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IRS SUPPLEMENTS TABLES FOR USE IN COMPUTING LIFE INSURANCE RESERVES.

SEP. 2, 1993

Rev. Rul. 93-58; 1993-2 C.B. 241

DATED SEP. 2, 1993
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Cross-Reference

    Rev. Rul. 92-19, 1992-1 C.B. 227

    Section 807. -- Rules for Certain Reserves

  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    insurance companies, life, reserves
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 93-9353
  • Tax Analysts Electronic Citation
    93 TNT 184-8
Citations: Rev. Rul. 93-58; 1993-2 C.B. 241

Rev. Rul. 93-58

For purposes of sections 807(d)(4) and 807(d)(5) of the Internal Revenue Code, for taxable years beginning after December 31, 1991, 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 1992 and 1993, and a supplement to the table in Part IV of Rev. Rul. 92- 19, providing the applicable federal interest rates under section 807(d)(4)(A) for 1993. This ruling does not supplement Parts I and II of Rev. Rul. 92-19.

 PART III. PREVAILING STATE ASSUMED INTEREST RATES -- PRODUCTS ISSUED

 

 IN YEARS AFTER 1982. /*/

 

 

                              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

 

      __________________          ______________________

 

 

                                         1993 4

 

                                         _______

 

 

      10 or fewer                         6.00

 

 

      More than 10                        6.00

 

      but not more than 20

 

 

      More than 20                        5.00

 

 

 Source: Rates calculated from the monthly averages, ending June 30,

 

 1992, of Moody's Corporate Bond Yield Average -- Monthly Average

 

 Corporates.

 

 

4 As the applicable federal interest rate for 1993 of 8.10 percent exceeds the prevailing state assumed interest rate for 1993 shown in Part IV of this ruling, 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. Note, however, that section 807(d)(4)(A)(ii) permits an election to recompute the applicable federal interest rate if certain conditions are satisfied. 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

 

 

                  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

 

      ______________________            _______________________

 

 

              1992                       7.75 /*/

 

 

Source: Rates calculated from the monthly averages, ending June 30, 1992, 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.

/*/ 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 by this ruling.

                    PART III, SCHEDULE C10 -- 1992

 

 

                  STATUTORY VALUATION INTEREST RATES

 

                 BASED ON NAIC STANDARD VALUATION LAW

 

                    FOR 1992 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:

 

 

    Cash        Future                        Valuation Interest Rate

 

 Settlement    Interest   Guarantee Duration       For Plan Type

 

  Options?    Guarantee?      (years)              A       B      C

 

 __________   __________  __________________  ________________________

 

 

    Yes          Yes      5 or fewer           7.75/*/  6.50/*/ 6.00/*/

 

 

                          More than 5, but     7.50/*/  6.50/*/ 6.00/*/

 

                           not more than 10

 

                          More than 10, but    6.75/*/  6.00/*/ 5.75/*/

 

                           not more than 20

 

                          More than 20         5.75/*/  5.00/*/ 5.00/*/

 

 

    Yes           No      5 or fewer           8.00/*/  6.75/*/ 6.25/*/

 

 

                          More than 5, but     7.75/*/  6.75/*/ 6.25/*/

 

                           not more than 10

 

                          More than 10, but    7.00/*/  6.25/*/ 6.00/*/

 

                           not more than 20

 

                          More than 20         6.00/*/  5.25/*/ 5.25/*/

 

 

    No         Yes or No  5 or fewer           7.75 /*/

 

 

                          More than 5, but     7.50 /*/

 

                            not more than 10             NOT APPLICABLE

 

                          More than 10, but    6.75 /*/

 

                            not more than 20

 

                          More than 20         5.75 /*/

 

 

Source: Rates calculated from the monthly averages, ending June 30, 1992, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates.

/*/ As the applicable federal interest rate for 1992 of 8.40 percent exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under section 807 is 8.40 percent.

                     Part III, Schedule D10 - 1992

 

 

                  STATUTORY VALUATION INTEREST RATES

 

                 BASED ON NAIC STANDARD VALUATION LAW

 

                    FOR 1992 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:

 

 

    Cash       Future                        Valuation Interest Rate

 

 Settlement   Interest   Guarantee Duration       For Plan Type

 

  Options?   Guarantee?      (years)              A       B      C

 

 __________  __________  __________________  ________________________

 

 

    Yes         Yes      5 or fewer            8.50     8.00/*/ 6.25/*/

 

 

                         More than 5, but      8.25/*/  8.00/*/ 6.25/*/

 

                           not more than 10

 

                         More than 10, but     7.75/*/  7.50/*/ 6.00/*/

 

                           not more than 20

 

                         More than 20          6.50/*/  6.50/*/ 5.25/*/

 

 

    Yes          No      5 or fewer            9.00     8.25/*/ 6.50/*/

 

 

                         More than 5, but      8.50     8.25/*/ 6.50/*/

 

                           not more than 10

 

                         More than 10, but     8.00/*/  7.75/*/ 6.25/*/

 

                           not more than 20

 

                         More than 20          6.75/*/  6.75/*/ 5.75/*/

 

 

Source: Rates calculated from the monthly averages, ending June 30, 1992, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates.

/*/ As the applicable federal interest rate for 1992 of 8.40 percent exceeds this prevailing state assumed interest rate, the interest rate to be used for this product under section 807 is 8.40 percent.

 PART IV. APPLICABLE FEDERAL INTEREST RATES.

 

 

                               TABLE OF

 

                   APPLICABLE FEDERAL INTEREST RATES

 

                      FOR PURPOSES OF SECTION 807

 

 

      Year                         Interest Rate

 

      ____                         _____________

 

 

      1993                                8.10

 

 

 Source: Rev. Rul. 92-104, 1992-2 C.B. 212.

 

 

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 1992 and 1993 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 number).

DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Cross-Reference

    Rev. Rul. 92-19, 1992-1 C.B. 227

    Section 807. -- Rules for Certain Reserves

  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    insurance companies, life, reserves
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 93-9353
  • Tax Analysts Electronic Citation
    93 TNT 184-8
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