Document ID: chunk:federal_register_of_legislation:F2014L01824:body:0:p7
Version: federal_register_of_legislation:F2014L01824
Segment Type: other
Provision Reference: 
Character Range: 16106–18854

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

Input the weighted-average age (in years) for each pool. The weighted-average age should be calculated outside of the reporting forms and should not be based on summarised data.

(3)  Seasoning factor

This is the seasoning factor corresponding to the weighted-average age of the pool.

It is automatically determined from the weighted-average age in Column 2.

(4)  Total sum insured

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

(5)  PD factor

This is the PD corresponding to the weighted-average LVR of the pool.

It is automatically determined from the weighted average LVR percentage in Column 1.

(6)  LGD factor

This is the LGD corresponding to the weighted-average LVR of the pool.

It is automatically determined from the weighted-average LVR percentage in Column 1.

(7)  PML

This is automatically calculated as Column 4 multiplied by Column 3 multiplied by Column 5 multiplied by Column 6.

GRF_116_2 Probable Maximum Loss for LMIs - Non-Standard Loans

These instructions must be read in conjunction with the general instruction guide.

Explanatory notes

Non-standard loan

A non-standard loan is a loan predominantly secured by residential property which does not meet the criteria for a standard loan as defined in Attachment A of GPS 116 and/or where APRA has given a direction that the loan should be classified as a non-standard loan.

100% cover

100% cover provides insurance for 100% of the loan amount.

Top cover

Top cover provides insurance for less than 100% of the loan amount.

Pool