Document ID: chunk:federal_register_of_legislation:F2023L00634:body:0:p8
Version: federal_register_of_legislation:F2023L00634
Segment Type: other
Provision Reference: 
Character Range: 19898–23448

The total H4 aggregate offset is calculated as the sum of:

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

H4 loss per event            The H4 loss per event is calculated for each H4 event as the sum of:

                                 * single event loss from H4 event; and
                                 * H4 reinstatement cost;

                             less:

                                 * H4 reinsurance recoverables;
                                 * H4 aggregate offset; and
                                 * H4 reinstatement premiums.

H4 reinstatement cost        H4 reinstatement cost is the cost (if any) of reinstating catastrophe reinsurance cover after the occurrence of the first three H4 losses. The cost (if any) must reflect the cost of reinstating reinsurance cover up to the size of the fourth event. In determining this cost, if the insurer does not have contractually agreed rates for the reinsurance cover, the insurer must estimate the cost based on the reinsurance market conditions that would prevail after the occurrence of the events. The amount must not be less than the full original cost of the cover, with no deduction for the expiry of time since the inception of the reinsurance arrangements unless the insurer is able to demonstrate to APRA that the amount materially overstates the cost that would prevail in the market after the occurrence of the events.

                             The total H4 reinstatement cost is calculated as the sum of:

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

H4 reinstatement premiums    H4 reinstatement premiums are applicable to insurers that write reinsurance and may receive inwards reinstatement premiums from cedants as a result of the events that give rise to three H4 losses. H4 reinstatement premiums must only be included in NP HR if the reinsurance contract specifically stipulates that offsetting with the cedant will occur at the time of the payment of the reinsurance claim.

                             The total H4 reinstatement premiums is calculated as the sum of:

                                 * 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