REVENUE RULE 94-11
1994-1 C.B. 196, 1994-7 I.R.B. 51.
Internal Revenue Service
Revenue Ruling
INSURANCE COMPANIES; INTEREST RATE TABLES
January 27, 1994
Section 807.--Rules for Certain Reserves
Insurance companies; interest rate tables. Prevailing state assumed interest rates are
provided for the determination of reserves under s 807 of the Code for contracts issued in
1993 and 1994. Rev. Rul. 92-19 supplemental in part.
For purposes of s 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 1993, this ruling supplements the schedules of prevailing state assumed interest rates set forth in Rev. Rul. 92-19, 1992-1 C.B. 227. This information is to be used by insurance companies in computing their reserves for (1) life insurance and supplementary total and permanent disability benefits, (2) individual annuities and pure endowments, and (3) group annuities and pure endowments. As 807(d)(2)(B) requires that the interest rate used to compute these reserves be the greater of (1) the applicable federal interest rate, or (2) the prevailing state assumed interest rate, the table of applicable federal interest rates in Rev. Rul. 92-19 is also supplemented.
Following are supplements to schedules A, B, C, and D to Part III of Rev. Rul. 92-19, providing prevailing state assumed interest rates for insurance products with different features issued in 1993 and 1994, and a supplement to the table in Part IV of Rev. Rul. 92-19, providing the applicable federal interest rate under s 807(d)(4)(A) for 1994. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.
This is the second supplement to the interest rates provided in Rev. Rul. 92- 19. The first supplement was published in Rev. Rul. 93-58, 1993-29 I.R.B. 64 (interest rates for insurance products issued in 1992 and 1993).
Part III. Prevailing State Assumed Interest Rates -- Products Issued in Years After 1982. Schedule A
STATUTORY VALUATION INTEREST RATES BASED ON THE 1980 AMENDMENTS TO THE NAIC STANDARD VALUATION LAW
A. Life insurance valuation:
| Guarantee Duration (years) | Calendar Year of Issue 1994 [Fn5] |
| 10 or fewer | 5.50 |
| More than 10 but not more than 20 |
5.25 |
| More than 20 | 5.00 |
Fn5. As the applicable federal interest rate for 1994 of 7.45 percent shown in Part IV
of this ruling exceeds the prevailing state assumed interest rate for 1994, the interest
rate to be used for this product for s 807 purposes, pursuant to s 807(d)(2)(B), is the
applicable federal interest rate. See also footnote 3 to Schedule A, Part III, Rev. Rul.
92-19 at 1992-1 C.B. 231.
Source: Rates calculated from the monthly averages, ending June 30, 1993, of Moody's
Corporate Bond Yield Average - Monthly Average Corporates.
Part III, Schedule B
STATUTORY VALUATION INTEREST RATES BASED ON THE 1980 AMENDMENTS TO THE NAIC STANDARD
VALUATION LAW
B. Single premium immediate annuities and annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options:
| Calendar Year of Issue Valuation | Interest Rate |
| 1993 | 7.00 |
FNa1. The applicable federal interest rates for 1988 and later years must be used in computing reserves under s 807 if they exceed the prevailing state assumed interest rates specified in this schedule. See applicable federal interest rates set forth in Part IV of Rev. Rul. 92-19 as supplemented.
Source: Rates calculated from the monthly averages, ending June 30, 1993, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates. The terms used in this schedule are those used in the Standard Valuation Law as defined in Rev. Rul. 92-19.
Part III, Schedule C11 - 1993
STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW FOR 1993 CALENDAR YEAR BUSINESS GOVERNED BY THE 1980 AMENDMENTS
C. Valuation interest rates for other annuities and guaranteed interest contracts that are valued on an issue year basis:
| Valuation Interest Rate For Plan Type | |||||
| Cash Settlement Options? | Future Interest Guarantee? | Guarantee Duration (in years) | A | B | C |
| Yes | Yes | 5 or fewer | 7.00 | 6.00 | 5.50 |
| More than 5, but not more than 10 | 6.75 | 6.00 | 5.50 | ||
| More than 10, but not more than 20 | 6.25 | 5.50 | 5.25 | ||
| More than 20 | 5.25 | 4.75 | 4.75 | ||
| Yes | No | 5 or fewer | 7.25 | 6.25 | 5.75 |
| More than 5, but not more than 10 | 7.00 | 6.25 | 5.75 | ||
| More than10, but not more than 20 | 6.50 | 5.75 | 5.50 | ||
| More than 20 | 5.50 | 5.00 | 5.00 | ||
| No | Yes | 5 or fewer | 7.00 | ||
| No | More than5, but not more than 10 | 6.75 | n/a | n/a | |
| More than 10, but not more than 20 | 6.25 | n/a | n/a | ||
| More than 20 | 5.25 | n/a | n/a | ||
FNA1. As the applicable federal interest rate for 1993 of 8.10 percent exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under s 807 is 8.10 percent.
Source: Rates calculated from the monthly averages, ending June 30, 1993, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates.
Part III, Schedule D11 - 1993
STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW FOR 1993 CALENDAR YEAR BUSINESS GOVERNED BY THE 1980 AMENDMENTS
D. Valuation interest rates for other annuities and guaranteed interest contracts that are contracts with cash settlement options and that are valued on a change in fund basis:
Valuation Interest Rate For Plan Type |
|||||
| Cash Settlement Options? | Future Interest Guarantee? | Guarantee Duration (in years) | A | B | C |
| Yes | Yes | 5 or fewer | 7.75 | 7.25 | 5.75 |
| More than 5, but not more than 10 | 7.50 | 7.25 | 5.75 | ||
| More than 10, but not more than 20 | 7.00 | 6.75 | 5.50 | ||
| More than 20 | 6.00 | 6.00 | 5.00 | ||
| 5 or fewer | 8.25 | 7.50 | 6.00 | ||
| More than 5, but not more than 10 | 7.75 | 7.50 | 6.00 | ||
| More than 10, but not more than 20 | 7.25 | 7.00 | 5.75 | ||
| More than 20 | 6.25 | 6.25 | 5.25 | ||
FNA1. As the applicable federal interest rate for 1993 of 8.10 percent exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under s 807 is 8.10 percent.
Source: Rates calculated from the monthly averages, ending June 30, 1993, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates.
Part IV. Applicable Federal Interest Rates.
TABLE OF APPLICABLE FEDERAL INTEREST RATES FOR PURPOSES OF §807
| Year | Interest Rate |
| 1994 | 7.45 |
Source: Rev. Rul. 93-82, 1993-39 I.R.B. 5 (at 7).
EFFECT ON OTHER REVENUE RULINGS
Rev. Rul. 92-19 is supplemented by the addition to Part III of that ruling of prevailing state assumed interest rates under s 807 for certain insurance products issued in 1993 and 1994 and is further supplemented by an addition to the table in Part IV of Rev. Rul. 92-19 listing applicable federal interest rates. Parts I and II of Rev. Rul. 92-19 are not affected by this ruling.
DRAFTING INFORMATION
The principal author of this revenue ruling is Ann H. Logan of the Office of Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling contact her on (202) 622-3970 (not a toll-free call).
FNa1. The terms used in the schedules in this ruling and in Part III of Rev. Rul. 92-19 are those used in the Standard Valuation Law, and are defined in Rev. Rul. 92-19.
Rev. Rul. 94-11, 1994-1 C.B. 196, 1994-7 I.R.B. 51.