REVENUE RULE 90-26
1990-1 C.B. 124, 1990-13 I.R.B. 7.
Internal Revenue Service
Revenue Ruling
INSURANCE COMPANIES; LOSS RESERVES; DISCOUNTING UNPAID LOSSES
Published: March 9, 1990
Section 846. - Discounted Unpaid Losses Defined
Insurance companies; loss reserves; discounting unpaid losses. The loss payment patterns
and discount factors are set forth for calendar year 1990 for each property and casualty
business to be used in discounting the deduction for loss reserves for purposes of section
846 of the Code.
For purposes of section 846 of the Internal Revenue Code, the following are the loss payment patterns and discount factors for calendar year 1990 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 1990 of 8.37 percent, the interest rate determined under section 846(c).
DRAFTING INFORMATION
The principal author of this revenue ruling is Katherine A. Hossofsky of the Office of Assistant Chief Counsel (Financial Institutions & Products). For further information regarding this revenue ruling contact Katherine Ann Hossofsky on (202) 566-3458 (not a toll-free call).
COMPOSITE SCHEDULE P
| Years before current year | Year loss incurred | Loss & loss expense payments to date (000s) | Total losses & loss expense incurred (000s) | Cummul. fraction of loss paid (%) | Fraction of loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 AY + 4 AY + 5 AY + 6 AY + 7 AY + 8 AY + 9 AY + 10 AY + 11 AY + 12 AY + 13 AY + 14 AY + 15 |
1985 1984 1983 1982 1981 1980 1979 1978 1977 1976 Pre 1976 n/a n/a n/a n/a n/a |
27050900 42762165 46304723 46339283 44014354 41790830 38531049 33285121 29524057 26745914 184257188 n/a n/a n/a n/a n/a |
78832067 70059326 62932278 56724398 50826873 46281924 41768331 35572301 31225532 28167858 188825255 n/a n/a n/a n/a n/a |
34.3146 61.0371 73.5787 81.6920 86.5966 90.2962 92.2494 93.5703 94.5510 94.9519 n/a n/a n/a n/a n/a n/a |
34.3143 26.7225 12.5416 8.1133 4.9046 3.6996 1.9532 1.3209 0.9807 0.4009 0.4009 0.4009 0.4009 0.4009 0.4009 3.0437 |
65.6854 38.9629 26.4213 18.3080 13.4034 9.7038 7.7506 6.4297 5.4490 5.0481 4.6472 4.2464 3.8455 3.4446 3.0437 0.0000 |
54.2288 30.9494 20.4840 13.7525 9.7978 6.7665 5.2996 4.3681 3.7128 3.6063 3.4908 3.3657 3.2300 3.0831 2.9238 0.0000 |
82.5584 79.4331 77.5283 75.1173 73.0994 69.7311 68.3769 67.9368 68.1378 71.4380 75.1156 79.2599 83.9959 89.5048 96.0606 96.0606 |
AUTOMOBILE LIABILITY
| Years before current year | Year loss incurred | Loss & loss expense payments to date (000s) | Total losses & loss expense incurred (000s) | Cummul. fraction of loss paid (%) | Fraction of loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 AY + 4 AY + 5 AY + 6 AY + 7 AY + 8 AY + 9 AY + 10 AY + 11 AY + 12 AY + 13 |
1985 1984 1983 1982 1981 1980 1979 1978 1977 1976 Pre 1976 n/a n/a n/a |
10734519 18397279 20047428 19808529 18974882 17105852 16266022 14534843 12853464 11389407 91306371 n/a n/a n/a |
31281287 28217053 24986353 22243403 20225872 17717213 16633374 14766868 13027563 1156437 91545592 n/a n/a n/a |
34.3161 65.1992 80.2335 89.0535 93.8149 96.5493 97.7915 98.4287 98.6636 98.9829 n/a n/a n/a n/a |
34.3161 30.8830 15.0344 8.8200 4.7614 2.7344 1.2421 0.6373 0.2349 0.3193 0.3193 0.3193 0.3193 0.0592 |
65.6839 34.8008 19.7665 10.9465 6.1851 3.4507 2.2085 1.5713 1.3364 1.0171 0.6978 0.3785 0.0592 0.0000 |
57.6062 30.2783 17.1616 9.4164 5.2479 2.8405 1.7852 1.2712 1.1332 0.8956 0.6382 0.3592 0.0568 0.0000 |
87.7021 87.0044 86.8219 86.0219 84.8471 82.3190 80.8335 80.9065 84.7922 88.0555 91.4560 94.9008 96.0606 96.0606 |
OTHER LIABILITY
| Years before current year | Year loss incurred | Loss & loss expense payments to date (000s) | Total losses & loss expense incurred (000s) | Cummul. fraction of loss paid (%) | Fraction of loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 AY + 4 AY + 5 AY + 6 AY + 7 AY + 8 AY + 9 AY + 10 AY + 11 AY + 12 AY + 13 AY + 14 AY + 15 |
1985 1984 1983 1982 1981 1980 1979 1978 1977 1976 Pre 1976 n/a n/a n/a n/a n/a |
824218 1752555 2493908 3181315 3429366 3548964 3339115 3050437 2812829 2702169 23480898 n/a n/a n/a n/a n/a |
8957695 6901148 6222045 5762517 5180556 4724863 4162493 3610079 3245716 3081827 25101360 n/a n/a n/a n/a n/a |
9.2012 25.3951 40.0818 55.2070 66.1969 75.1125 80.2191 84.4978 86.6628 87.6807 n/a n/a n/a n/a n/a n/a |
9.2012 16.1939 14.6867 15.1252 10.9898 8.9157 5.1066 4.2787 2.1650 1.0179 1.0179 1.0179 1.0179 1.0179 1.0179 7.2296 |
90.7988 74.6049 59.9182 44.7930 33.8031 24.8875 19.7809 15.5022 13.3372 12.3193 11.3013 10.2834 9.2655 8.2475 7.2296 0.0000 |
67.2552 56.0265 45.4270 33.4837 24.8458 17.6441 13.8049 10.5062 9.1318 8.8364 8.5163 8.1695 7.7936 7.3862 6.9448 0.0000 |
74.0706 75.0977 75.8150 74.7521 73.5014 70.8954 69.7890 67.7723 68.4684 71.7285 75.3570 79.4435 84.1145 89.5571 96.0606 96.0606 |
WORKER'S COMPENSATION
| Years before current year | Year loss incurred | Loss & loss expense payments to date (000s) | Total losses & loss expense incurred (000s) | Cummul. fraction of loss paid (%) | Fraction of loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 AY + 4 AY + 5 AY + 6 AY + 7 AY + 8 AY + 9 AY + 10 AY + 11 AY + 12 AY + 13 AY + 14 AY + 15 |
1985 1984 1983 1982 1981 1980 1979 1978 1977 1976 Pre 1976 n/a n/a n/a n/a n/a |
3932938 7635807 8124465 8126215 8203632 7893190 7559441 6621807 5981586 5510811 46351166 n/a n/a n/a n/a n/a |
15174769 14004437 11973169 10749254 10245226 9444281 8845526 7594942 6744498 6170361 48577936 n/a n/a n/a n/a n/a |
25.9176 54.5242 67.8556 75.5979 80.0727 83.5764 85.4606 87.1871 88.6884 89.3110 n/a n/a n/a n/a n/a n/a |
25.9176 28.6066 13.3314 7.7423 4.4748 3.5037 1.8842 1.7264 1.5013 0.6226 0.6226 0.6226 0.6226 0.6226 0.6226 7.5759 |
74.0824 45.4758 32.1444 24.4021 19.9273 16.4236 14.5394 12.8129 11.3116 10.6890 10.0664 9.4438 8.8211 8.1985 7.5759 0.0000 |
58.4232 33.5336 22.4622 16.2824 12.9870 10.4266 9.3379 8.3222 7.4559 7.4318 7.4057 7.3774 7.3467 7.3135 7.2775 0.0000 |
78.8625 73.7393 69.8790 66.7257 65.1719 63.4857 64.2246 64.9515 65.9134 69.5274 73.5684 78.1190 83.2852 89.2048 96.0606 96.0606 |
MEDICAL MALPRACTICE
| Years before current year | Year loss incurred | Loss & loss expense payments to date (000s) | Total losses & loss expense incurred (000s) | Cummul. fraction of loss paid (%) | Fraction of loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 AY + 4 AY + 5 AY + 6 AY + 7 AY + 8 AY + 9 AY + 10 AY + 11 AY + 12 AY + 13 AY + 14 AY + 15 |
1985 1984 1983 1982 1981 1980 1979 1978 1977 1976 Pre 1976 n/a n/a n/a n/a n/a |
85689 312207 534322 745691 836834 846392 800223 745973 639578 627818 1959501 n/a n/a n/a n/a n/a |
2835465 2404595 2280478 2095689 1839826 1574497 1316417 1109154 883594 835753 2323449 n/a n/a n/a n/a n/a |
3.0220 12.9838 23.4303 35.5821 45.4844 53.7563 60.7880 67.2560 72.3837 75.1200 n/a n/a n/a n/a n/a n/a |
3.0220 9.9617 10.4465 12.1519 9.9023 8.2719 7.0316 6.4681 5.1277 2.7363 2.7363 2.7363 2.7363 2.7363 2.7363 11.1982 |
96.9780 87.0162 76.5697 64.4179 54.5156 46.2437 39.2120 32.7440 27.6163 24.8800 22.1436 19.4073 16.6709 13.9346 11.1982 0.0000 |
63.5019 58.4467 52.4638 44.2048 37.5964 32.1321 27.5016 23.0701 19.6631 18.4604 17.1570 15.744 14.2137 12.5548 10.7571 0.0000 |
65.4807 67.1676 68.5177 68.6220 68.9645 69.4843 70.1355 70.4561 71.2012 74.1978 77.4804 81.1265 85.2604 90.0983 96.0606 96.0606 |
FARMOWNERS MULTIPLE PERIL, HOMEONWERS MULTILPLE PERIL, COMMERCIAL MULTIPLE PERIL, OCEAN MARINE, AIRCRAFT (ALL PERILS) AND BOILER AND MACHINERY
| Years before current year | Year loss incurred | Loss & loss expense payments to date (000s) | Total losses & loss expense incurred (000s) | Cummul. fraction of loss paid (%) | Fraction of loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 AY + 4 AY + 5 AY + 6 AY + 7 AY + 8 AY + 9 AY + 10 AY + 11 AY + 12 |
1985 1984 1983 1982 1981 1980 1979 1978 1977 1976 Pre 1976 n/a n/a |
11473534 14664316 15104598 14477532 12569638 12396429 10566246 8332059 7236609 6515706 21159251 n/a n/a |
20582849 18532075 17470233 15873533 13335391 12821063 10810520 8491257 7324158 6573477 21276916 n/a n/a |
55.7432 79.1294 86.4591 91.2055 94.2577 96.6880 97.7404 98.1252 98.8047 99.1212 n/a n/a n/a |
55.7432 23.3862 7.3297 4.7464 3.0523 2.4303 1.0524 0.3847 0.6795 0.3165 0.3165 0.3165 0.2459 |
44.2568 20.8706 13.5409 8.7945 5.7423 3.3120 2.2596 1.8748 1.1953 0.8788 0.5624 0.2459 0.0000 |
38.6581 17.5486 11.3871 7.3992 4.8411 2.7163 1.8481 1.6023 1.0290 0.7857 0.5220 0.2362 0.0000 |
87.3496 84.0827 84.0941 84.1339 84.3056 82.0146 81.7897 85.4617 86.0856 89.3980 92.8170 96.0606 96.0606 |
FIRE
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
1182445 687222 196764 n/a |
2142829 944426 462600 n/a |
55.1815 72.7661 n/a n/a |
55.1815 32.6127 6.1029 6.1029 |
44.8185 12.2058 6.1029 0.0000 |
41.7295 11.2722 5.8625 0.0000 |
93.1078 92.3510 96.0606 96.0606 |
ALLIED LINES
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
657907 297197 77676 n/a |
1076282 388220 174175 n/a |
61.1278 76.5538 n/a n/a |
61.1278 29.7582 4.5570 4.5570 |
38.8722 9.1141 4.5570 0.0000 |
36.3527 8.4169 4.3775 0.0000 |
93.5185 92.3510 96.0606 96.0606 |
INLAND MARINE
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
1101567 562321 140515 n/a |
1913177 731477 321225 n/a |
57.5779 76.8747 n/a n/a |
57.5779 32.6119 4.9051 4.9051 |
42.4221 9.8102 4.9051 0.0000 |
39.6873 9.0598 4.7119 0.0000 |
93.5533 92.3510 96.0606 96.0606 |
MISCELLANEOUS CASUALTY
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
185443 12581 1729 n/a |
216664 14861 4100 n/a |
85.5901 84.6578 n/a n/a |
85.5901 84.6578 n/a n/a |
85.5901 12.1991 1.1054 1.1054 |
13.6025 2.0417 1.0618 0.0000 |
94.3972 92.3510 96.0606 96.0606 |
EARTHQUAKE
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
3852 1654 722 n/a |
13974 3010 1757 n/a |
27.5655 54.9502 n/a n/a |
27.5655 39.8029 16.3158 16.3158 |
72.4345 32.6316 16.3158 0.0000 |
66.0430 30.1356 15.6731 0.0000 |
91.1762 92.3510 96.0606 96.0606 |
AUTO PHYSICAL DAMAGE
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
13876758 1743502 -128871 n/a |
16695051 1864945 -44115 n/a |
83.1190 93.4881 n/a n/a |
83.1190 15.7817 0.5496 0.5496 |
16.8810 1.0993 0.5496 0.0000 |
16.0968 1.0152 0.5280 0.0000 |
95.3546 92.3510 96.0606 96.0606 |
FIDELITY
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
63993 108652 76630 n/a |
281102 212771 196869 n/a |
22.7650 51.0652 n/a n/a |
22.7650 39.4402 18.8974 18.8974 |
77.2350 37.7947 18.8974 0.0000 |
70.0945 34.9038 18.1529 0.0000 |
90.7549 92.3510 96.0606 96.0606 |
SURETY
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
322557 221719 29380 n/a |
869869 418289 252418 n/a |
37.0811 53.0062 n/a n/a |
37.0811 33.3509 14.7840 14.7840 |
62.9189 29.5680 14.7840 0.0000 |
57.2344 27.3063 14.2016 0.0000 |
90.9654 92.3510 96.0606 96.0606 |
GLASS
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
5330 1482 145 n/a |
8021 1703 518 n/a |
66.4506 87.0229 n/a n/a |
66.4506 29.1957 2.1769 2.1769 |
33.5494 4.3537 2.1769 0.0000 |
31.7557 4.0207 2.0911 0.0000 |
94.6536 92.3510 96.0606 96.0606 |
BURGLARY AND THEFT
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
16947 10304 3182 n/a |
35142 13001 8093 n/a |
48.2243 79.2554 n/a n/a |
48.2243 41.0350 5.3703 5.3703 |
51.7757 10.7406 5.3703 0.0000 |
48.5715 9.9191 5.1588 0.0000 |
93.8114 92.3510 96.0606 96.0606 |
CREDIT
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
54286 52253 9995 n/a |
218630 126369 43661 n/a |
24.8301 41.3495 n/a n/a |
24.8301 31.0824 22.0438 22.0438 |
75.1699 44.0875 22.0438 0.0000 |
67.4286 40.7153 21.1754 0.0000 |
89.7015 92.3510 96.0606 96.0606 |
CREDIT ACCIDENT AND HEALTH (Group & Individual)
| Years before current year | Year loss incurred | Net losses paid in year (000s) | Unpaid losses beginning of year(000s) | Fraction of unpaid loss paid in year(%) | Fraction of total loss paid during year (%) | Fraction of loss unpaid, year-end (%) | Discount'd fraction unpaid, year-end (%) | Reserve discount factor (%) |
| AY + 0 AY + 1 AY + 2 AY + 3 |
1985 1984 Pre 1984 n/a |
50544 26637 8295 n/a |
93229 42512 18171 n/a |
54.2149 62.6576 n/a n/a |
54.2149 28.6879 8.5486 8.5486 |
45.7851 17.0973 8.5486 0.0000 |
42.1277 15.7895 8.2119 0.0000 |
92.0118 92.3510 96.0606 96.0606 |
Rev. Rul. 90-26, 1990-1 C.B. 124, 1990-13 I.R.B. 7.