOUNTING UNPAID LOSSES
Published: June 12, 1989
Section 846. - Discounted Unpaid Losses Defined
Insurance companies; loss reserves; discounting unpaid losses. The loss payment patterns and discount factors for calendar year 1989 for each property and casualty business to be used in discounting the deduction for loss reserves for purposes of section 846 of the Code. Rev. Rul. 89-66 modified and superseded.
This revenue ruling modifies and supersedes Rev. Rul. 89-66, 1989-21 I.R.B. 13, which contained erroneous column headings.
For purposes of section 846 of the Internal Revenue Code, the following are the loss payment patterns and discount factors for calendar year 1989 for each property and casualty line of business to be used in discounting the deduction for loss reserves. Section 846 requires all property and casualty loss reserves (unpaid losses and unpaid loss adjustment expenses) for each line of business (as shown on the annual statement approved by the National Association of Insurance Commissioners (NAIC)) to be discounted for federal income tax purposes. The discount factors were determined by using an interest rate for 1989 of 8.16 percent, the interest rate determined under section 846(c).
COMPOSITE SCHEDULE P
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 27050900 78832067 34.3146
AY + 1 1984 42762165 70059326 61.0371
AY + 2 1983 46304723 62932278 73.5787
AY + 3 1982 46339283 56724398 81.6920
AY + 4 1981 44014354 50826873 86.5966
AY + 5 1980 41790830 46281924 90.2962
AY + 6 1979 38531049 41768331 92.2494
AY + 7 1978 33285121 35572301 93.5703
AY + 8 1977 29524057 31225532 94.5510
AY + 9 1976 26745914 28167858 94.9519
AY + 10 Pre 1976 184257188 188825255 NA
AY + 11 NA NA NA NA
AY + 12 NA NA NA NA
AY + 13 NA NA NA NA
AY + 14 NA NA NA NA
AY + 15 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
34.3146 65.6854 54.4457 82.8886
26.7225 38.9629 31.0971 79.8120
12.5416 26.4213 20.5914 77.9346
8.1133 18.3080 13.8338 75.5613
4.9046 13.4034 9.8618 73.5769
3.6996 9.7038 6.8189 70.2708
1.9532 7.7506 5.3440 68.9500
1.3209 6.4297 4.4063 68.5315
0.9807 5.4490 3.7460 68.7467
0.4009 5.0481 3.6348 72.0024
0.4009 4.6472 3.5144 75.6244
0.4009 4.2464 3.3843 79.6992
0.4009 3.8455 3.2436 84.3473
0.4009 3.4446 3.0913 89.7439
0.4009 3.0437 2.9267 96.1538
3.0437 0.0000 0.0000 96.1538
AUTOMOBILE LIABILITY
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 10734519 31281287 34.3161
AY + 1 1984 18397279 28217053 65.1992
AY + 2 1983 20047428 24986353 80.2335
AY + 3 1982 19808529 22243403 89.0535
AY + 4 1981 18974882 20225872 93.8149
AY + 5 1980 17105852 17717213 96.5493
AY + 6 1979 16266022 16633374 97.7915
AY + 7 1978 14534843 14766868 98.4287
AY + 8 1977 12853464 13027563 98.6636
AY + 9 1976 11389407 11506437 98.9829
AY + 10 Pre 1976 91306371 91545592 NA
AY + 11 NA NA NA NA
AY + 12 NA NA NA NA
AY + 13 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
34.3161 65.6839 57.7769 87.9621
30.8830 34.8008 30.3732 87.2770
15.0344 19.7665 17.2159 87.0962
8.8200 10.9465 9.4479 86.3097
4.7614 6.1851 5.2670 85.1560
2.7344 3.4507 2.8530 82.6785
1.2421 2.2085 1.7939 81.2278
0.6373 1.5713 1.2776 81.3082
0.2349 1.3364 1.1375 85.1211
0.3193 1.0171 0.8983 88.3206
0.3193 0.6978 0.6395 91.6505
0.3193 0.3785 0.3596 95.0199
0.3193 0.0592 0.0569 96.1538
0.0592 0.0000 0.0000 96.1538
OTHER LIABILITY
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 824218 8957695 9.2012
AY + 1 1984 1752555 6901148 25.3951
AY + 2 1983 2493908 6222045 40.0818
AY + 3 1982 3181315 5762517 55.2070
AY + 4 1981 3429366 5180556 66.1969
AY + 5 1980 3548964 4724863 75.1125
AY + 6 1979 3339115 4162493 80.2191
AY + 7 1978 3050437 3610079 84.4978
AY + 8 1977 2812829 3245716 86.6628
AY + 9 1976 2702169 3081827 87.6807
AY + 10 Pre 1976 23480898 25101360 NA
AY + 11 NA NA NA NA
AY + 12 NA NA NA NA
AY + 13 NA NA NA NA
AY + 14 NA NA NA NA
AY + 15 NA NA NA NA
Fraction Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
9.2012 90.7988 67.6821 74.5408
16.1939 74.6049 56.3634 75.5492
14.6867 59.9182 45.6885 76.2514
15.1252 44.7930 33.6864 75.2047
10.9898 33.8031 25.0058 73.9748
8.9157 24.8875 17.7740 71.4174
5.1066 19.7809 13.9135 70.3380
4.2787 15.5022 10.5990 68.3709
2.1650 13.3372 9.2122 69.0719
1.0179 12.3193 8.9053 72.2878
1.0179 11.3013 8.5733 75.8614
1.0179 10.2834 8.2143 79.8791
1.0179 9.2655 7.8259 84.4634
1.0179 8.2475 7.4059 89.7950
1.0179 7.2296 6.9515 96.1538
7.2296 0.0000 0.0000 96.1538
WORKERS' COMPENSATION
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 3932938 15174769 25.9176
AY + 1 1984 7635807 14004437 54.5242
AY + 2 1983 8124465 11973169 67.8556
AY + 3 1982 8126215 10749254 75.5979
AY + 4 1981 8203632 10245226 80.0727
AY + 5 1980 7893190 9444281 83.5764
AY + 6 1979 7559441 8845526 85.4606
AY + 7 1978 6621807 7594942 87.1871
AY + 8 1977 5981586 6744498 88.6884
AY + 9 1976 5510811 6170361 89.3110
AY + 10 Pre 1976 46351166 48577936 NA
AY + 11 NA NA NA NA
AY + 12 NA NA NA NA
AY + 13 NA NA NA NA
AY + 14 NA NA NA NA
AY + 15 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
25.9176 74.0824 58.6978 79.2331
28.6066 45.4758 33.7367 74.1860
13.3314 32.1444 22.6249 70.3853
7.7423 24.4021 16.4191 67.2857
4.4748 19.9273 13.1051 65.7647
3.5037 16.4236 10.5307 64.1192
1.8842 14.5394 9.4304 64.8610
1.7264 12.8129 8.4044 65.5932
1.5013 11.3116 7.5288 66.5585
0.6226 10.6890 7.4957 70.1251
0.6226 10.0664 7.4598 74.1060
0.6226 9.4438 7.4210 78.5809
0.6226 8.8211 7.3790 83.6515
0.6226 8.1985 7.3336 89.4505
0.6226 7.5759 7.2845 96.1538
7.5759 0.0000 0.0000 96.1538
MEDICAL MALPRACTICE
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 85689 2835465 3.0220
AY + 1 1984 312207 2404595 12.9838
AY + 2 1983 534322 2280478 23.4303
AY + 3 1982 745691 2095689 35.5821
AY + 4 1981 836834 1839826 45.4844
AY + 5 1980 846392 1574497 53.7563
AY + 6 1979 800223 1316417 60.7880
AY + 7 1978 745973 1109154 67.2560
AY + 8 1977 639578 883594 72.3837
AY + 9 1976 627818 835753 75.1200
AY + 10 Pre 1976 1959501 2323449 NA
AY + 11 NA NA NA NA
AY + 12 NA NA NA NA
AY + 13 NA NA NA NA
AY + 14 NA NA NA NA
AY + 15 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
3.0220 96.9780 64.0702 66.0668
9.9617 87.0162 58.9382 67.7324
10.4465 76.5697 52.8831 69.0653
12.1519 64.4179 44.5605 69.1741
9.9023 54.5156 37.8982 69.5182
8.2719 46.2437 32.3879 70.0375
7.0316 39.2120 27.7179 70.6872
6.4681 32.7440 23.2529 71.0142
5.1277 27.6163 19.8175 71.7603
2.7363 24.8800 18.5889 74.7142
2.7363 22.1436 17.2599 77.9453
2.7363 19.4073 15.8225 81.5288
2.7363 16.6709 14.2678 85.5851
2.7363 13.9346 12.5863 90.3242
2.7363 11.1982 10.7675 96.1538
11.1982 0.0000 0.0000 96.1538
FARMOWNERS MULTIPLE PERIL, HOMEOWNERS MULTIPLE PERIL, COMMERCIAL MULTIPLE PERIL, OCEAN MARINE, AIRCRAFT (ALL PERILS) AND BOILER AND MACHINERY
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 11473534 20582849 55.7432
AY + 1 1984 14664316 18532075 79.1294
AY + 2 1983 15104598 17470233 86.4591
AY + 3 1982 14477532 15873533 91.2055
AY + 4 1981 12569638 13335391 94.2577
AY + 5 1980 12396429 12821063 96.6880
AY + 6 1979 10566246 10810520 97.7404
AY + 7 1978 8332059 8491257 98.1252
AY + 8 1977 7236609 7324158 98.8047
AY + 9 1976 6515706 6573477 99.1212
AY + 10 Pre 1976 21159251 21276916 NA
AY + 11 NA NA NA NA
AY + 12 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
55.7432 44.2568 38.7743 87.6120
23.3862 20.8706 17.6166 84.4086
7.3297 13.5409 11.4313 84.4200
4.7464 8.7945 7.4278 84.4590
3.0523 5.7423 4.8595 84.6274
2.4303 3.3120 2.7286 82.3850
1.0524 2.2596 1.8567 82.1715
0.3847 1.8748 1.6081 85.7731
0.6795 1.1953 1.0327 86.3897
0.3165 0.8788 0.7878 89.6358
0.3165 0.5624 0.5229 92.9823
0.3165 0.2459 0.2364 96.1538
0.2459 0.0000 0.0000 96.1538
FIRE
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 1 1984 687222 944426 72.7661
AY + 2 Pre 1984 196764 462600 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
32.6127 12.2058 11.2937 92.5267
6.1029 6.1029 5.8682 96.1538
6.1029 0.0000 0.0000 96.1538
ALLIED LINES
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 657907 1076282 61.1278
AY + 1 1984 297197 388220 76.5538
AY + 2 Pre 1984 77676 174175 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
61.1278 38.8722 36.4104 93.6667
29.7582 9.1141 8.4330 92.5267
4.5570 4.5570 4.3818 96.1538
4.5570 0.0000 0.0000 96.1538
INLAND MARINE
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 1101567 1913177 57.5779
AY + 1 1984 562321 731477 76.8747
AY + 2 Pre 1984 140515 321225 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
57.5779 42.4221 39.7499 93.7008
32.6119 9.8102 9.0771 92.5267
4.9051 4.9051 4.7165 96.1538
4.9051 0.0000 0.0000 96.1538
MISCELLANEOUS CASUALTY
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 185443 216664 85.5901
AY + 1 1984 12581 14861 84.6578
AY + 2 Pre 1984 1729 4100 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
85.5901 14.4099 13.6211 94.5264
12.1991 2.2108 2.0456 92.5267
1.1054 1.1054 1.0629 96.1538
1.1054 0.0000 0.0000 96.1538
EARTHQUAKE
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 3852 13974 27.5655
AY + 1 1984 1654 3010 54.9502
AY + 2 Pre 1984 722 1757 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
27.5655 72.4345 66.1871 91.3751
39.8029 32.6316 30.1930 92.5267
16.3158 16.3158 15.6883 96.1538
16.3158 0.0000 0.0000 96.1538
AUTO PHYSICAL DAMAGE
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 13876758 16695051 83.1190
AY + 1 1984 1743502 1864945 93.4881
AY + 2 Pre 1984 -128871 -44115 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
83.1190 16.8810 16.1151 95.4631
15.7817 1.0993 1.0171 92.5267
0.5496 0.5496 0.5285 96.1538
0.5496 0.0000 0.0000 96.1538
FIDELITY
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 63993 281102 22.7650
AY + 1 1984 108652 212771 51.0652
AY + 2 Pre 1984 76630 196869 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
22.7650 77.2350 70.2552 90.9630
39.4402 37.7947 34.9702 92.5267
18.8974 18.8974 18.1706 96.1538
18.8974 0.0000 0.0000 96.1538
SURETY
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 322557 869869 37.0811
AY + 1 1984 221719 418289 53.0062
AY + 2 Pre 1984 29380 252418 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
37.0811 62.9189 57.3625 91.1689
33.3509 29.5680 27.3583 92.5267
14.7840 14.7840 14.2154 96.1538
14.7840 0.0000 0.0000 96.1538
GLASS
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 5330 8021 66.4506
AY + 1 1984 1482 1703 87.0229
AY + 2 Pre 1984 145 518 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
66.4506 33.5494 31.7972 94.7773
29.1957 4.3537 4.0284 92.5267
2.1769 2.1769 2.0931 96.1538
2.1769 0.0000 0.0000 96.1538
BURGLARY AND THEFT
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 16947 35142 48.2243
AY + 1 1984 10304 13001 79.2554
AY + 2 Pre 1984 3182 8093 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
48.2243 51.7757 48.6450 93.9533
41.0350 10.7406 9.9380 92.5267
5.3703 5.3703 5.1638 96.1538
5.3703 0.0000 0.0000 96.1538
CREDIT
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 54286 218630 24.8301
AY + 1 1984 52253 126369 41.3495
AY + 2 Pre 1984 9995 43661 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
24.8301 75.1699 67.6021 89.9324
31.0824 44.0875 40.7927 92.5267
22.0438 22.0438 21.1959 96.1538
22.0438 0.0000 0.0000 96.1538
CREDIT ACCIDENT AND HEALTH (Group and Individual)
Cumulative
Loss & loss Total losses and fraction of
Years before Year loss expense payments loss expense loss paid
current year incurred to date (000s) incurred (000s) (percent)
-------------------------------------------------------------------------
AY + 0 1985 50544 93229 54.2149
AY + 1 1984 26637 42512 62.6576
AY + 2 Pre 1984 8295 18171 NA
AY + 3 NA NA NA NA
Fraction
Fraction of of loss Discounted Reserve
loss paid unpaid, fraction discount
during year year-end unpaid, year- factor
(percent) (percent) end (percent) (percent)
-------------------------------------------------
54.2149 45.7851 42.2105 92.1927
28.6879 17.0973 15.8195 92.5267
8.5486 8.5486 8.2198 96.1538
8.5486 0.0000 0.0000 96.1538
Rev. Rul. 89-66A, 1989-1 C.B. 220, 1989-24 I.R.B. 50.