rp-99-37.pdf

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# Part III

Administrative, Procedural, and Miscellaneous

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

## Rev. Proc. 99-37

## SECTION 1. PURPOSE

This revenue procedure prescribes the salvage discount
factors for the 1999 accident year. These factors will be used
for computing discounted estimated salvage recoverable under
§ 832 of the Internal Revenue Code.
SEC. 2. BACKGROUND

Section 832 (b) (5) (A) requires that all estimated salvage
recoverable (including that which cannot be treated as an asset
for state accounting purposes) be taken into account in computing
the deduction for losses incurred. Under § 832 (b) (5) (A), paid
losses are to be reduced by salvage and reinsurance recovered
during the taxable year. This amount is adjusted to reflect
changes in discounted unpaid losses on nonlife insurance
contracts and in unpaid losses on life insurance contracts. An
adjustment is then made to reflect any changes in discounted
estimated salvage recoverable and in reinsurance recoverable.
Pursuant to $ 832 (b) , the amount of estimated salvage is
determined on a discounted basis in accordance with procedures
established by the Secretary.

SEC. 3. SCOPE

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This revenue procedure applies to any taxpayer that is
required to discount estimated salvage recoverable under § 832.
SEC. 4. APPLICATION

. 01 The following tables present separately for each line
of business the discount factors under § 832 for the 1999
accident year. All the discount factors presented in this
section were determined using the applicable interest rate under
§ 846 (c) for 1999, which is 6.30 percent, and by assuming all
estimated salvage is recovered in the middle of each calendar
year. See Rev. Proc. 98-12, 1998-4 I.R.B. 18, for background
regarding the tables.

. 02 These tables must be used by taxpayers irrespective of
whether they elected to discount unpaid losses using their own
historical experience under § 846.

. 03 Section V of Notice 88-100, 1988-2 C. B. 439, provides
guidance concerning the determination of discount factors for
unpaid losses for accident years not separately reported on the
annual statement.

. 04 Tables.

### Accident and Health (Other Than Disability Income or Credit Disability Insurance)

Discount factor for all years equals 96.9914 percent.

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### Auto Physical Damage

Tax

Year

Discount Factors (응)

AY+

0

95.5695

AY+

1

94.1173

AY+

2

96.9914

### Commercial Auto/Truck Liability/Medical

Tax Year

Discount Factors (응)

AY+ 0

88.1039

AY+ 1

87.2517

AY+ 2

88.9900

AY+ 3

88.2622

AY+ 4

88.0871

AY+ 5

90.4901

AY+ 6

85.7328

AY+ 7

91.4181

AY+ 8

89.8355

AY+ 9

92.4551

AY+10

95.0697

AY+11

96.9914

### Composite Discount Factors

Tax Year

Discount Factors (응)

AY+ 0

85.6093

AY+ 1

83.9887

AY+ 2

83.5630

AY+ 3

83.4530

AY+ 4

84.2000

AY+ 5

84.7825

AY+ 6

84.8358

AY+ 7

84.9271

AY+ 8

87.7984

AY+ 9

90.3741

AY+10

93.0175

AY+11

95.6437

AY+12

96.9914

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### Fidelity/Surety

Financial Guaranty/Mortgage Guaranty

Tax

Year

Discount Factors (응)

AY+

0

92.7828

AY+

1

94.1173

AY+

2

96.9914

International (Composite)

Tax

Year

Discount Factors (응)

AY+

0

94.6355

AY+

1

94.1173

AY+

2

96.9914

Tax Year

Discount Factors (응)

AY+ 0

85.6093

AY+ 1

83.9887

AY+ 2

83.5630

AY+ 3

83.4530

AY+ 4

84.2000

AY+ 5

84.7825

AY+ 6

84.8358

AY+ 7

84.9271

AY+ 8

87.7984

AY+ 9

90.3741

AY+10

93.0175

AY+11

95.6437

AY+12

96.9914

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#### Medical Malpractice - Claims-Made

Tax

Year

Discount Factors (응)

AY+

0

69.8521

AY+

1

72.5407

AY+

2

71.0672

AY+

3

70.4106

AY+

4

73.9891

AY+

5

72.3274

AY+

6

82.1285

AY+

7

91.3849

AY+

8

96.2899

AY+

9

96.9914

### Medical Malpractice - Occurrence

Tax

Year

Discount Factors (응)

AY+

0

63.6130

AY+

1

66.9948

AY+

2

71.5686

AY+

3

75.3861

AY+

4

72.1518

AY+

5

78.2468

AY+

6

83.2448

AY+

7

86.3963

AY+

8

90.9167

AY+

9

93.6125

AY+10

96.3310

AY+11

96.9914

### Miscellaneous Casualty

Tax

Year

Discount Factors (응)

AY+

0

94.9728

AY+

1

94.1173

AY+

2

96.9914

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### Multiple Peril Lines (Homeowners/Farmowners Multiple Peril, Commercial Multiple Peril, and Special Liability (Ocean Marine, Aircraft (All Perils) , Boiler And Machinery) )

Tax

Year

Discount Factors (응)

AY+

0

88.1923

AY+

1

87.1353

AY+

2

87.9117

AY+

3

87.5629

AY+

4

88.7011

AY+

5

90.1672

AY+

6

90.1613

AY+

7

89.1007

AY+

8

91.5372

AY+

9

94.2606

AY+10

96.9914

Other

(Including Credit)

Tax

Year

Discount

Factors

(응)

AY+ 0

96.0338

AY+ 1

94.1173

AY+ 2

96.9914

<!-- PageBreak -->

## Other Liability - Claims-Made

Tax

Year

Discount Factors (응)

AY+

0

77.2784

AY+

1

82.8178

AY+

2

81.8164

AY+

3

79.4571

AY+

4

82.4769

AY+

5

87.1976

AY+

6

85.6914

AY+

7

91.4229

AY+

8

93.5743

AY+

9

96.2841

AY+10

96.9914

## Other Liability - Occurrence

Tax

Year

Discount Factors (응)

AY+

0

78.2635

AY+

1

78.9961

AY+

2

81.4078

AY+

3

83.4032

AY+

4

84.6724

AY+

5

82.2100

AY+

6

86.3544

AY+

7

88.3424

AY+

8

92.5115

AY+

9

95.1243

AY+10

96.9914

<!-- PageBreak -->

## Private Passenger Auto Liability/Medical

Tax

Year

Discount Factors (응)

AY+

0

91.4618

AY+

1

90.9068

AY+

2

89.9635

AY+

3

89.5735

AY+

4

89.1026

AY+

5

89.5637

AY+

6

88.3400

AY+

7

89.0749

AY+

8

89.7735

AY+

9

92.3920

AY+10

95.0094

AY+11

96.9914

## Products Liability - Claims-Made

Tax

Year

Discount Factors (응)

AY+

0

78.7056

AY+

1

80.7697

AY+

2

85.3179

AY+

3

85.2263

AY+

4

80.7596

AY+

5

87.8587

AY+

6

80.4380

AY+

7

88.0132

AY+

8

96.7141

AY+

9

96.9914

<!-- PageBreak -->

## Products Liability - Occurrence

Reinsurance A (Nonproportional Property)

Tax

Year

Discount Factors (응)

AY+

0

75.2045

AY+

1

77.8428

AY+

2

76.1949

AY+

3

77.5126

AY+

4

79.2935

AY+

5

78.6299

AY+

6

80.0215

AY+

7

72.0300

AY+

8

77.5666

AY+

9

80.0419

AY+10

82.7021

AY+11

85.5978

AY+12

88.8131

AY+13

92.5030

AY+14

96.9914

Tax

Year

Discount Factors (응 )

AY+

0

86.3193

AY+

1

89.5547

AY+

2

92.3252

AY+

3

91.6732

AY+

4

78.5915

AY+

5

94.7028

AY+

6

93.2934

AY+

7

95.9512

AY+

8

96.9914

<!-- PageBreak -->

### Reinsurance B (Nonproportional Liability)

Tax Year

Discount Factors (응 )

AY+ 0

74.2797

AY+ 1

76.5792

AY+ 2

77.3123

AY+ 3

76.7003

AY+ 4

79.2343

AY+ 5

74.2190

AY+ 6

75.9976

AY+ 7

83.6134

AY+ 8

86.0629

AY+ 9

88.6137

AY+10

91.2729

AY+11

94.0524

AY+12

96.9914

Reinsurance C (Financial Lines)

Tax

Year

Discount Factors (응)

AY+

0

80.7539

AY+

1

83.1736

AY+

2

86.4993

AY+

3

92.4836

AY+

4

91.0300

AY+

5

92.9471

AY+

6

89.3955

AY+

7

96.8756

AY+

8

96.9914

<!-- PageBreak -->

#### Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Glass, Burglary and Theft)

Workers' Compensation

Tax

Year

Discount Factors (응)

AY+

0

92.0956

AY+

1

94.1173

AY+

2

96.9914

Tax

Year

Discount Factors (%)

AY+

0

78.1046

AY+

1

80.5669

AY+

2

82.5003

AY+

3

84.0905

AY+

4

84.2036

AY+

5

84.3691

AY+

6

85.5654

AY+

7

86.3250

AY+

8

88.7748

AY+

9

91.4218

AY+10

94.1684

AY+11

96.9914

# DRAFTING INFORMATION

The principal author of this revenue procedure is Katherine
A. Hossofsky of the Office of the Assistant Chief Counsel
(Financial Institutions and Products) . For further information
regarding this revenue procedure, contact Ms. Hossofsky on (202)
622-3477 (not a toll-free number) .