REVENUE RULE 91-42

1991-2 C.B. 332, 1991-31 I.R.B. 1.

Internal Revenue Service
Revenue Ruling

INSURANCE COMPANIES; LOSS RESERVES; DISCOUNTING UNPAID LOSSES

Published: July 18, 1991

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 1991 for each property and casualty business to be used in discounting the deduction for loss reserves under 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 1991 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 1991 of 8.42 percent, the interest rate determined under section 846(c). See also Rev. Proc. 90-23, 1990-1 C.B. 507, which prescribes the manner in which taxpayers are to apply discount factors under section 846 to unpaid losses as reported in the new configuration of lines of business that was adopted for the 1989 annual statement for fire and casualty insurance companies.

DRAFTING INFORMATION

The principal author of the revenue ruling is Katherine Ann Hossofsky of the Office of Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling contact Ms. Hossofsky on (202) 566-4336 (not a toll-free call).

Note: Tables Omitted.

Rev. Rul. 91-42, 1991-2 C.B. 332, 1991-31 I.R.B. 1.