Document ID: chunk:federal_register_of_legislation:F2014L01824:body:0:p9
Version: federal_register_of_legislation:F2014L01824
Segment Type: other
Provision Reference: 
Character Range: 21048–23694

a loan.

Lenders mortgage insurers (LMIs) are required to report the sum insured according to the following categories: LVR of less than 60.01, 60.01 to 70, 70.01 to 80, 80.01 to 85, 85.01 to 90, 90.01 to 95, 95.01 to 100, and greater than 100 per cent. Report the relevant category by selecting the appropriate lower and upper bound percentages in Columns 1 and 2.

(3)  Coverage proportion (%)

This is the percentage of cover for which the insurance provides over the loan amount.

Select from the appropriate coverage proportion percentage: 20, 25, 30, 35, 40 or 100 per cent.

    (4.1)   < 3 years

    (4.2)      3 < 5 years

    (4.3)      5 < 10 years

(4.5)      >= 10 years

Age is the length of time from the date of origination of the loan to the date of calculation for the purposes of determining the seasoning factors in Attachment A of GPS 116.

Report the sums insured for the LMI policies according to the following categories: age of less than three years, three to less than five years, five to less than 10 years, and more than 10 years.

    (5)         Total sum insured

The sum insured is the original exposure amount for an LMI as stated in the mortgage insurance policy.

It is automatically calculated as the sum of Columns 4.1 to 4.4 multiplied by their corresponding seasoning factors.

    (6)  PD factor

The probability of default (PD) is the risk of default by the borrower. It varies according to LVR as per Attachment A of GPS 116.

This is automatically determined from the LVR percentages in Columns 1 and 2.

    (7)  LGD factor (100% cover)

Loss given default (LGD) is the loss to the LMI upon default by the borrower. It varies according to LVR as per Attachment A of GPS 116. The LGD factors are for 100% cover.

This is automatically determined from the LVR percentages in Columns 1 and 2.

    (8)  LGD factor (top cover)

This is the LGD factor for top cover. It is automatically calculated as Column 7 divided by Column 3, subject to a maximum of 100%.

    (9)  PML

For each individual LMI policy, the probable maximum loss (PML) is the sum insured multiplied by the seasoning, PD and LGD factors applicable to the policy. It is determined in accordance with Attachment A of GPS 116.

It is automatically calculated as Column 5 multiplied by Column 6 multiplied by Column 8.

Sections 1 and 2 - 1.2 and 2.2: Pool cover

    (1)  Weighted-average LVR (%)

Input the weighted-average LVR as a percentage for each pool. The weighted-average LVR should be calculated outside of the reporting forms and should not be based on summarised data.

    (2)  Weighted-average age