IRS Releases 2015 Loss Reserve Discounting Factors
The IRS recently released the annual revenue procedures that provide 2015 accident year discounting factors for loss reserves and for anticipated salvage and subrogation. In addition, the revenue procedures include the discount rate used to compute 2015 accident year factors under the company factor election.
For companies that previously elected to compute tax loss reserves using the company factor, the applicable interest rate under Internal Revenue Code Section 846(c) is 1.68 percent for the 2015 accident year, based on claims development in the 2013 annual statement.
Revenue Procedure 2015-52 provides the detail discount factors for each line of business for loss reserves. The salvage and subrogation factors are found in Revenue Procedure 2015-54. Also, companies should consider reviewing Revenue Procedure 2015-24 to make sure errors in the 2014 discount factors originally released are updated on their rollforward schedules.
If you have questions about loss reserve or salvage and subrogation discounting, contact your BKD advisor.