Internal Revenue Service
Revenue Ruling
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Section 807. --- Rules for Certain Reserve
For purposes of s 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 1999, 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 s 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 2000 and 2001, and a supplement to the table in Part IV of Rev. Rul. 92-19, providing the applicable federal interest rate under s 807(d) for 2000 and 2001. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.
This is the ninth supplement to the interest rates provided in Rev. Rul. 92-19. Earlier supplements were published in Rev. Rul. 93-58, 1993-2 C.B. 241 (interest rates for insurance products issued in 1992 and 1993), Rev. Rul. 94-11, 1994-1 C.B. 196 (1993 and 1994), Rev. Rul. 95-4, 1995-1 C.B. 141 (1994 and 1995), Rev. Rul. 96-2, 1996-1 C.B. 141 (1995 and 1996), Rev. Rul. 97-2, 1997-1 C.B. 8 (1996 and 1997), Rev. Rul. 98-2, 1998-2 I.R.B. 15 (1997 and 1998), Rev. Rul. 99-10, 1999-10 I.R.B. 10 (1998 and 1999), and Rev. Rul. 2000-17, 2000-1 C.B. 842 (1999 and 2000).
Part III. Prevailing State Assumed Interest Rates -- Products Issued in Years
After 1982. [FNa1]
Schedule A
STATUTORY VALUATION INTEREST RATES BASED ON THE 1980 AMENDMENTS TO THE NAIC
STANDARD VALUATION LAW
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A. Life insurance valuation:
Guarantee Duration (years) Calendar Year of Issue 2001
--------------------------------------- --------------------------------------
10 or fewer 5.00 [FNaa1]
More than 10 but not more than 20 4.75 [FNaa1]
More than 20 4.50 [FNaa1]
Source: Rates calculated from the monthly averages, ending June 30, 2000, of
Moody's Corporate Bond Yield Average -- Monthly Average Corporates.
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; the terms are
defined in Rev. Rul. 92-19.
FNaa1. As the applicable federal interest rate for 2001 of 6.00 percent
exceeds this prevailing state assumed interest rate, the interest rate to be
used for this product under
s 807 is 6.00 percent.
Part III, Schedule B
STATUTORY VALUATION INTEREST RATES BASED ON THE 1980 AMENDMENTS TO THE NAIC
STANDARD VALUATION LAW
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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
-------------------------------------- ---------------------------------------
2000 7.00 [FNa1]
Source: Rates calculated from the monthly averages, ending June 30, 2000, 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.
FNa1. As this prevailing state assumed interest exceeds the applicable
federal interest rate for 2000 of 6.09 percent, the valuation interest rate
of 7.00 percent is to be used for this product under
s 807.
Part III, Schedule C18 - 2000
STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW FOR
2000 CALENDAR YEAR BUSINESS GOVERNED BY THE 1980 AMENDMENTS
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C. Valuation interest rates for other annuities and guaranteed interest
contracts that are valued on an issue year basis:
Cash Future Guarantee Valuation Interest Rate For Plan
Settlement Interest Duration Type
Options? Guarantee? (years)
A B C
------------ ------------ ----------------- --------------------------------
Yes Yes 5 or fewer 7.00 6.00 5.50
[FNa1] [FNa1]
More than 5, but 6.75 6.00 5.50
not more than [FNa1] [FNa1]
10
More than 10, but 5.75 5.25 5.00
not more than [FNa1] [FNa1] [FNa1]
20
More than 20 5.00 4.50 4.50
[FNa1] [FNa1] [FNa1]
Yes No 5 or fewer 7.25 6.25 5.75
[FNa1]
More than 5, but 7.00 6.25 5.75
not more than [FNa1]
10
More than 10, but 6.00 5.50 5.25
not more than [FNa1] [FNa1] [FNa1]
20
More than 20 5.25 4.75 4.75
[FNa1] [FNa1] [FNa1]
No Yes or No 5 or fewer 7.00
More than 5, but 6.75 NOT APPLICABLE
not more than
10
More than 10, but 6.25
not more than
20
More than 20 5.25
[FNa1]
Source: Rates calculated from the monthly averages, ending June 30, 2000 of
Moody's Corporate Bond Yield Average -- Monthly Average Corporates.
FNa1. As the applicable federal interest rate for 2000 of 6.09 percent
exceeds this prevailing state assumed interest rate, the interest rate to be
used for this product under
s 807 is 6.09 percent.
Part III, Schedule D18 - 2000
STATUTORY VALUATION INTEREST RATE2S BASED ON NAIC STANDARD VALUATION LAW FOR
2000 CALENDAR YEAR BUSINESS GOVERNED BY THE 1980 AMENDMENTS
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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:
Cash Future Guarantee Valuation Interest Rate For Plan
Settlement Interest Duration Type
Options? Guarantee? (years)
A B C
------------ ------------ ---------------- ---------------------------------
Yes Yes 5 or fewer 7.75 7.25 5.75 [FNa1]
More than 5, but 7.50 7.25 5.75 [FNa1]
not more than
10
More than 10, 7.00 6.75 5.50 [FNa1]
but not more
than 20
More than 20 6.00 6.00 5.00 [FNa1]
[FNa1] [FNa1]
Yes No 5 or fewer 8.00 7.50 6.00 [FNa1]
More than 5, but 7.75 7.50 6.00 [FNa1]
not more than
10
More than 10, 7.25 7.00 5.75 [FNa1]
but not more
than 20
More than 20 6.25 6.25 5.25 [FNa1]
Source: Rates calculated from the monthly averages, ending June 30, 2000, of
Moody's Corporate Bond Yield Average -- Monthly Average Corporates.
FNa1. As the applicable federal interest rate for 2000 of 6.09 percent
exceeds this prevailing state assumed interest rate, the interest rate to be
used for this product under
s 807 is 6.09 percent.
Part IV. Applicable Federal Interest Rates.
TABLE OF APPLICABLE FEDERAL INTEREST RATES FOR PURPOSES OF
s 807
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Year Interest Rate
------------------------------------- ----------------------------------------
2000 6.09
2001 6.00
Sources: Rev. Rul. 99-48, 2000-49 I.R.B. 600 for the 2000 rate and Rev. Rul.
2000-54, 2000-49 I.R.B. 566 for the 2001 rate.
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 2000 and 2001 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).