Do u have WBC, St George ir RAMS loans with LMI ?

Hi All

Due to some interesting mixed and unusual circumstances on a loan decline this week, we have this week learnt that WLMI and SG Bank LMI have now merged their exposure aggregates.

I believe there is still some policy differentiation etc

Someone with better connections than me may be able to confirm the rumours but neither my SGB, WBC, or RAMS folk have released any info.

Basically, what it means is that between the 2 lenders we could carry 3 and a bit LMI exposure per borrowing entity, and SGB and WLMI exposure was totally separate.

Now with the risk combined the max is 2 mill.

I understand this doesnt affect the majority of Joe Public, but it certainly affects a lot of the middle range investment folk, and can become a millstone for those with existing exposures, even if well managed.

I bet this is one little consequence that the ACCC didnt take into account when allowing the merger to proceed. The merging of the LMI providers is a MUCH bigger loss to the market than losing a Bank per se, because the number of separate LMI providers is now very small.

ta
rolf
 
Hi Rolf,

From my understanding the LMI companies were external? I.e. bank transferring risk away from themselves, how can St George merge particularly existing clients from what I would think is another company?

Also would it be true that the reason that there is few LMI companies is due to the risk that they hold? I mean default rates have been low but if that changes the downside risk is pretty big for said companies so the more they have on the book the lower the risk?

Cheers,
David
 
Many lenders have underwriting authorities which allow them to sign off on the LMI without specifically sending it to the insurer. Westpac, St George & RAMS all come under Westpac's umbrella policy, but I think it's ultimately underwritten by Genworth (I could be wrong on this they like to state that it's their own).

CBA has their own underwriting authority as does ANZ, NAB and others. If the application falls outside of certain parameters, then the insurer wants to see it, but otherwise they're okay with in-house sign off.

Very interesting that Westpac have essentially consolidated everything into the one office. I wonder how long it'll be before we see St George statements co-branded with a Westpac logo?
 
Back
Top