IRS Revenue Ruling
2001-11

Code Sec. 807

<<FULL TEXT>>

Insurance companies; interest rate tables. Prevailing state assumed
interest rates are provided for the determination of reserves under
section 807 of the Code for contracts issued in 2000 and 2001. Rev. Rul.
92-19 supplemented in part.


REV. RUL. 2001-11

For purposes of section 807(d)(4) of the Internal Revenue Code, for
taxable years beginning after December 31, 1999, 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 2000 and 2001, and a
supplement to the table in Part IV of Rev. Rul. 92-19, providing the
applicable federal interest rate under section 807(d) for 2000 and 2001.
This ruling does not supplement Parts I and II of Rev. Rul. 92-19.

This is the ninth supplement to the interest rates provided in Rev.
Rul. 92-19. Earlier supplements were published in Rev. Rul. 93-58, 1993-2
C.B. 241 (interest rates for insurance products issued in 1992 and 1993),
Rev. Rul. 94-11, 1994-1 C.B. 196 (1993 and 1994), Rev. Rul. 95-4, 1995-1
C.B. 141 (1994 and 1995), Rev. Rul. 96-2, 1996-1 C.B. 141 (1995 and 1996),
Rev. Rul. 97-2, 1997-1 C.B. 8 (1996 and 1997), Rev. Rul. 98-2, 1998-2
I.R.B. 15 (1997 and 1998), Rev. Rul. 99-10, 1999-10 I.R.B. 10 (1998 and
1999), and Rev. Rul. 2000-17, 2000-1 C.B. 842 (1999 and 2000).


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 Calendar
Duration Year of
(years) Issue
--------- --------
2001
----
10 or fewer 5.00 <**>
More than 10 4.75 <**>
but not more
than 20
More than 20 4.50 <**>


Source: Rates calculated from the monthly averages, ending June 30, 2000,
of Moody's Corporate Bond Yield Average -- Monthly Average Corporates.

----------
*/ 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; the terms
are defined in Rev. Rul. 92-19.
**/ As the applicable federal interest rate for 2001 of 6.00 percent
exceeds this prevailing state assumed interest rate, the interest rate to
be used for this product under section 807 is 6.00 percent.


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 Valuation
of Issue Interest Rate
------------- -------------
2000 7.00 <*>


Source: Rates calculated from the monthly averages, ending June 30, 2000,
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.

----------
*/ As this prevailing state assumed interest exceeds the applicable
federal interest rate for 2000 of 6.09 percent, the valuation interest
rate of 7.00 percent is to be used for this product under section 807.


PART III, SCHEDULE C18 -- 2000

STATUTORY VALUATION INTEREST RATES BASED ON NAIC STANDARD VALUATION LAW
FOR 2000 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:

Valuation
Interest Rate
Cash Future Guarantee For Plan Type
Settlement Interest Duration -----------------------
Options? Guarantee? (years) A B C
---------- ---------- --------- - - -
Yes Yes 5 or fewer 7.00 6.00 <*> 5.50 <*>

More than 5, 6.75 6.00 <*> 5.50 <*>
but not
more than
10

More than 5.75 <*> 5.25 <*> 5.00 <*>
10, but
not more
than 20

More than 20 5.00 <*> 4.50 <*> 4.50 <*>

Yes No 5 or fewer 7.25 6.25 5.75 <*>

More than 5, 7.00 6.25 5.75 <*>
but not
more than
10

More than 6.00 <*> 5.50 <*> 5.25 <*>
10, but
not more
than 20

More than 20 5.25 <*> 4.75 <*> 4.75 <*>

No Yes or No 5 or fewer 7.00

More than 5, 6.75
but not NOT APPLICABLE
more than
10

More than 6.25
10, but
not more
than 20

More than 20 5.25 <*>

Source: Rates calculated from the monthly averages, ending June 30, 2000
of Moody's Corporate Bond Yield Average -- Monthly Average Corporates.

----------
*/ As the applicable federal interest rate for 2000 of 6.09 percent
exceeds this prevailing state assumed interest rate, the interest rate to
be used for this product under section 807 is 6.09 percent.


PART III, SCHEDULE D18 -- 2000

STATUTORY VALUATION INTEREST RATEES BASED ON NAIC STANDARD VALUATION
LAW FOR 2000 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:

Valuation
Interest Rate
Cash Future Guarantee For Plan Type
Settlement Interest Duration -----------------------
Options? Guarantee? (years) A B C
---------- ---------- --------- - - -
Yes Yes 5 or fewer 7.75 7.25 5.75 <*>

More than 5, 7.50 7.25 5.75 <*>
but not
more than
10

More than 7.00 6.75 5.50 <*>
10, but
not more
than 20

More than 20 6.00 <*> 6.00 <*> 5.00 <*>

Yes No 5 or fewer 8.00 7.50 6.00 <*>

More than 5, 7.75 7.50 6.00 <*>
but not
more than
10

More than 7.25 7.00 5.75 <*>
10, but
not more
than 20

More than 20 6.25 6.25 5.25 <*>


Source: Rates calculated from the monthly averages, ending June 30, 2000,
of Moody's Corporate Bond Yield Average -- Monthly Average Corporates.

----------
*/ As the applicable federal interest rate for 2000 of 6.09 percent
exceeds this prevailing state assumed interest rate, the interest rate to
be used for this product under section 807 is 6.09 percent.


PART IV. APPLICABLE FEDERAL INTEREST RATES.

TABLE OF APPLICABLE FEDERAL INTEREST RATES FOR PURPOSES OF SECTION 807

Year Interest Rate
---- -------------
2000 6.09
2001 6.00


Sources: Rev. Rul. 99-48, 2000-49 I.R.B. 600 for the 2000 rate and Rev.
Rul. 2000-54, 2000-49 I.R.B. 566 for the 2001 rate.


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 2000 and 2001 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).

<<END RULING>>

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