Document ID: chunk:federal_register_of_legislation:F2023L00672:body:0:p18
Version: federal_register_of_legislation:F2023L00672
Segment Type: other
Provision Reference: 
Character Range: 46135–49346

– top cover
Greater than 100%  14.0%      40%
95.01 – 100%       8.2%       40%
90.01 – 95%        5.1%       40%                              Minimum of:
85.01 – 90%        3.2%       30%                              100%; or
80.01 – 85%        2.0%       30%                              LGD factor /
70.01 – 80%        1.9%       30%                              Top cover %[25]
60.01 – 70%        0.9%       20%
Less than 60.01%   0.6%       20%

The seasoning factors by age for standard loans are:

Age of loan                    Seasoning factor
Less than 3 years              100%
3 years to less than 5 years   75%
5 years to less than 10 years  25%
10 years or more               5%

Non-standard loans

The aggregate PD and LGD factors by LVR, over the three-year scenario, for non‑standard loans are:

LVR                PD factor  LGD factor – 100 per cent cover  LGD factor – top cover
Greater than 100%  31.5%      40%
95.01 – 100%       18.5%      40%
90.01 – 95%        11.5%      40%                              Minimum of:
85.01 – 90%        7.2%       30%                              100%; or
80.01 – 85%        4.5%       30%                              LGD factor /
70.01 – 80%        4.3%       30%                              Top cover %[26]
60.01 – 70%        2.0%       20%
Less than 60.01%   0.9%       20%

The seasoning factors by age for non-standard loans are:
Age of loan                    Seasoning factor
Less than 3 years              100%
3 years to less than 5 years   75%
5 years to less than 10 years  25%
10 years or more               5%

Commercial loans
The PML for the three-year scenario is the sum insured multiplied by 8 per cent. No seasoning factor applies to commercial loans.

Attachment B – Level 2 insurance groups
     1. A Level 2 insurance group must comply with paragraphs 1 to 8 and 60 to 61 of this Prudential Standard and the requirements of this Attachment to determine its Insurance Concentration Risk Charge.

Insurance Concentration Risk Charge formula
    2.             The Insurance Concentration Risk Charge for a Level 2 insurance group is the greatest of the following amounts:

       (a)          the natural perils vertical requirement determined in accordance with the principles of paragraphs 18 to 26 of this Prudential Standard;

       (b)          the natural perils horizontal requirement determined in accordance with the principles of paragraphs 27 to 43 of this Prudential Standard;

       (c)          the other accumulations vertical requirement determined in accordance with the principles of paragraphs 44 to 52 of this Prudential Standard; and

       (d)          where applicable[27], the lenders mortgage insurer concentration risk charge determined in accordance with the principles of Attachment A.

    A Level 2 insurance group does not need to calculate amounts for each of sub-paragraphs (a) to (d) above if it is able to demonstrate that the amount determined for one or more of those sub-paragraphs is always expected to be materially lower than the amount determined for one of the other sub-paragraphs.
    3.             Each component of the Insurance Concentration Risk Charge