IRS SUPPLEMENTS TABLES FOR USE IN COMPUTING LIFE INSURANCE RESERVES.

Rev. Rul. 94-11

For purposes of section 807(d)(4) of the Internal Revenue Code, for taxable years beginning after December 31, 1993, 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 section 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 1993 and 1994, and a supplement to the table in Part IV of Rev. Rul. 92- 19, providing the applicable federal interest rate under section 807(d)(4)(A) for 1994. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.

This is the second supplement to the interest rates provided in Rev. Rul. 92-19. The first supplement was published in Rev. Rul. 93- 58, 1993-29 I.R.B. 64 (interest rates for insurance products issued in 1992 and 1993).

         PART III. PREVAILING STATE ASSUMED INTEREST RATES --

⁵ As the applicable federal interest rate for 1994 of 7.45 percent shown in part IV of this ruling exceeds the prevailing state assumed interest rate for 1994, the interest rate to be used for this product for section 807 purposes, pursuant to section 807(d)(2)(B), is the applicable federal interest rate. See also footnote 3 to Schedule A, Part III, Rev. Rul. 92-19 at 1992-1 C.B. 231.

/*/ 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, and are defined in Rev. Rul. 92-19.

                         PART III, SCHEDULE B

/*/ The applicable federal interest rates for 1988 and later years must be used in Computing reserves under section 807 if they exceed the prevailing state assumed interest rates specified in this schedule. See applicable federal interest rates set forth in Part IV of Rev. Rul. 92-19 as supplemented.

                     PART III, SCHEDULE C11 - 1993

* As the applicable federal interest rate for 1993 of 8.10 percent exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under section 807 is 8.10 percent.

                     PART III, SCHEDULE D11 - 1993

* As the applicable federal interest rate for 1993 of 8.10 percent exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under section 807 is 8.10 percent.

              PART IV. APPLICABLE FEDERAL INTEREST RATES.

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 section 807 for certain insurance products issued in 1993 and 1994 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).