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Revenue Procedure 2005-72 December 5, 2005

Loss Payment Patterns and Discount
Factors for the 2005 Accident Year

SECTION 1. PURPOSE

This revenue procedure prescribes the loss payment patterns and discount factors for the 2005 accident year. These factors will be used for computing discounted unpaid losses under � 846 of the Internal Revenue Code. See Rev. Proc. 2003-17, 2003-1 C.B. 427, for background concerning the loss payment patterns and application of the discount factors.

SEC. 2. SCOPE

This revenue procedure applies to any taxpayer that is required to discount its unpaid losses under � 846 for a line of business using discount factors published by the Secretary.

SEC. 3. TABLES OF DISCOUNT FACTORS

.01 The following tables present separately for each line of business the discount factors under � 846 for accident year 2005. All the discount factors presented in this section were determined using the applicable interest rate under � 846(c) for 2005, which is 4.44 percent, and by assuming all loss payments occur in the middle of the calendar year.

.02 If the groupings of individual lines of business on the annual statement change, taxpayers must discount the unpaid losses on the affected lines of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 2000 annual statement. See Rev. Proc. 2003-17, 2003-1 C.B. 427, section 2, for additional background on discounting under section 846 and the use of the Secretary�s tables.

.03 Section V of Notice 88-100, 1988-2 C.B. 439, sets forth a composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. The tables separately provide discount factors for taxpayers who elect to use the composite method of section V of Notice 88-100. See Rev. Proc. 2002-74, 2002-2 C.B. 980.

.04 Section 2.03(4) of Rev. Proc. 2003-17 requested comments as to whether a methodology should be adopted to smooth the raw payment data and thus produce a more stable pattern of discount factors. This issue will be addressed in the new determination year, which is 2007. Accordingly, taxpayers may still submit comments that should include a reference to Rev. Proc. 2005-72 on this issue to the following address:

 CC:PA:LPD:PR (Rev. Proc. 2005-72), room 5203, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Comments may be hand delivered between the hours of  8 a.m. and 4 p.m. to CC:PA:LPD (Rev. Proc. 2005-72), Courier�s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC 20224. Alternatively, e-mail comments to  [email protected]. All comments will be available for public inspection and copying.

.05 Tables.

Tables of Factors to be Used to Discount Unpaid Losses Incurred in Accident Year 2005
 
(Interest rate: 4.44 percent)
Accident and Health (Other Than Disability Income or Credit Disability Insurance)
 
Taxpayers that do not use the composite method of Notice 88-100 should use 97.8513 percent to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the 2005 and later taxable years.
Taxpayers that use the composite method of Notice 88-100 should use 97.8513 percent to discount all unpaid losses in this line of business that are outstanding at the end of the 2005 taxable year.
Auto Physical Damage
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 89.6468 89.6468 10.3532 10.1113 97.6638
2006 99.6845 10.0377 0.3155 0.3022 95.7713
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
2007 and later years 0.1578 0.1578 0.1544 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 97.8513 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2007 taxable year.
Commercial Auto/Truck Liability/Medical
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 28.8244 28.8244 71.1756 65.3965 91.8806
2006 54.9871 26.1626 45.0129 41.5630 92.3357
2007 72.8039 17.8168 27.1961 25.2004 92.6616
2008 85.0572 12.2533 14.9428 13.7969 92.3312
2009 91.6276 6.5704 8.3724 7.6948 91.9064
2010 94.9514 3.3239 5.0486 4.6396 91.8992
2011 97.0453 2.0938 2.9547 2.7058 91.5744
2012 98.1574 1.1121 1.8426 1.6894 91.6838
2013 98.7370 0.5796 1.2630 1.1721 92.7985
2014 99.1070 0.3700 0.8930 0.8460 94.7324
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
2015   0.3700 0.5230 0.5054 96.6342
2016 and later years 0.3700 0.1530 0.1497 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 96.8695 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Composite
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 40.9985 40.9985 59.0015 53.2420 90.2384
2006 65.8439 24.8454 34.1561 30.2149 88.4613
2007 77.5023 11.6583 22.4977 19.6421 87.3071
2008 84.6221 7.1198 15.3779 13.2380 86.0849
2009 90.2455 5.6234 9.7545 8.0789 82.8227
2010 92.2780 2.0325 7.7220 6.3605 82.3688
2011 94.3974 2.1195 5.6026 4.4769 79.9089
2012 95.2526 0.8552 4.7474 3.8017 80.0811
2013 96.2792 1.0266 3.7208 2.9214 78.5162
2014 96.4323 0.1531 3.5677 2.8946 81.1355
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
2015   0.1531 3.4145 2.8667 83.9550
2016   0.1531 3.2614 2.8374 87.0012
2017   0.1531 3.1083 2.8069 90.3057
2018   0.1531 2.9551 2.7751 93.9070
2019 and later years 0.1531 2.8020 2.7418 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 88.8907 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Fidelity/Surety
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 38.3328 38.3328 61.6672 57.8107 93.7463
2006 58.8485 20.5156 41.1515 39.4114 95.7713
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
2007 and later years 20.5758 20.5758 20.1336 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 97.8513 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2007 taxable year.
Financial Guaranty/Mortgage Guaranty
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 4.0723 4.0723 95.9277 90.2226 94.0527
2006 40.7639 36.6916 59.2361 56.7312 95.7713
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
2007 and later years 29.6180 29.6180 28.9816 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 97.8513 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2007 taxable year.
International (Composite)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 40.9985 40.9985 59.0015 53.2420 90.2384
2006 65.8439 24.8454 34.1561 30.2149 88.4613
2007 77.5023 11.6583 22.4977 19.6421 87.3071
2008 84.6221 7.1198 15.3779 13.2380 86.0849
2009 90.2455 5.6234 9.7545 8.0789 82.8227
2010 92.2780 2.0325 7.7220 6.3605 82.3688
2011 94.3974 2.1195 5.6026 4.4769 79.9089
2012 95.2526 0.8552 4.7474 3.8017 80.0811
2013 96.2792 1.0266 3.7208 2.9214 78.5162
2014 96.4323 0.1531 3.5677 2.8946 81.1355
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015   0.1531 3.4145 2.8667 83.9550
2016   0.1531 3.2614 2.8374 87.0012
2017   0.1531 3.1083 2.8069 90.3057
2018   0.1531 2.9551 2.7751 93.9070
2019 and later 0.1531 2.8020 2.7418 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 88.8907 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Medical Malpractice � Claims-Made
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 7.3447 7.3447 92.6553 82.5239 89.0655
2006 29.0191 21.6744 70.9809 64.0376 90.2180
2007 53.3108 24.2917 46.6892 42.0557 90.0759
2008 69.1517 15.8409 30.8483 27.7343 89.9053
2009 82.0981 12.9464 17.9019 15.7350 87.8955
2010 86.3995 4.3014 13.6005 12.0377 88.5095
2011 89.7111 3.3116 10.2889 9.1879 89.2991
2012 92.4688 2.7577 7.5312 6.7776 89.9934
2013 94.5163 2.0475 5.4837 4.9860 90.9248
2014 95.7635 1.2471 4.2365 3.9329 92.8323
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015   1.2471 2.9894 2.8330 94.7672
2016   1.2471 1.7422 1.6842 96.6692
2017 and later years 1.2471 0.4951 0.4845 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 95.5661 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Medical Malpractice � Occurrence
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
           
2005 0.8316 0.8316 99.1684 83.1082 83.8051
2006 7.4573 6.6257 92.5427 80.0270 86.4758
2007 23.5575 16.1002 76.4425 67.1265 87.8130
2008 41.0062 17.4487 58.9938 52.2751 88.6111
2009 55.5832 14.5770 44.4168 39.6990 89.3782
2010 68.9413 13.3581 31.0587 27.8102 89.5407
2011 78.2095 9.2682 21.7905 19.5732 89.8245
2012 82.8727 4.6632 17.1273 15.6766 91.5303
2013 86.3178 3.4451 13.6822 12.8519 93.9319
2014 91.0834 4.7656 8.9166 8.5523 95.9147
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015 and later years 4.7656 4.1510 4.0618 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 97.8513 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Miscellaneous Casualty
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 79.7790 79.7790 20.2210 19.4754 96.3125
2006 94.9417 15.1627 5.0583 4.8444 95.7713
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2007 and later years 2.5292 2.5292 2.4748 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 97.8513 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2007 taxable year.
Multiple Peril Lines (Homeowners/Farmowners, Commercial Multiple Peril, and Special Liability (Ocean Marine, Aircraft (All Perils), Boiler and Machinery))
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 59.7445 59.7445 40.2555 37.1445 92.2719
2006 81.0347 21.2902 18.9653 17.0360 89.8274
2007 87.3325 6.2978 12.6675 11.3563 89.6494
2008 91.0659 3.7334 8.9341 8.0452 90.0503
2009 95.1781 4.1122 4.8219 4.1999 87.1002
2010 95.7605 0.5824 4.2395 3.7911 89.4249
2011 97.0539 1.2933 2.9461 2.6377 89.5320
2012 97.6441 0.5903 2.3559 2.1516 91.3303
2013 98.7037 1.0596 1.2963 1.1643 89.8184
2014 98.6217 -0.0821 1.3783 1.2999 94.3059
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015   0.5226 0.8558 0.8235 96.2318
2016 and later years 0.5226 0.3332 0.3260 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 96.6358 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Other (Including Credit)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 69.1729 69.1729 30.8271 29.6244 96.0986
2006 91.2168 22.0439 8.7832 8.4118 95.7713
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2007 and later years 4.3916 4.3916 4.2973 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 97.8513 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2007 taxable year.
Other Liability � Claims-Made
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 14.9618 14.9618 85.0382 74.3656 87.4496
2006 36.2113 21.2494 63.7887 55.9513 87.7135
2007 54.2876 18.0763 45.7124 39.9623 87.4211
2008 64.2163 9.9288 35.7837 31.5899 88.2801
2009 73.2732 9.0569 26.7268 23.7367 88.8123
2010 80.5748 7.3016 19.4252 17.3286 89.2072
2011 87.6200 7.0452 12.3800 10.8982 88.0304
2012 89.9155 2.2955 10.0845 9.0361 89.6042
2013 93.3946 3.4791 6.6054 5.8818 89.0459
2014 94.6170 1.2223 5.3830 4.8938 90.9113
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015   1.2223 4.1607 3.8619 92.8183
2016   1.2223 2.9383 2.7841 94.7528
2017   1.2223 1.7160 1.6586 96.6546
2018 and later years 1.2223 0.4936 0.4830 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 94.1292 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Other Liability � Occurrence
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 19.1133 19.1133 80.8867 68.6311 84.8484
2006 36.4434 17.3301 63.5566 53.9677 84.9128
2007 52.1648 15.7215 47.8352 40.2972 84.2417
2008 63.2383 11.0734 36.7617 30.7698 83.7006
2009 72.0780 8.8397 27.9220 23.1021 82.7380
2010 75.9021 3.8241 24.0979 20.2198 83.9068
2011 82.9305 7.0284 17.0695 13.9348 81.6357
2012 85.1441 2.2136 14.8559 12.2913 82.7368
2013 89.3006 4.1565 10.6994 8.5893 80.2780
2014 89.9898 0.6892 10.0102 8.2663 82.5786
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015   0.6892 9.3210 7.9290 85.0657
2016   0.6892 8.6318 7.5767 87.7764
2017   0.6892 7.9426 7.2087 90.7606
2018   0.6892 7.2533 6.8244 94.0867
2019 and later years 0.6892 6.5641 6.4231 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 88.8152 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Private Passenger Auto Liability/Medical
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 43.1926 43.1926 56.8074 53.1786 93.6121
2006 72.2008 29.0082 27.7992 25.8946 93.1486
2007 84.5632 12.3625 15.4368 14.4104 93.3510
2008 91.9316 7.3684 8.0684 7.5200 93.2034
2009 95.8729 3.9413 4.1271 3.8261 92.7060
2010 97.7804 1.9075 2.2196 2.0465 92.2040
2011 98.7957 1.0153 1.2043 1.0999 91.3257
2012 99.2491 0.4535 0.7509 0.6853 91.2646
2013 99.5195 0.2703 0.4805 0.4394 91.4469
2014 99.6353 0.1159 0.3647 0.3405 93.3821
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015   0.1159 0.2488 0.2373 95.3548
2016   0.1159 0.1330 0.1294 97.3165
2017 and later years 0.1159 0.0171 0.0167 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 96.0257 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Products Liability � Claims-Made
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 6.5804 6.5804 93.4196 79.0050 84.5700
2006 26.7183 20.1379 73.2817 61.9327 84.5131
2007 43.1834 16.4652 56.8166 47.8558 84.2286
2008 43.9209 0.7375 56.0791 49.2269 87.7812
2009 54.3806 10.4597 45.6194 40.7232 89.2673
2010 78.3630 23.9824 21.6370 18.0223 83.2938
2011 82.8643 4.5013 17.1357 14.2223 82.9982
2012 68.2184 -14.6459 31.7816 29.8213 93.8320
2013 79.1582 10.9399 20.8418 19.9653 95.7947
2014 89.6963 10.5381 10.3037 10.0823 97.8513
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015 and later years       97.8513
Taxpayers that use the composite method of Notice 88-100 should use 97.1286 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Products Liability � Occurrence
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 9.4198 9.4198 90.5802 75.2456 83.0707
2006 20.5845 11.1647 79.4155 67.1766 84.5888
2007 36.7807 16.1962 63.2193 53.6074 84.7959
2008 55.5974 18.8167 44.4026 36.7576 82.7827
2009 66.6238 11.0263 33.3762 27.1212 81.2591
2010 77.2636 10.6399 22.7364 17.4519 76.7576
2011 79.1888 1.9251 20.8112 16.2593 78.1278
2012 83.6816 4.4928 16.3184 12.3898 75.9253
2013 85.5507 1.8691 14.4493 11.0297 76.3341
2014 85.7291 0.1784 14.2709 11.3371 79.4424
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015   0.1784 14.0925 11.6582 82.7263
2016   0.1784 13.9141 11.9935 86.1968
2017   0.1784 13.7357 12.3437 89.8658
2018   0.1784 13.5573 12.7094 93.7461
2019 and later years 0.1784 13.3789 13.0914 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 86.9679 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Reinsurance A (Nonproportional Assumed Property)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 25.0571 25.0571 74.9429 68.9700 92.0300
2006 52.0402 26.9831 47.9598 44.4567 92.6956
2007 82.4709 30.4307 17.5291 15.3316 87.4636
2008 85.6387 3.1678 14.3613 12.7749 88.9539
2009 92.7228 7.0840 7.2772 6.1025 83.8577
2010 91.8604 -0.8624 8.1396 7.2548 89.1294
2011 96.5016 4.6412 3.4984 2.8338 81.0020
2012 96.1872 -0.3143 3.8128 3.2809 86.0493
2013 97.6206 1.4333 2.3794 1.9617 82.4450
2014 97.8419 0.2214 2.1581 1.8226 84.4552
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015   0.2214 1.9367 1.6773 86.6060
2016   0.2214 1.7154 1.5256 88.9357
2017   0.2214 1.4940 1.3671 91.5049
2018   0.2214 1.2727 1.2016 94.4149
2019 and later years 0.2214 1.0513 1.0287 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 89.0524 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Reinsurance B (Nonproportional Assumed Liability)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 8.9223 8.9223 91.0777 75.0085 82.3566
2006 27.3618 18.4395 72.6382 59.4945 81.9052
2007 44.5758 17.2140 55.4242 44.5440 80.3692
2008 53.8781 9.3023 46.1219 37.0152 80.2551
2009 60.8896 7.0115 39.1104 31.4932 80.5238
2010 69.7327 8.8430 30.2673 23.8542 78.8118
2011 76.6292 6.8965 23.3708 17.8654 76.4433
2012 79.4030 2.7738 20.5970 15.8239 76.8263
2013 83.8936 4.4906 16.1064 11.9373 74.1151
2014 80.1707 -3.7229 19.8293 16.2719 82.0601
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015   1.1805 18.6487 15.7879 84.6595
2016   1.1805 17.4682 15.2825 87.4873
2017   1.1805 16.2877 14.7546 90.5872
2018   1.1805 15.1072 14.2032 94.0165
2019 and later years 1.1805 13.9266 13.6274 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 87.9189 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Reinsurance C (Nonproportional Assumed Financial Lines)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 17.1195 17.1195 82.8805 73.7197 88.9470
2006 46.6590 29.5395 53.3410 46.8047 87.7462
2007 67.7135 21.0545 32.2865 27.3660 84.7599
2008 78.1379 10.4244 21.8621 17.9277 82.0037
2009 89.7346 11.5967 10.2654 6.8723 66.9470
2010 92.1268 2.3921 7.8732 4.7328 60.1128
2011 89.7323 -2.3945 10.2677 7.3900 71.9733
2012 90.0460 0.3137 9.9540 7.3975 74.3171
2013 94.8867 4.8407 5.1133 2.7790 54.3481
2014 86.7041 -8.1827 13.2959 11.2647 84.7228
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015   1.4277 11.8683 10.3058 86.8351
2016   1.4277 10.4406 9.3044 89.1173
2017   1.4277 9.0129 8.2584 91.6292
2018   1.4277 7.5852 7.1661 94.4744
2019 and later years 1.4277 6.1575 6.0252 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 89.1998 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.
Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Glass, Burglary and Theft)
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 62.9320 62.9320 37.0680 35.5638 95.9420
2006 88.4950 25.5631 11.5050 11.0185 95.7713
Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2007 and later years 5.7525 5.7525 5.6289 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 97.8513 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2007 taxable year.
Workers� Compensation
Tax Year Estimated Cumulative Losses Paid (%) Estimated Losses Paid Each Year (%) Unpaid Losses at Year End (%) Discounted Unpaid Losses at Year End (%) Discount Factors (%)
2005 28.2489 28.2489 71.7511 63.4995 88.4998
2006 57.8739 29.6249 42.1261 36.0435 85.5608
2007 71.2999 13.4260 28.7001 23.9229 83.3549
2008 77.7584 6.4585 22.2416 18.3848 82.6595
2009 81.9301 4.1717 18.0699 14.9378 82.6666
2010 83.7739 1.8437 16.2261 13.7168 84.5350
2011 86.5350 2.7611 13.4650 11.5040 85.4365
2012 88.4367 1.9017 11.5633 10.0714 87.0975
2013 89.5926 1.1559 10.4074 9.3372 89.7172
2014 91.6441 2.0515 8.3559 7.6553 91.6150
Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.
           
2015   2.0515 6.3045 5.8987 93.5633
2016   2.0515 4.2530 4.0641 95.5573
2017   2.0515 2.2016 2.1480 97.5677
2018 and later years 2.0515 0.1501 0.1469 97.8513
Taxpayers that use the composite method of Notice 88-100 should use 95.7822 percent to discount unpaid losses incurred in this line of business in 2005 and prior years and that are outstanding at the end of the 2015 taxable year.

DRAFTING INFORMATION

The principal author of this revenue procedure is Katherine A. Hossofsky of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure, contact Ms. Hossofsky at (202) 622-8435 (not a toll-free call).


Internal Revenue Bulletin 2005-49

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