Internal Revenue Service
Revenue Ruling
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smRev. Rul. 2002-12, 2002-11 I.R.B. 624
Internal Revenue Service (I.R.S.)
Revenue Ruling
INSURANCE COMPANIES; INTEREST RATE TABLES
Released: February 28, 2002
Published: March 18, 2002
Section 807.--Rules for Certain Reserves
Insurance companies; interest rate tables. Prevailing state assumed interest rates are provided for the determination of reserves under section 807 of the Code for contracts issued in 2001 and 2002. Rev. Rul. 92-19 supplemented in part.
For purposes of § 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 2000, 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 2001 and 2002, and a supplement to the table in Part IV of Rev. Rul. 92-19, providing the applicable federal interest rate under § 807(d) for 2000 and 2001. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.
This is the tenth 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. 134) (1996 and 1997); Rev. Rul. 98-2 (1998-1 C.B. 259) (1997 and 1998); Rev. Rul. 99-10 (1999-1 C.B. 671) (1998 and 1999); Rev. Rul. 2000-17 (2000-1 C.B. 842) (1999 and 2000); and Rev. Rul. 2001-11 (2001-10 I.R.B. 780).
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
A. Life insurance valuation:
Guarantee Duration (years) Calendar Year of Issue 2002
---------------------------------------- -------------------------------------
10 or fewer 5.00 [FNaa1]
More than 10 but not more than 20 4.75 [FNaa1]
More than 20 4.50 [FNaa1]
FNaa1. As the applicable federal interest rate for 2002 of 5.71 percent
exceeds this prevailing state assumed interest rate, the interest rate to be
used for this product under § 807 is 5.71 percent.
Source: Rates calculated from the monthly averages, ending June 30, 2001, 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
------------------------------------- ----------------------------------------
2001 6.75 [FNa1]
FNa1. As this prevailing state assumed interest exceeds the applicable
federal interest rate for 2001 of 6.00 percent, the valuation interest rate
of 6.75 percent is to be used for this product under § 807.
Source: Rates calculated from the monthly averages, ending June 30, 2001, 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 C19 -- 2001
STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW FOR
2001 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 Future Guarantee Duration A B C
Settlement Interest (years)
Options? Guarantee?
------------ ------------ -------------------- -----------------------------
Yes Yes 5 or fewer 6.75 5.75 5.25
[FNa1] [FNa1]
More than 5, but not 6.50 5.75 5.25
more than 10 [FNa1] [FNa1]
More than 10, but 6.00 5.25 5.00
not more than 20 [FNa1] [FNa1]
More than 20 5.00 4.50 4.50
[FNa1] [FNa1] [FNa1]
Yes No 5 or fewer 7.00 6.00 5.50
[FNa1]
More than 5, but not 6.75 6.00 5.50
more than 10 [FNa1]
More than 10, but 6.25 5.50 5.25
not more than 20 [FNa1] [FNa1]
More than 20 5.25 4.75 4.75
[FNa1] [FNa1] [FNa1]
No Yes or No 5 or fewer 6.75
More than 5, but not 6.50 NOT APPLICABLE
more than 10
More than 10, but 6.00
not more than 20
More than 20 5.00
[FNa1]
FNa1. 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 § 807 is 6.00 percent.
Source: Rates calculated from the monthly averages, ending June 30, 2001, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates.
Part III, Schedule D19 -- 2001
STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW FOR
2001 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 Future Guarantee Duration A B C
Settlement Interest (years)
Options? Guarantee?
------------ ------------ ------------------- ------------------------------
Yes Yes 5 or fewer 7.50 7.00 5.50 [FNa1]
More than 5, but 7.25 7.00 5.50 [FNa1]
not more than 10
More than 10, but 6.75 6.50 5.25 [FNa1]
not more than 20
More than 20 5.75 5.75 [- 5.00 [FNa1]
[FNa1] FNa1]
Yes No 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, but 7.00 6.75 5.50 [FNa1]
not more than 20
More than 20 6.00 6.00 5.00 [FNa1]
FNa1. As the applicable federal interest rate for 2001 of 6.00 percent is
equal to or exceeds this prevailing state assumed interest rate, the interest
rate to be used for this product under § 807 is 6.00 percent.
Source: Rates calculated from the monthly averages, ending June 30, 2001, 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
---- -------------
2001 6.00
2002 5.71
Sources: Rev. Rul. 2000-54 (2000-2 C.B. 566) for the 2001 rate and Rev. Rul. 2001-58 (2001-50 I.R.B. 570) for the 2002 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 § 807 for certain insurance prod ucts issued in 2001 and 2002 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 Associate Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling, contact her at (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; the terms are defined in Rev. Rul. 92-19.
Rev. Rul. 2002-12, 2002-11 I.R.B. 624