Document ID: chunk:federal_register_of_legislation:F2023L00640:body:0:p10
Version: federal_register_of_legislation:F2023L00640
Segment Type: other
Provision Reference: 
Character Range: 25606–29470

first event;
                                 * second event;
                                 * third event; and
                                 * fourth event.

H4 reinsurance recoverables  H4 reinsurance recoverables are the level of potential reinsurance recoverables should there be the occurrence of four H4 losses over the catastrophe reinsurance program treaty year. H4 reinsurance recoverables must not include any amounts due from aggregate reinsurance cover.

                             The total H4 reinsurance recoverables is calculated as the sum of:

                                 * first event;
                                 * second event;
                                 * third event; and
                                 * fourth event.

H4 requirement               The H4 requirement is calculated as the total over the four events for H4 loss per event.

L

LMI Concentration Risk Charge  The LMI Concentration Risk Charge represents the net loss from the application of a prescribed three-year economic downturn scenario to any lenders mortgage insurance business. The determination of the LMI Concentration Risk Charge is based on the formulae and requirements set out in GPS 116.

                               This is a derived item and is calculated as the greater of:

                                   * total of adjusted PML multiplied by 10%; or
                                   * the sum of PML net of reinsurance and adjustments to LMI Concentration Risk Charge as approved by APRA less net premium liability deduction.

N

Natural perils horizontal requirement (NP HR)  The natural perils horizontal requirement (NP HR) is calculated as the greater of:

                                                   * H3 requirement; or
                                                   * H4 requirement

                                               less:

                                                   * PL offset.

Natural perils vertical requirement (NP VR)    The natural perils vertical requirement (NP VR) is calculated as the greater of:
                                                   * NP PML less NP reinsurance recoverables; or
                                                   * Net whole-of-portfolio loss;
                                               less:
                                                   * NP reinstatement premiums
                                               plus:
                                                   * NP reinstatement cost
                                               less:
                                                   * other adjustments.
Net premium liability deduction                In determining the LMI Concentration Risk Charge, this is the value of the deduction from the PML, allowed under GPS 116, for net PL of the LMI that relate to an economic downturn.

Net whole-of-portfolio loss                    Net whole-of-portfolio loss is the net loss arising from the occurrence of a single event where that net loss is not less than the whole-of-portfolio annual net loss with a 0.5 per cent probability of occurrence.

NP PML                                         NP PML is the gross loss arising from the occurrence of a single event, where that loss is not less than the whole-of-portfolio annual loss with a 0.5 per cent probability of occurrence.

NP reinstatement cost                          NP reinstatement cost is the cost (if any) of reinstating all catastrophe reinsurance cover relating to the reinsurance recoverables determined. In determining this cost, if the Level 2 insurance group does not have contractually agreed rates for the reinsurance cover, the Level 2 insurance group must estimate the cost based on current reinsurance market conditions. The amount must not be less than the full original cost of the