rp-19-31.pdf

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing.

This collection currently includes the publisher’s available advance-release directory. Historical bulletin renditions are discovered separately; an advance-release record alone does not certify the collection archive complete.

26 CFR 601.201: Rulings and determination letters.
(Also: Part I, Sections 832, 846; 1.832-4, 1.846-1.)

Rev. Proc. 2019-31

SECTION 1. PURPOSE
This revenue procedure prescribes revised unpaid loss discount factors for the
2018 accident year and earlier accident years for use by insurance companies in
computing discounted unpaid losses under § 846 of the Internal Revenue Code (Code).
The revised unpaid loss discount factors also serve as revised salvage discount factors
for the 2018 accident year and earlier accident years for use in computing estimated
salvage recoverable under § 832 of the Code. Additionally, this revenue procedure
prescribes discount factors for the 2019 accident year for use by insurance companies
in computing discounted unpaid losses under § 846 and estimated salvage recoverable
under § 832. The discount factors prescribed herein were determined under § 846, as
amended by section 13523 of Pub. L. No. 115-97 (131 Stat. 2054, 2152), commonly
referred to as the Tax Cuts and Jobs Act (TCJA), and final regulations under § 846
(T.D. 9863, 84 FR 27947) (Final Regulations) published on June 17, 2019.

2

SECTION 2. BACKGROUND
.01 Discounting rules and discount factors.
(1) The discounting rules of § 846 are used to determine discounted unpaid
losses under § 832(b)(5), including unpaid loss adjustment expenses included in unpaid
losses under § 832(b)(6), and estimated salvage recoverable of property and casualty
insurance companies for Federal income tax purposes under § 832(b)(5), as well as
discounted unpaid losses of life insurance companies for Federal income tax purposes
under §§ 805(a)(1) and 807(c)(2) of the Code. References to unpaid losses hereinafter
in this revenue procedure refer to unpaid losses and expenses unpaid (as defined in
§ 832(b)(5) and (6)) or unpaid losses (as defined in §§ 805(a)(1) and 807(c)(2)), as
applicable.
(2) Section 846 provides that discounted unpaid losses must be separately
determined for each accident year for each line of business by applying the annual rate
determined under § 846(c) and the appropriate loss payment pattern to the amount of
unpaid losses as measured at the end of the taxable year. Section 846(d) directs the
Secretary to use the most recent aggregate loss payment data of property and casualty
insurance companies to determine a loss payment pattern for each line of business
every five years. This payment pattern is used to discount unpaid losses for the
accident year ending with a determination year and for each of the four succeeding
accident years. For every accident year, the Secretary publishes guidance in the
Internal Revenue Bulletin that provides discount factors for each line of business based
on the annual rate and loss payment patterns determined under § 846.

3

(3) Section 13523 of the TCJA amended § 846 for taxable years beginning after
December 31, 2017. Section 846, as amended by the TCJA, is referred to in this
revenue procedure as Amended § 846. Section 13523(a) and (b) amended the
definition of annual rate under § 846(c) and the computational rules for loss payment
patterns under § 846(d), respectively. Section 13523(c) repealed the election that was
previously set forth in § 846(e) to use the insurance company’s own historical loss
payment pattern instead of the pattern published by the Secretary.
(4) Section 13523(e) of the TCJA provides a transition rule for the application of
the amendments made by section 13523. For the first taxable year beginning after
December 31, 2017, the unpaid losses at the end of the preceding taxable year are
determined as if the amendments made by section 13523 had applied to the unpaid
losses in the preceding taxable year and by using the annual rate and loss payment
patterns applicable to accident years ended with calendar year 2018. The resulting
adjustment, if any, is included in the insurance company’s gross income ratably over
eight taxable years, beginning with the insurance company’s first taxable year beginning
after December 31, 2017, and continuing through the seven succeeding taxable years.
Section 13523(e) also provides that, for subsequent taxable years, the amendments
made by section 13523 are applied with respect to unpaid losses for accident years
ended with or before calendar year 2018 by using the annual rate and loss payment
patterns applicable to accident years ended with calendar year 2018.
(5) On November 7, 2018, the Department of the Treasury (Treasury
Department) and the Internal Revenue Service (IRS) published proposed regulations

4

under Amended § 846 (REG-103163-18, 83 FR 55646) (Proposed Regulations).
(6) On January 7, 2019, the Treasury Department and the IRS published Rev.
Proc. 2019-06, which prescribes unpaid loss discount factors for the 2018 accident year
and earlier accident years for use in computing discounted unpaid losses under
Amended § 846. The unpaid loss discount factors also serve as salvage discount
factors for the 2018 accident year and earlier accident years for use in computing
estimated salvage recoverable under § 832. The unpaid loss discount factors
prescribed in Rev. Proc. 2019-06 (Proposed Discount Factors) were determined under
Amended § 846 and the Proposed Regulations. In Rev. Proc. 2019-06, the Treasury
Department and the IRS announced the intent to publish revised unpaid loss discount
factors, if necessary, following the publication of the Proposed Regulations as final
regulations. In Rev. Proc. 2019-06, the Treasury Department and the IRS also
announced the intent to issue guidance on the use of revised discount factors, including
the adjustment to be taken into account by certain taxpayers that used the Proposed
Discount Factors in a taxable year ended before the date of publication of final
regulations.
(7) Under the Proposed Regulations, the annual rate determined under Amended
§ 846(c) is based on a specific range of maturities (from one-half year to seventeen and
one-half years) from the corporate bond yield curve prescribed in Amended § 846(c)(2).
Under the Final Regulations, the annual rate determined under Amended § 846(c) is
based on a specific range of maturities (from four and one-half years to ten years) from
the prescribed corporate bond yield curve. The loss payment patterns for the 2017

5

determination year are the same under the Proposed Regulations and Final
Regulations. The annual rate determined for the 2018 calendar year under the
Proposed Regulations is 3.12 percent, compounded semiannually, while the annual rate
determined for the 2018 calendar year under the Final Regulations is 2.94 percent,
compounded semiannually. Because the annual rate determined under the Final
Regulations is different from the annual rate determined under the Proposed
Regulations, this revenue procedure prescribes revised discount factors determined
under Amended § 846 and the Final Regulations (Revised Discount Factors) and
provides guidance on the use of the Revised Discount Factors. Section 6.01(2) of Rev.
Proc. 2019-30, 2019-33 I.R.B. ___, published in the same edition of the Internal
Revenue Bulletin as this revenue procedure, describes the adjustments to be taken into
account by certain taxpayers that used the Proposed Discount Factors in any taxable
year ended before June 17, 2019.
(8) This revenue procedure also prescribes discount factors for the 2019 accident
year determined under Amended § 846 and the Final Regulations for use by insurance
companies in computing discounted unpaid losses under Amended § 846 and
estimated salvage recoverable under § 832. These discount factors must be used in
taxable years ending on or after June 17, 2019.
.02 Changes in methods of accounting.
In addition to describing the adjustments to be taken into account by certain
taxpayers that used the Proposed Discount Factors, Rev. Proc. 2019-30 provides
simplified procedures under § 446 of the Code and § 1.446-1(e) of the Income Tax

6

Regulations for an insurance company to obtain automatic consent of the
Commissioner of Internal Revenue to change its methods of accounting for discounting
unpaid losses and estimated salvage recoverable, as applicable, to comply with
Amended § 846.
SECTION 3. SCOPE
This revenue procedure applies to any insurance company that is required to
discount unpaid losses under Amended § 846 for a line of business using the discount
factors published by the Secretary, and also applies to any insurance company that is
required to discount estimated salvage recoverable under § 832. This revenue
procedure applies to taxable years beginning after December 31, 2017.
SECTION 4. REVISED DISCOUNT FACTORS
.01 The tables in this section 4 present separately for each line of business the
Revised Discount Factors. All of the Revised Discount Factors presented in the tables
in this section 4 are determined by using the applicable interest rate for 2018 under
Amended § 846(c) and the Final Regulations, which is 2.94 percent, compounded
semiannually, and the payment patterns for the 2017 determination year determined by
the Secretary under Amended § 846(d) and the Final Regulations. All of the Revised
Discount Factors presented in these tables are determined by assuming all loss
payments occur in the middle of the calendar year.
.02 An insurance company may use either the Revised Discount Factors or the
Proposed Discount Factors for its first taxable year beginning after December 31, 2017,
if the company’s first taxable year beginning after December 31, 2017, ended before

7

June 17, 2019. However, the insurance company must consistently use the Revised
Discount Factors or consistently use the Proposed Discount Factors. An insurance
company that uses the Proposed Discount Factors in its first taxable year beginning
after December 31, 2017, must take into account the adjustments described in section
6.01(2) of Rev. Proc. 2019-30 in the manner prescribed in section 6.02(2) of Rev. Proc.
2019-30 if the company does not amend the return filed for that year to use the Revised
Discount Factors.
.03 Tables 1 and 2 present separately for each line of business the Revised
Discount Factors for losses incurred in the 2018 accident year and earlier accident
years for use in the first taxable year beginning after December 31, 2017, for purposes
of determining discounted unpaid losses under Amended § 846 and estimated salvage
recoverable under § 832.
.04 Tables 3 and 4 present separately for each line of business the Revised
Discount Factors for losses incurred in the 2017 accident year and earlier accident
years for use in the first taxable year beginning after December 31, 2017, for purposes
of determining the unpaid losses at the end of the preceding taxable year, as well as the
adjustments described in section 2.01(4) of this revenue procedure and section 6.01(1)
and (2) of Rev. Proc. 2019-30, which must be taken into account in the manner
prescribed in section 6.02(1) and (2) of Rev. Proc. 2019-30.
.05 Tables 5 and 6 present separately for each line of business the Revised
Discount Factors for losses incurred in the 2018 accident year for use in taxable years
beginning after December 31, 2017, for purposes of determining discounted unpaid

8

losses under Amended § 846 and estimated salvage recoverable under § 832.
.06 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. Tables 2, 4, 5, and 6 separately provide discount
factors for insurance companies that have elected to use the composite method of
Notice 88-100. See Rev. Proc. 2002-74, 2002-2 C.B. 980.

Table 1 (part A)

Revised Discount Factors Under Amended Section 846 (percent)

For the First Taxable Year Beginning After December 31, 2017

Short-Tail Lines of Business

Accident
Year
Auto
Physical
Damage Fidelity/Surety
Financial
Guaranty/
Mortgage
Guaranty International Other*

2018 98.3892 95.9894 95.7530 96.3010 97.1014

2017 97.1339 97.1339 97.1339 97.1339 97.1339

Years before 2017 98.5513 98.5513 98.5513 98.5513 98.5513

* For Accident and Health lines of business (other than disability income or credit disability
insurance), the discount factor for taxable year 2018 is 98.5513 percent.

Table 1 (part B)
Revised Discount Factors Under Amended Section 846 (percent)
For the First Taxable Year Beginning After December 31, 2017
Short-Tail Lines of Business
Accident
Year
Reinsurance -
Nonproportional
Assumed
Financial Lines
Reinsurance -
Nonproportional
Assumed
Liability
Reinsurance -
Nonproportional
Assumed
Property
Special
Property
(Fire,
Allied Lines,
Inland
Marine,
Earthquake,
Burglary &
Theft) Warranty
Short-Tail
Composite

9

2018 95.6050 94.8379 96.2833 97.5135 98.1947 96.9951
2017 97.1339 97.1339 97.1339 97.1339 97.1339 97.1339
Years before
2017 98.5513 98.5513 98.5513 98.5513 98.5513 98.5513

Table 2 (part A)
Revised Discount Factors Under Amended Section 846 (percent)
For the First Taxable Year Beginning After December 31, 2017
Long-Tail Lines of Business
Accident
Year
Commercial
Auto/Truck
Liability/Medical
Medical
Professional
Liability -
Claims-Made
Medical
Professional
Liability -
Occurrence
Multiple
Peril
Lines
Other
Liability -
Claims-
Made
Other
Liability -
Occurrence

2018 94.0556 91.6544 86.8932 95.3058 90.8915 89.3683
2017 94.7607 92.6388 88.9529 93.6724 91.6944 90.2053
2016 95.2819 92.8576 90.4811 93.9651 92.1992 90.7535
2015 95.3204 93.1388 91.8194 93.2041 92.2415 90.9196
2014 95.2024 93.2805 92.7664 91.4064 92.0976 90.6836
2013 95.0498 93.3035 93.5069 91.6039 92.6040 90.7542
2012 95.3260 94.2423 94.3189 91.3154 93.0770 90.7788
2011 94.9804 95.1291 94.9993 91.0177 93.8378 91.9830
2010 96.4102 96.0160 96.1220 93.5200 94.9264 92.6228
2009 98.3585 97.7503 97.7902 94.8530 96.6876 94.4974

Taxpayer Not Using the Composite Method
2008 98.5513 98.5513 98.5513 96.1895 98.0033 95.8511
2007 98.5513 98.5513 98.5513 97.5045 98.5513 97.2176
Years before
2007 98.5513 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Using the Composite Method
Years before
2009 98.5513 98.5513 98.5513 96.9185 98.0920 96.7300

Table 2 (part B)
Revised Discount Factors Under Amended Section 846 (percent)

10

For the First Taxable Year Beginning After December 31, 2017
Long-Tail Lines of Business
Accident
Year
Private
Passenger
Auto
Liability/
Medical
Products
Liability -
Claims-
Made
Products
Liability -
Occurrence
Workers'
Compensation
Long-Tail
Composite

2018 95.6745 85.8982 87.8191 88.0401 92.7568
2017 95.2920 86.3600 89.1417 86.5393 91.7292
2016 95.2520 88.1407 89.8860 85.4517 91.4469
2015 94.8920 83.8076 91.1924 83.9662 90.2933
2014 94.2325 85.0889 89.8810 83.4129 88.7546
2013 94.2824 86.4184 89.9309 82.8905 88.6421
2012 94.5205 87.8040 90.8527 83.2567 88.6258
2011 95.0550 89.0388 91.8072 84.1036 89.1661
2010 95.6473 90.2969 92.1992 84.7150 90.3858
2009 97.7282 91.5785 94.4133 86.5946 92.1457

Taxpayer Not Using the Composite Method
2008 98.5513 92.8838 95.7739 87.8065 93.4541
2007 98.5513 94.2124 97.1571 89.0414 94.7812
2006 98.5513 95.5629 98.5513 90.2995 96.1195
2005 98.5513 96.9299 98.5513 91.5813 97.4421
2004 98.5513 98.2868 98.5513 92.8867 98.5513
2003 98.5513 98.5513 98.5513 94.2154 98.5513
2002 98.5513 98.5513 98.5513 95.5661 98.5513
2001 98.5513 98.5513 98.5513 96.9334 98.5513
2000 98.5513 98.5513 98.5513 98.2913 98.5513
Years before
2000 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Using the Composite Method
Years before
2009 98.5513 94.7288 96.6903 91.2579 95.0968

Table 3 (part A)

Revised Discount Factors Under Amended Section 846 (percent)

For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017

Short-Tail Lines of Business

11

Accident
Year
Auto Physical
Damage Fidelity/Surety
Financial
Guaranty/
Mortgage
Guaranty International Other*

2017 98.3892 95.9894 95.7530 96.3010

97.1014

2016 97.1339 97.1339 97.1339 97.1339

97.1339

Years before
2016 98.5513 98.5513 98.5513 98.5513

98.5513

* For Accident and Health lines of business (other than disability income or credit disability
insurance), the discount factor for taxable year 2017 is 98.5513 percent.

Table 3 (part B)
Revised Discount Factors Under Amended Section 846 (percent)
For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017
Short-Tail Lines of Business
Accident
Year
Reinsurance -
Nonproportional
Assumed
Financial Lines
Reinsurance -
Nonproportional
Assumed
Liability
Reinsurance -
Nonproportional
Assumed
Property
Special
Property
(Fire,
Allied Lines,
Inland
Marine,
Earthquake,
Burglary &
Theft) Warranty
Short-Tail
Composite

2017 95.6050 94.8379 96.2833 97.5135 98.1947 96.9951
2016 97.1339 97.1339 97.1339 97.1339 97.1339 97.1339
Years before
2016 98.5513 98.5513 98.5513 98.5513 98.5513 98.5513

Table 4 (part A)
Revised Discount Factors Under Amended Section 846 (percent)
For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017
Long-Tail Lines of Business

12

Accident
Year
Commercial
Auto/Truck
Liability/Medical
Medical
Professional
Liability -
Claims-Made
Medical
Professional
Liability -
Occurrence
Multiple
Peril
Lines
Other
Liability
-
Claims-
Made
Other
Liability -
Occurrence

2017 94.0556 91.6544 86.8932 95.3058 90.8915 89.3683
2016 94.7607 92.6388 88.9529 93.6724 91.6944 90.2053
2015 95.2819 92.8576 90.4811 93.9651 92.1992 90.7535
2014 95.3204 93.1388 91.8194 93.2041 92.2415 90.9196
2013 95.2024 93.2805 92.7664 91.4064 92.0976 90.6836
2012 95.0498 93.3035 93.5069 91.6039 92.6040 90.7542
2011 95.3260 94.2423 94.3189 91.3154 93.0770 90.7788
2010 94.9804 95.1291 94.9993 91.0177 93.8378 91.9830
2009 96.4102 96.0160 96.1220 93.5200 94.9264 92.6228
2008 98.3585 97.7503 97.7902 94.8530 96.6876 94.4974

Taxpayer Not Using the Composite Method
2007 98.5513 98.5513 98.5513 96.1895 98.0033 95.8511
2006 98.5513 98.5513 98.5513 97.5045 98.5513 97.2176
Years before
2006 98.5513 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Using the Composite Method
Years before
2008 98.5513 98.5513 98.5513 96.9185 98.0920 96.7300

Table 4 (part B)
Revised Discount Factors Under Amended Section 846 (percent)
For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017
Long-Tail Lines of Business
Accident
Year
Private
Passenger
Auto Liability/
Medical
Products
Liability -
Claims-Made
Products
Liability -
Occurrence
Workers'
Compensation
Long-Tail
Composite

2017 95.6745 85.8982 87.8191 88.0401 92.7568
2016 95.2920 86.3600 89.1417 86.5393 91.7292
2015 95.2520 88.1407 89.8860 85.4517 91.4469
2014 94.8920 83.8076 91.1924 83.9662 90.2933
2013 94.2325 85.0889 89.8810 83.4129 88.7546
2012 94.2824 86.4184 89.9309 82.8905 88.6421

13

2011 94.5205 87.8040 90.8527 83.2567 88.6258
2010 95.0550 89.0388 91.8072 84.1036 89.1661
2009 95.6473 90.2969 92.1992 84.7150 90.3858
2008 97.7282 91.5785 94.4133 86.5946 92.1457

Taxpayer Not Using the Composite Method
2007 98.5513 92.8838 95.7739 87.8065 93.4541
2006 98.5513 94.2124 97.1571 89.0414 94.7812
2005 98.5513 95.5629 98.5513 90.2995 96.1195
2004 98.5513 96.9299 98.5513 91.5813 97.4421
2003 98.5513 98.2868 98.5513 92.8867 98.5513
2002 98.5513 98.5513 98.5513 94.2154 98.5513
2001 98.5513 98.5513 98.5513 95.5661 98.5513
2000 98.5513 98.5513 98.5513 96.9334 98.5513
1999 98.5513 98.5513 98.5513 98.2913 98.5513
Years before 1999 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Using the Composite Method
Years before 2008 98.5513 94.7288 96.6903 91.2579 95.0968

Table 5 (part A)

Revised Discount Factors Under Amended Section 846 (percent)

For Losses Incurred in Accident Year 2018 in Short-Tail Lines of Business

Taxable
Year
Beginning in
Auto Physical
Damage Fidelity/Surety
Financial
Guaranty/
Mortgage
Guaranty International Other*

2018 98.3892 95.9894 95.7530 96.3010 97.1014

2019 97.1339 97.1339 97.1339 97.1339 97.1339

Taxpayer Not Using Composite Method

Years after 2019 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Using the Composite Method

2020 98.5513 98.5513 98.5513 98.5513 98.5513

Years after 2020 Use composite discount factors published for the relevant accident year.**

* For Accident and Health lines of business (other than disability income or credit disability
insurance), the discount factor for taxable year 2018 is 98.5513 percent. For later years, the
discount factor for losses incurred in 2018 is the discount factor published for Accident and
Health lines of business for losses incurred in the accident year coinciding with the taxable
year.

14

**The relevant accident year is the accident year that is two years prior to the specified taxable
year.

Table 5 (part B)
Revised Discount Factors Under Amended Section 846 (percent)
For Losses Incurred in Accident Year 2018 in Short-Tail Lines of Business
Taxable
Year
Beginning in
Reinsurance -
Nonproportional
Assumed
Financial Lines
Reinsurance -
Nonproportional
Assumed
Liability
Reinsurance -
Nonproportional
Assumed
Property
Special
Property
(Fire,
Allied Lines,
Inland
Marine,
Earthquake,
Burglary &
Theft) Warranty
Short-Tail
Composite

2018 95.6050 94.8379 96.2833 97.5135 98.1947 96.9951
2019 97.1339 97.1339 97.1339 97.1339 97.1339 97.1339

Taxpayer Not Using Composite Method
Years after
2019 98.5513 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Using the Composite Method
2020 98.5513 98.5513 98.5513 98.5513 98.5513 98.5513
Years after
2020 Use composite discount factors published for the relevant accident year.**

**The relevant accident year is the accident year that is two years prior to the specified taxable
year.

Table 6 (part A)
Revised Discount Factors Under Amended Section 846 (percent)
For Losses Incurred in Accident Year 2018 in Long-Tail Lines of Business
Taxable
Year
Commercial
Auto/Truck
Liability/Medical
Medical
Professional
Liability -
Claims-Made
Medical
Professional
Liability -
Occurrence
Multiple Peril
Lines
Other
Liability
-
Claims-
Made
Other
Liability -
Occurrence

2018 94.0556 91.6544 86.8932 95.3058 90.8915 89.3683
2019 94.7607 92.6388 88.9529 93.6724 91.6944 90.2053
2020 95.2819 92.8576 90.4811 93.9651 92.1992 90.7535

15

2021 95.3204 93.1388 91.8194 93.2041 92.2415 90.9196
2022 95.2024 93.2805 92.7664 91.4064 92.0976 90.6836
2023 95.0498 93.3035 93.5069 91.6039 92.6040 90.7542
2024 95.3260 94.2423 94.3189 91.3154 93.0770 90.7788
2025 94.9804 95.1291 94.9993 91.0177 93.8378 91.9830
2026 96.4102 96.0160 96.1220 93.5200 94.9264 92.6228
2027 98.3585 97.7503 97.7902 94.8530 96.6876 94.4974

Taxpayer Not Using Composite Method
2028 98.5513 98.5513 98.5513 96.1895 98.0033 95.8511
2029 98.5513 98.5513 98.5513 97.5045 98.5513 97.2176
Years after
2029 98.5513 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Using the Composite Method
2028 98.5513 98.5513 98.5513 96.9185 98.0920 96.7300
Years after
2028 Use composite discount factors published for the relevant accident year.*

*The relevant accident year is the accident year that is ten years prior to the specified taxable year.

Table 6 (part B)

Revised Discount Factors Under Amended Section 846 (percent)

For Losses Incurred in Accident Year 2018 in Long-Tail Lines of Business

Taxable
Year
Private
Passenger
Auto Liability/
Medical
Products
Liability
-
Claims-
Made
Products
Liability -
Occurrence
Workers'
Compensation
Long-Tail
Composite

2018 95.6745 85.8982 87.8191 88.0401 92.7568

2019 95.2920 86.3600 89.1417 86.5393 91.7292

2020 95.2520 88.1407 89.8860 85.4517 91.4469

2021 94.8920 83.8076 91.1924 83.9662 90.2933

2022 94.2325 85.0889 89.8810 83.4129 88.7546

2023 94.2824 86.4184 89.9309 82.8905 88.6421

2024 94.5205 87.8040 90.8527 83.2567 88.6258

2025 95.0550 89.0388 91.8072 84.1036 89.1661

2026 95.6473 90.2969 92.1992 84.7150 90.3858

2027 97.7282 91.5785 94.4133 86.5946 92.1457

Taxpayer Not Using Composite Method

2028 98.5513 92.8838 95.7739 87.8065 93.4541

2029 98.5513 94.2124 97.1571 89.0414 94.7812

2030 98.5513 95.5629 98.5513 90.2995 96.1195

16

2031 98.5513 96.9299 98.5513 91.5813 97.4421

2032 98.5513 98.2868 98.5513 92.8867 98.5513

2033 98.5513 98.5513 98.5513 94.2154 98.5513

2034 98.5513 98.5513 98.5513 95.5661 98.5513

2035 98.5513 98.5513 98.5513 96.9334 98.5513

2036 98.5513 98.5513 98.5513 98.2913 98.5513

Years after
2036 98.5513 98.5513 98.5513 98.5513 98.5513

Taxpayer Using the Composite Method

2028 98.5513 94.7288 96.6903 91.2579 95.0968

Years after
2028 Use composite discount factors published for the relevant accident year.*

*The relevant accident year is the accident year that is ten years prior to the specified
taxable year.

SECTION 5. DISCOUNT FACTORS FOR TAXABLE YEARS BEGINNING IN 2019
.01 The tables in this section 5 present separately for each line of business
discount factors for losses incurred in the 2019 accident year and earlier accident years
for use by insurance companies in computing discounted unpaid losses under Amended
§ 846 and estimated salvage recoverable under § 832 in taxable years beginning in
2019. Insurance companies must use these discount factors in taxable years ending on
or after June 17, 2019. The discount factors for losses incurred in accident year 2019
presented in these tables are determined by using the applicable interest rate for 2019
under Amended § 846(c) and the Final Regulations, which is 3.09 percent, compounded
semiannually. Consistent with the transition rule in section 13523(3) of the TCJA, all
other discount factors presented in these tables are determined by using the applicable
interest rate for 2018, which is 2.94 percent, compounded semiannually. All of the
discount factors presented in these tables are determined by using the payment
patterns for the 2017 determination year determined by the Secretary under Amended

17

§ 846(d) and the Final Regulations and by assuming all loss payments occur in the
middle of the calendar year.
.02 Tables 8, 9, and 10 separately provide discount factors for insurance
companies that have elected to use the composite method of Notice 88-100. See Rev.
Proc. 2002-74.

Table 7 (part A)

Discount Factors Under Amended Section 846 (percent)

For Taxable Year(s) Beginning in 2019

Short-Tail Lines of Business

Accident
Year
Auto
Physical
Damage Fidelity/Surety
Financial
Guaranty/
Mortgage
Guaranty International Other*

2019 98.3085 95.7921 95.5443 96.1189 96.9581

2018 97.1339 97.1339 97.1339 97.1339 97.1339

Years before 2018 98.5513 98.5513 98.5513 98.5513 98.5513

* For Accident and Health lines of business (other than disability income or credit
disability insurance), the discount factor for taxable year 2019 is 98.4785 percent.

Table 7 (part B)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For Taxable Year(s) Beginning in 2019
Short-Tail Lines of Business
Accident
Year
Reinsurance -
Nonproportional
Assumed
Financial Lines
Reinsurance -
Nonproportiona
l
Assumed
Liability
Reinsurance -
Nonproportiona
l
Assumed
Property
Special
Property
(Fire,
Allied
Lines,
Inland
Marine,
Earthquake
,
Burglary &
Theft)
Warrant
y
Short-Tail
Composit
e

18

2019 95.3891 94.5848 96.1004 97.3903

98.1046 96.8468
2018 97.1339 97.1339 97.1339 97.1339

97.1339 97.1339
Years before
2018 98.5513 98.5513 98.5513 98.5513

98.5513 98.5513

Table 8 (part A)
Discount Factors Under Amended Section 846 (percent)
For Taxable Year(s) Beginning in 2019
Long-Tail Lines of Business
Accident
Year
Commercial
Auto/Truck
Liability/Medical
Medical
Professiona
l
Liability -
Claims-
Made
Medical
Professiona
l
Liability -
Occurrence
Multiple
Peril
Lines
Other
Liability
-
Claims-
Made
Other
Liability -
Occurrence

2019 93.7704 91.2627 86.2902 95.0826 90.4676

88.8810
2018 94.7607 92.6388 88.9529 93.6724 91.6944

90.2053
2017 95.2819 92.8576 90.4811 93.9651 92.1992

90.7535
2016 95.3204 93.1388 91.8194 93.2041 92.2415

90.9196
2015 95.2024 93.2805 92.7664 91.4064 92.0976

90.6836
2014 95.0498 93.3035 93.5069 91.6039 92.6040

90.7542
2013 95.3260 94.2423 94.3189 91.3154 93.0770

90.7788
2012 94.9804 95.1291 94.9993 91.0177 93.8378

91.9830
2011 96.4102 96.0160 96.1220 93.5200 94.9264

92.6228
2010 98.3585 97.7503 97.7902 94.8530 96.6876

94.4974

Taxpayer Not Using the Composite Method
2009 98.5513 98.5513 98.5513 96.1895 98.0033

95.8511

19

2008 98.5513 98.5513 98.5513 97.5045 98.5513

97.2176
Years before
2008 98.5513 98.5513 98.5513 98.5513 98.5513

98.5513

Taxpayer Using the Composite Method
Years before
2010 98.5513 98.5513 98.5513 96.9185 98.0920 96.7300

Table 8 (part B)

Discount Factors Under Amended Section 846 (percent)

For Taxable Year(s) Beginning in 2019

Long-Tail Lines of Business

Accident
Year
Private
Passenger
Auto Liability/
Medical
Products
Liability -
Claims-Made
Products
Liability -
Occurrence
Workers'
Compensation
Long-Tail
Composit
e

2019 95.4657 85.2754 87.2645 87.5213 92.4228

2018 95.2920 86.3600 89.1417 86.5393 91.7292

2017 95.2520 88.1407 89.8860 85.4517 91.4469

2016 94.8920 83.8076 91.1924 83.9662 90.2933

2015 94.2325 85.0889 89.8810 83.4129 88.7546

2014 94.2824 86.4184 89.9309 82.8905 88.6421

2013 94.5205 87.8040 90.8527 83.2567 88.6258

2012 95.0550 89.0388 91.8072 84.1036 89.1661

2011 95.6473 90.2969 92.1992 84.7150 90.3858

2010 97.7282 91.5785 94.4133 86.5946 92.1457

Taxpayer Not Using the Composite Method

2009 98.5513 92.8838 95.7739 87.8065 93.4541

2008 98.5513 94.2124 97.1571 89.0414 94.7812

2007 98.5513 95.5629 98.5513 90.2995 96.1195

2006 98.5513 96.9299 98.5513 91.5813 97.4421

2005 98.5513 98.2868 98.5513 92.8867 98.5513

2004 98.5513 98.5513 98.5513 94.2154 98.5513

2003 98.5513 98.5513 98.5513 95.5661 98.5513

2002 98.5513 98.5513 98.5513 96.9334 98.5513

2001 98.5513 98.5513 98.5513 98.2913 98.5513

Years before
2001 98.5513 98.5513 98.5513 98.5513 98.5513

20

Taxpayer Using the Composite Method

Years before
2010 98.5513 94.7288 96.6903 91.2579 95.0968

SECTION 6. DISCOUNT FACTORS FOR THE 2019 ACCIDENT YEAR
.01 The tables in this section 6 present separately for each line of business the
discount factors for losses incurred in the 2019 accident year for use by insurance
companies in computing discounted unpaid losses under Amended § 846 and
estimated salvage recoverable under § 832. All of the discount factors presented in
these tables are determined by using the applicable interest rate for 2019 under
Amended § 846(c) and the Final Regulations, which is 3.09 percent, compounded
semiannually, and the payment patterns for the 2017 determination year determined by
the Secretary under Amended § 846(d) and the Final Regulations. All of the discount
factors presented in these tables are determined by assuming all loss payments occur
in the middle of the calendar year.
.02 Tables 9 and 10 separately provide discount factors for insurance companies
who have elected to use the composite method of Notice 88-100. See Rev. Proc. 2002-
74.

Table 9 (part A)
Discount Factors Under Amended Section 846 (percent)
For Losses Incurred in Accident Year 2019 in Short-Tail Lines of Business
Taxable
Year
Beginning in
Auto
Physical
Damage Fidelity/Surety
Financial
Guaranty/
Mortgage
Guaranty International Other*

21

2019 98.3085 95.7921 95.5443 96.1189 96.9581
2020 96.9916 96.9916 96.9916 96.9916 96.9916

Taxpayer Not Using Composite Method
Years after 2020 98.4785 98.4785 98.4785 98.4785 98.4785

Taxpayer Using the Composite Method
2021 98.4785 98.4785 98.4785 98.4785 98.4785
Years after 2021 Use composite discount factors published for the relevant accident year.**

* For Accident and Health lines of business (other than disability income or credit disability
insurance), the discount factor for taxable year 2019 is 98.4785 percent. For later years, the
discount factor for losses incurred in 2019 is the discount factor published for Accident and
Health lines of business for losses incurred in the accident year coinciding with the taxable year.
**The relevant accident year is the accident year that is two years prior to the specified taxable
year.

Table 9 (part B)
Discount Factors Under Amended Section 846 (percent)
For Losses Incurred in Accident Year 2019 in Short-Tail Lines of Business
Taxable
Year
Beginning in
Reinsurance -
Nonproportiona
l
Assumed
Financial Lines
Reinsurance -
Nonproportiona
l
Assumed
Liability
Reinsurance -
Nonproportiona
l
Assumed
Property
Special
Property
(Fire,
Allied
Lines,
Inland
Marine,
Earthquake
,
Burglary &
Theft)
Warrant
y
Short-Tail
Composit
e

2019 95.3891 94.5848 96.1004 97.3903

98.1046 96.8468
2020 96.9916 96.9916 96.9916 96.9916

96.9916 96.9916

Taxpayer Not Using Composite Method
Years after
2020 98.4785 98.4785 98.4785 98.4785

98.4785 98.4785

Taxpayer Using the Composite Method
2021 98.4785 98.4785 98.4785 98.4785

98.4785 98.4785

22

Years after
2021 Use composite discount factors published for the relevant accident year.**

**The relevant accident year is the accident year that is two years prior to the specified taxable
year.

Table 10 (part A)
Discount Factors Under Amended Section 846 (percent)
For Losses Incurred in Accident Year 2019 in Long-Tail Lines of Business
Taxable
Year
Commercial
Auto/Truck
Liability/Medical
Medical
Professional
Liability -
Claims-
Made
Medical
Professional
Liability -
Occurrence
Multiple
Peril
Lines
Other
Liability -
Claims-
Made
Other
Liability -
Occurrence

2019 93.7704 91.2627 86.2902 95.0826 90.4676 88.8810
2020 94.5084 92.2917 88.4392 93.3741 91.3061 89.7544
2021 95.0543 92.5197 90.0344 93.6815 91.8334 90.3264
2022 95.0945 92.8130 91.4323 92.8864 91.8764 90.4989
2023 94.9707 92.9600 92.4216 91.0050 91.7240 90.2502
2024 94.8102 92.9821 93.1951 91.2099 92.2519 90.3215
2025 95.0988 93.9636 94.0439 90.9051 92.7450 90.3437
2026 94.7349 94.8913 94.7551 90.5890 93.5395 91.6011
2027 96.2326 95.8197 95.9308 93.2071 94.6782 92.2678
2028 98.2762 97.6382 97.6800 94.6020 96.5238 94.2296

Taxpayer Not Using Composite Method
2029 98.4785 98.4785 98.4785 96.0017 97.9036 95.6470
2030 98.4785 98.4785 98.4785 97.3803 98.4785 97.0794
Years after 2030 98.4785 98.4785 98.4785 98.4785 98.4785 98.4785

Taxpayer Using the Composite Method
2029 98.4785 98.4785 98.4785 96.8165 98.0085 96.6260
Years after 2029 Use composite discount factors published for the relevant accident year.*

*The relevant accident year is the accident year that is ten years prior to the specified taxable
year.

Table 10 (part B)

23

Discount Factors Under Amended Section 846 (percent)

For Losses Incurred in Accident Year 2019 in Long-Tail Lines of Business

Taxable
Year
Private
Passenger
Auto
Liability/
Medical
Products
Liability -
Claims-
Made
Products
Liability -
Occurrence
Workers'
Compensation
Long-Tail
Composite

2019 95.4657 85.2754 87.2645 87.5213 92.4228

2020 95.0654 85.7548 88.6442 85.9577 91.3501

2021 95.0239 87.6130 89.4203 84.8235 91.0564

2022 94.6472 83.0836 90.7854 83.2721 89.8512

2023 93.9560 84.4151 89.4118 82.6909 88.2413

2024 94.0072 85.7981 89.4605 82.1401 88.1205

2025 94.2553 87.2412 90.4215 82.5155 88.0992

2026 94.8139 88.5278 91.4175 83.3929 88.6595

2027 95.4330 89.8399 91.8241 84.0243 89.9313

2028 97.6150 91.1778 94.1415 85.9823 91.7704

Taxpayer Not Using Composite Method

2029 98.4785 92.5418 95.5661 87.2439 93.1382

2030 98.4785 93.9314 97.0159 88.5305 94.5268

2031 98.4785 95.3452 98.4785 89.8427 95.9284

2032 98.4785 96.7777 98.4785 91.1807 97.3148

2033 98.4785 98.2011 98.4785 92.5447 98.4785

2034 98.4785 98.4785 98.4785 93.9345 98.4785

2035 98.4785 98.4785 98.4785 95.3485 98.4785

2036 98.4785 98.4785 98.4785 96.7814 98.4785

2037 98.4785 98.4785 98.4785 98.2057 98.4785

Years after 2037 98.4785 98.4785 98.4785 98.4785 98.4785

Taxpayer Using the Composite Method

2029 98.4785 94.6171 96.5859 91.1466 94.9858

Years after 2029 Use composite discount factors published for the relevant accident year.*

*The relevant accident year is the accident year that is ten years prior to the specified
taxable year.

SECTION 7. EFFECTIVE DATE
This revenue procedure is effective for taxable years beginning after December
31, 2017.

24

SECTION 8. DRAFTING INFORMATION
The principal author of this revenue procedure is Kathryn M. Sneade of the Office
of Associate Chief Counsel (Financial Institutions & Products). For further information
regarding this revenue procedure contact Ms. Sneade at (202) 317-6995 (not a toll free
call).