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Aetna Health Holdings, LLC -- Moody's affirms Aetna's ratings; outlook to stable

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<!DOCTYPE html> <html lang="" xml:lang=""> <head> <title>/nwsys/www/images/PR_1000003904</title> <meta http-equiv="Content-Type" content="text/html; charset=UTF-8"/> <meta name="generator" content="pdftohtml 0.36"/> <meta name="date" content="2020-12-11T17:52:52+00:00"/> <style type="text/css"> <!-- .xflip { -moz-transform: scaleX(-1); -webkit-transform: scaleX(-1); -o-transform: scaleX(-1); transform: scaleX(-1); filter: fliph; } .yflip { -moz-transform: scaleY(-1); -webkit-transform: scaleY(-1); -o-transform: scaleY(-1); transform: scaleY(-1); filter: flipv; } .xyflip { -moz-transform: scaleX(-1) scaleY(-1); -webkit-transform: scaleX(-1) scaleY(-1); -o-transform: scaleX(-1) scaleY(-1); transform: scaleX(-1) scaleY(-1); filter: fliph + flipv; } --> </style> </head> <body bgcolor="#A0A0A0" vlink="blue" link="blue"> <!-- Page 1 --> <style type="text/css"> <!-- p {margin: 0; padding: 0;} .ft00{font-size:18px;font-family:Times;color:#000000;} .ft01{font-size:18px;font-family:Times;color:#1257c7;} .ft02{font-size:14px;font-family:Times;color:#666666;} .ft03{font-size:13px;font-family:Times;color:#0d0c0c;} .ft04{font-size:13px;line-height:30px;font-family:Times;color:#0d0c0c;} .ft05{font-size:13px;line-height:31px;font-family:Times;color:#0d0c0c;} --> </style> <div id="page1-div" style="position:relative;width:918px;height:1188px;"> <img width="918" height="1188" src="http://mco.acquiremedia.com/images/PR_1000003904001.png" alt="background image"/> <p style="position:absolute;top:162px;left:108px;white-space:nowrap" class="ft00"><b>Rating Action:&#160;</b></p> <p style="position:absolute;top:162px;left:252px;white-space:nowrap" class="ft01"><b>Moody's affirms Aetna's ratings; outlook to stable</b></p> <p style="position:absolute;top:209px;left:108px;white-space:nowrap" class="ft02"><b>11 December 2020</b></p> <p style="position:absolute;top:242px;left:108px;white-space:nowrap" class="ft03">New York, December 11, 2020 – Moody's Investors Service (Moody's) has affirmed Aetna Inc.'s</p> <p style="position:absolute;top:261px;left:108px;white-space:nowrap" class="ft03">(Aetna) ratings (senior unsecured debt at Baa2), and its subsidiaries' ratings (insurance financial</p> <p style="position:absolute;top:281px;left:108px;white-space:nowrap" class="ft03">strength at A2), and has changed the outlook to stable from negative following Moody’s recent</p> <p style="position:absolute;top:300px;left:108px;white-space:nowrap" class="ft03">affirmation of the Baa2 senior debt rating of CVS Health (CVS) and outlook change to stable from</p> <p style="position:absolute;top:320px;left:108px;white-space:nowrap" class="ft04">negative for CVS.<br/>Aetna and its subsidiaries, which are operating subsidiaries of CVS, no longer issue debt as</p> <p style="position:absolute;top:370px;left:108px;white-space:nowrap" class="ft03">financing is managed at the CVS holding company level. See a separate press release on CVS for a</p> <p style="position:absolute;top:389px;left:108px;white-space:nowrap" class="ft05">description of the CVS rating action.<br/>RATINGS RATIONALE<br/>Following the acquisition of Aetna by CVS in November 2018, Moody’s affirmed Aetna’s Baa2</p> <p style="position:absolute;top:471px;left:108px;white-space:nowrap" class="ft03">senior debt rating and changed its outlook to negative from stable to align with the outlook of CVS.</p> <p style="position:absolute;top:490px;left:108px;white-space:nowrap" class="ft03">While Moody’s continues to assess Aetna’s business profile, capital adequacy and profitability</p> <p style="position:absolute;top:510px;left:108px;white-space:nowrap" class="ft03">independently, financial flexibility is considered on a consolidated CVS basis. The prior negative</p> <p style="position:absolute;top:529px;left:108px;white-space:nowrap" class="ft03">outlook, therefore, reflected the very high level of leverage incurred on a consolidated basis to fund</p> <p style="position:absolute;top:549px;left:108px;white-space:nowrap" class="ft03">the acquisition of Aetna by CVS. At closing, consolidated CVS debt/EBITDA was 4.6x. Since then</p> <p style="position:absolute;top:568px;left:108px;white-space:nowrap" class="ft03">CVS has repaid $13.8 billion and Moody’s estimates that debt/EBITDA will be 4.0x by year-end 2020</p> <p style="position:absolute;top:588px;left:108px;white-space:nowrap" class="ft03">and improve to 3.5x by year-end 2022. Given this progress, Moody’s concludes that a stable outlook</p> <p style="position:absolute;top:607px;left:108px;white-space:nowrap" class="ft03">is now warranted. The ratings of CVS and Aetna are likely to remain aligned absent a significant</p> <p style="position:absolute;top:627px;left:108px;white-space:nowrap" class="ft04">divergence in performance at the two companies.<br/>Beyond consolidated financial flexibility, Aetna’s rating reflects its large scale with over 20 million</p> <p style="position:absolute;top:677px;left:108px;white-space:nowrap" class="ft03">members and leading positions in commercial and Medicare Advantage. Aetna’s performance has</p> <p style="position:absolute;top:696px;left:108px;white-space:nowrap" class="ft03">been solid since the acquisition and Aetna has managed well through the coronavirus pandemic. Q3</p> <p style="position:absolute;top:716px;left:108px;white-space:nowrap" class="ft03">2020 year-to-date EBITDA generation is considerable and has outstripped full-year 2019, primarily</p> <p style="position:absolute;top:735px;left:108px;white-space:nowrap" class="ft03">reflecting unusually low utilization in Q2 2020 (Aetna largely comprises CVS Health’s Health Care</p> <p style="position:absolute;top:755px;left:108px;white-space:nowrap" class="ft03">Benefits segment). We believe Aetna will continue to invest heavily in customer benefits and its own</p> <p style="position:absolute;top:774px;left:108px;white-space:nowrap" class="ft04">operations through the remainder of 2020 to balance out the significant year-to-date gain in EBITDA.<br/>While growth in government enrollment has been strong, commercial enrollment has been a</p> <p style="position:absolute;top:824px;left:108px;white-space:nowrap" class="ft03">challenge, even before the onset of the pandemic. However, we expect a turnaround in commercial,</p> <p style="position:absolute;top:843px;left:108px;white-space:nowrap" class="ft03">particularly in the large group segment, as the cost savings benefits of the integrated healthcare</p> <p style="position:absolute;top:863px;left:108px;white-space:nowrap" class="ft03">model are demonstrated. Early indications are encouraging, with the company reporting medical</p> <p style="position:absolute;top:882px;left:108px;white-space:nowrap" class="ft03">cost savings among chronic populations served in its retail health outlets, a reduction in unnecessary</p> <p style="position:absolute;top:902px;left:108px;white-space:nowrap" class="ft04">emergency room visits, and a reduction in out-of-network and non-preferred provider utilization.<br/>The combination of Aetna and CVS has created the potential to reshape the entire health plan</p> <p style="position:absolute;top:952px;left:108px;white-space:nowrap" class="ft03">market although execution risk remains high with the combination. Both the retail pharmacy and</p> <p style="position:absolute;top:971px;left:108px;white-space:nowrap" class="ft03">PBM industries will benefit from broad demographic trends that will continue to drive increases in the</p> <p style="position:absolute;top:991px;left:108px;white-space:nowrap" class="ft03">use of prescription drugs over the longer term. However, increased competition, reimbursement rate</p> <p style="position:absolute;top:1010px;left:108px;white-space:nowrap" class="ft03">pressure, regulatory and political uncertainty especially pertaining to drug pricing, remain key risks to</p> <p style="position:absolute;top:1030px;left:108px;white-space:nowrap" class="ft03">the downside.</p> </div> <!-- Page 2 --> <style type="text/css"> <!-- p {margin: 0; padding: 0;} .ft06{font-size:13px;font-family:Times;color:#1b62b7;} --> </style> <div id="page2-div" style="position:relative;width:918px;height:1188px;"> <img width="918" height="1188" src="http://mco.acquiremedia.com/images/PR_1000003904002.png" alt="background image"/> <p style="position:absolute;top:114px;left:108px;white-space:nowrap" class="ft04">FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS<br/>Aetna's ratings will depend on both Aetna's standalone performance as well as that of CVS on a</p> <p style="position:absolute;top:163px;left:108px;white-space:nowrap" class="ft04">consolidated basis, and it is likely that Aetna's debt ratings will continue to mirror those of CVS.<br/>The following would place upward pressure on Aetna’s credit profile: 1) An upgrade of the debt</p> <p style="position:absolute;top:213px;left:108px;white-space:nowrap" class="ft03">ratings of CVS and/or 2) improving market position. Conversely, factors that could lead to a ratings</p> <p style="position:absolute;top:233px;left:108px;white-space:nowrap" class="ft03">downgrade for Aetna include the following: 1) a downgrade of the debt ratings of CVS; 2) Aetna's</p> <p style="position:absolute;top:252px;left:108px;white-space:nowrap" class="ft03">RBC ratio falling below 225%; 3) Aetna Inc.'s EBITDA margins below 5% on a sustained basis; and/</p> <p style="position:absolute;top:272px;left:108px;white-space:nowrap" class="ft04">or 4) a significant decline in membership or the company's core franchise strength.<br/>LIST OF AFFECTED RATINGS<br/>The following ratings were affirmed:<br/>Aetna Inc. -- senior unsecured debt rating at Baa2;<br/>Aetna Health Holdings, LLC -- senior unsecured debt rating at Baa2;<br/>Aetna Life Insurance Company -- insurance financial strength rating at A2;<br/>HealthAssurance Pennsylvania, Inc. -- insurance financial strength rating at A2;<br/>Coventry Health Care of Missouri, Inc. -- insurance financial strength rating at A2.<br/>Outlook Actions:<br/>Issuer:<br/>.. Aetna Inc.<br/>.. Aetna Health Holdings, LLC<br/>.. Aetna Life Insurance Company<br/>.. HealthAssurance Pennsylvania, Inc.<br/>.. Coventry Health Care of Missouri, Inc.<br/>.....Outlook, Stable from Negative<br/>Aetna Inc. is based in Hartford, CT, and is one of the nation's leading diversified healthcare and</p> <p style="position:absolute;top:776px;left:108px;white-space:nowrap" class="ft03">related benefits companies based on membership. The company is a principal operating unit of</p> <p style="position:absolute;top:795px;left:108px;white-space:nowrap" class="ft03">CVS Health and offers medical, behavioral, health, dental, and vision products. Aetna’s results are</p> <p style="position:absolute;top:815px;left:108px;white-space:nowrap" class="ft03">reported in and account for a large percentage of CVS Health’s Health Care Benefits segment. 2019</p> <p style="position:absolute;top:834px;left:108px;white-space:nowrap" class="ft04">was the first full year of results as a combined company.<br/>Moody's insurance financial strength ratings are opinions of the ability of insurance companies to</p> <p style="position:absolute;top:884px;left:108px;white-space:nowrap" class="ft04">pay punctually senior policyholder claims and obligations.<br/>The principal methodology used in these ratings was US Health Insurance Companies</p> <p style="position:absolute;top:934px;left:108px;white-space:nowrap" class="ft03">Methodology published in November 2019 and available at&#160;</p> <p style="position:absolute;top:934px;left:522px;white-space:nowrap" class="ft06">https://www.moodys.com/</p> <p style="position:absolute;top:954px;left:108px;white-space:nowrap" class="ft06">researchdocumentcontentpage.aspx?docid=PBC_1187569</p> <p style="position:absolute;top:954px;left:520px;white-space:nowrap" class="ft03">&#160;. Alternatively, please see the Rating</p> <p style="position:absolute;top:973px;left:108px;white-space:nowrap" class="ft03">Methodologies page on www.moodys.com for a copy of this methodology.</p> </div> <!-- Page 3 --> <style type="text/css"> <!-- p {margin: 0; padding: 0;}--> </style> <div id="page3-div" style="position:relative;width:918px;height:1188px;"> <img width="918" height="1188" src="http://mco.acquiremedia.com/images/PR_1000003904003.png" alt="background image"/> <p style="position:absolute;top:114px;left:108px;white-space:nowrap" class="ft05">REGULATORY DISCLOSURES<br/>For further specification of Moody’s key rating assumptions and sensitivity analysis, see</p> <p style="position:absolute;top:165px;left:108px;white-space:nowrap" class="ft03">the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure</p> <p style="position:absolute;top:184px;left:108px;white-space:nowrap" class="ft03">form. Moody’s Rating Symbols and Definitions can be found at:&#160;</p> <p style="position:absolute;top:184px;left:551px;white-space:nowrap" class="ft06">https://www.moodys.com/</p> <p style="position:absolute;top:204px;left:108px;white-space:nowrap" class="ft06">researchdocumentcontentpage.aspx?docid=PBC_79004</p> <p style="position:absolute;top:204px;left:503px;white-space:nowrap" class="ft03">.</p> <p style="position:absolute;top:234px;left:108px;white-space:nowrap" class="ft03">For ratings issued on a program, series, category/class of debt or security this announcement</p> <p style="position:absolute;top:254px;left:108px;white-space:nowrap" class="ft03">provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or</p> <p style="position:absolute;top:273px;left:108px;white-space:nowrap" class="ft03">note of the same series, category/class of debt, security or pursuant to a program for which the</p> <p style="position:absolute;top:293px;left:108px;white-space:nowrap" class="ft03">ratings are derived exclusively from existing ratings in accordance with Moody's rating practices.</p> <p style="position:absolute;top:312px;left:108px;white-space:nowrap" class="ft03">For ratings issued on a support provider, this announcement provides certain regulatory disclosures</p> <p style="position:absolute;top:332px;left:108px;white-space:nowrap" class="ft03">in relation to the credit rating action on the support provider and in relation to each particular credit</p> <p style="position:absolute;top:351px;left:108px;white-space:nowrap" class="ft03">rating action for securities that derive their credit ratings from the support provider's credit rating.</p> <p style="position:absolute;top:371px;left:108px;white-space:nowrap" class="ft03">For provisional ratings, this announcement provides certain regulatory disclosures in relation to the</p> <p style="position:absolute;top:390px;left:108px;white-space:nowrap" class="ft03">provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent</p> <p style="position:absolute;top:410px;left:108px;white-space:nowrap" class="ft03">to the final issuance of the debt, in each case where the transaction structure and terms have not</p> <p style="position:absolute;top:429px;left:108px;white-space:nowrap" class="ft03">changed prior to the assignment of the definitive rating in a manner that would have affected the</p> <p style="position:absolute;top:449px;left:108px;white-space:nowrap" class="ft03">rating. For further information please see the ratings tab on the issuer/entity page for the respective</p> <p style="position:absolute;top:468px;left:108px;white-space:nowrap" class="ft04">issuer on www.moodys.com.<br/>For any affected securities or rated entities receiving direct credit support from the primary entity(ies)</p> <p style="position:absolute;top:518px;left:108px;white-space:nowrap" class="ft03">of this credit rating action, and whose ratings may change as a result of this credit rating action, the</p> <p style="position:absolute;top:537px;left:108px;white-space:nowrap" class="ft03">associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach</p> <p style="position:absolute;top:557px;left:108px;white-space:nowrap" class="ft03">exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated</p> <p style="position:absolute;top:576px;left:108px;white-space:nowrap" class="ft04">entity, Disclosure from rated entity.<br/>The ratings have been disclosed to the rated entities or their designated agent(s) and issued with no</p> <p style="position:absolute;top:626px;left:108px;white-space:nowrap" class="ft04">amendment resulting from that disclosure.<br/>These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited</p> <p style="position:absolute;top:676px;left:108px;white-space:nowrap" class="ft04">Credit Ratings available on its website www.moodys.com.<br/>Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the</p> <p style="position:absolute;top:726px;left:108px;white-space:nowrap" class="ft04">related rating outlook or rating review.<br/>Moody’s general principles for assessing environmental, social and governance (ESG) risks in our</p> <p style="position:absolute;top:776px;left:108px;white-space:nowrap" class="ft03">credit analysis can be found at&#160;</p> <p style="position:absolute;top:776px;left:325px;white-space:nowrap" class="ft06">https://www.moodys.com/researchdocumentcontentpage.aspx?</p> <p style="position:absolute;top:795px;left:108px;white-space:nowrap" class="ft06">docid=PBC_1133569</p> <p style="position:absolute;top:795px;left:256px;white-space:nowrap" class="ft03">.</p> <p style="position:absolute;top:825px;left:108px;white-space:nowrap" class="ft03">The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s</p> <p style="position:absolute;top:845px;left:108px;white-space:nowrap" class="ft03">affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt</p> <p style="position:absolute;top:864px;left:108px;white-space:nowrap" class="ft03">am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No</p> <p style="position:absolute;top:884px;left:108px;white-space:nowrap" class="ft03">1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the</p> <p style="position:absolute;top:903px;left:108px;white-space:nowrap" class="ft04">Moody’s office that issued the credit rating is available on www.moodys.com.<br/>Please see www.moodys.com for any updates on changes to the lead rating analyst and to the</p> <p style="position:absolute;top:953px;left:108px;white-space:nowrap" class="ft04">Moody's legal entity that has issued the rating.<br/>Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory</p> <p style="position:absolute;top:1003px;left:108px;white-space:nowrap" class="ft04">disclosures for each credit rating.<br/>Stefan Kahandaliyanage, CFA</p> </div> <!-- Page 4 --> <style type="text/css"> <!-- p {margin: 0; padding: 0;} .ft07{font-size:13px;line-height:23px;font-family:Times;color:#0d0c0c;} --> </style> <div id="page4-div" style="position:relative;width:918px;height:1188px;"> <img width="918" height="1188" src="http://mco.acquiremedia.com/images/PR_1000003904004.png" alt="background image"/> <p style="position:absolute;top:114px;left:108px;white-space:nowrap" class="ft03">AVP-Analyst</p> <p style="position:absolute;top:133px;left:108px;white-space:nowrap" class="ft03">Financial Institutions Group</p> <p style="position:absolute;top:153px;left:108px;white-space:nowrap" class="ft03">Moody's Investors Service, Inc.</p> <p style="position:absolute;top:172px;left:108px;white-space:nowrap" class="ft03">250 Greenwich Street</p> <p style="position:absolute;top:192px;left:108px;white-space:nowrap" class="ft03">New York, NY 10007</p> <p style="position:absolute;top:211px;left:108px;white-space:nowrap" class="ft03">U.S.A.</p> <p style="position:absolute;top:231px;left:108px;white-space:nowrap" class="ft03">JOURNALISTS: 1 <PhoneNo>212 553 0376</PhoneNo></p> <p style="position:absolute;top:250px;left:108px;white-space:nowrap" class="ft04">Client Service: 1 <PhoneNo>212 553 1653</PhoneNo><br/>Scott Robinson, CFA</p> <p style="position:absolute;top:300px;left:108px;white-space:nowrap" class="ft03">Associate Managing Director</p> <p style="position:absolute;top:319px;left:108px;white-space:nowrap" class="ft03">Financial Institutions Group</p> <p style="position:absolute;top:339px;left:108px;white-space:nowrap" class="ft03">JOURNALISTS: 1 <PhoneNo>212 553 0376</PhoneNo></p> <p style="position:absolute;top:358px;left:108px;white-space:nowrap" class="ft04">Client Service: 1 <PhoneNo>212 553 1653</PhoneNo><br/>Releasing Office:</p> <p style="position:absolute;top:408px;left:108px;white-space:nowrap" class="ft03">Moody's Investors Service, Inc.</p> <p style="position:absolute;top:428px;left:108px;white-space:nowrap" class="ft03">250 Greenwich Street</p> <p style="position:absolute;top:447px;left:108px;white-space:nowrap" class="ft03">New York, NY 10007</p> <p style="position:absolute;top:467px;left:108px;white-space:nowrap" class="ft03">U.S.A.</p> <p style="position:absolute;top:486px;left:108px;white-space:nowrap" class="ft03">JOURNALISTS: 1 <PhoneNo>212 553 0376</PhoneNo></p> <p style="position:absolute;top:506px;left:108px;white-space:nowrap" class="ft03">Client Service: 1 <PhoneNo>212 553 1653</PhoneNo></p> <p style="position:absolute;top:602px;left:108px;white-space:nowrap" class="ft03">© 2020 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their</p> <p style="position:absolute;top:621px;left:108px;white-space:nowrap" class="ft07">licensors and affiliates (collectively, “MOODY’S”). All rights reserved.<br/>CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT</p> <p style="position:absolute;top:664px;left:108px;white-space:nowrap" class="ft03">RATINGS AFFILIATES ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE</p> <p style="position:absolute;top:683px;left:108px;white-space:nowrap" class="ft03">CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES,</p> <p style="position:absolute;top:703px;left:108px;white-space:nowrap" class="ft03">AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S</p> <p style="position:absolute;top:722px;left:108px;white-space:nowrap" class="ft03">(COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S</p> <p style="position:absolute;top:742px;left:108px;white-space:nowrap" class="ft03">INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT</p> <p style="position:absolute;top:761px;left:108px;white-space:nowrap" class="ft03">MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY</p> <p style="position:absolute;top:781px;left:108px;white-space:nowrap" class="ft03">ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S</p> <p style="position:absolute;top:800px;left:108px;white-space:nowrap" class="ft03">RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES</p> <p style="position:absolute;top:820px;left:108px;white-space:nowrap" class="ft03">OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S INVESTORS</p> <p style="position:absolute;top:839px;left:108px;white-space:nowrap" class="ft03">SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK,</p> <p style="position:absolute;top:859px;left:108px;white-space:nowrap" class="ft03">INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE</p> <p style="position:absolute;top:878px;left:108px;white-space:nowrap" class="ft03">VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER</p> <p style="position:absolute;top:898px;left:108px;white-space:nowrap" class="ft03">OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT</p> <p style="position:absolute;top:917px;left:108px;white-space:nowrap" class="ft03">OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE</p> <p style="position:absolute;top:937px;left:108px;white-space:nowrap" class="ft03">MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY</p> <p style="position:absolute;top:956px;left:108px;white-space:nowrap" class="ft03">PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT</p> <p style="position:absolute;top:976px;left:108px;white-space:nowrap" class="ft03">RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE</p> <p style="position:absolute;top:995px;left:108px;white-space:nowrap" class="ft03">OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS,</p> <p style="position:absolute;top:1015px;left:108px;white-space:nowrap" class="ft03">ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE</p> <p style="position:absolute;top:1034px;left:108px;white-space:nowrap" class="ft03">RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S</p> </div> <!-- Page 5 --> <style type="text/css"> <!-- p {margin: 0; padding: 0;}--> </style> <div id="page5-div" style="position:relative;width:918px;height:1188px;"> <img width="918" height="1188" src="http://mco.acquiremedia.com/images/PR_1000003904005.png" alt="background image"/> <p style="position:absolute;top:114px;left:108px;white-space:nowrap" class="ft03">CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT</p> <p style="position:absolute;top:133px;left:108px;white-space:nowrap" class="ft03">COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR.</p> <p style="position:absolute;top:153px;left:108px;white-space:nowrap" class="ft03">MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND</p> <p style="position:absolute;top:172px;left:108px;white-space:nowrap" class="ft03">PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH</p> <p style="position:absolute;top:192px;left:108px;white-space:nowrap" class="ft03">INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH</p> <p style="position:absolute;top:211px;left:108px;white-space:nowrap" class="ft07">SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.<br/>MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS</p> <p style="position:absolute;top:254px;left:108px;white-space:nowrap" class="ft03">ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS</p> <p style="position:absolute;top:273px;left:108px;white-space:nowrap" class="ft03">AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS,</p> <p style="position:absolute;top:293px;left:108px;white-space:nowrap" class="ft03">ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT</p> <p style="position:absolute;top:312px;left:108px;white-space:nowrap" class="ft03">DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER</p> <p style="position:absolute;top:332px;left:108px;white-space:nowrap" class="ft03">PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED</p> <p style="position:absolute;top:351px;left:108px;white-space:nowrap" class="ft03">BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH</p> <p style="position:absolute;top:371px;left:108px;white-space:nowrap" class="ft03">INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER</p> <p style="position:absolute;top:390px;left:108px;white-space:nowrap" class="ft03">TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED</p> <p style="position:absolute;top:410px;left:108px;white-space:nowrap" class="ft03">FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM</p> <p style="position:absolute;top:429px;left:108px;white-space:nowrap" class="ft03">OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S</p> <p style="position:absolute;top:449px;left:108px;white-space:nowrap" class="ft07">PRIOR WRITTEN CONSENT.<br/>MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE</p> <p style="position:absolute;top:491px;left:108px;white-space:nowrap" class="ft03">NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED</p> <p style="position:absolute;top:511px;left:108px;white-space:nowrap" class="ft03">FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT</p> <p style="position:absolute;top:530px;left:108px;white-space:nowrap" class="ft07">IN THEM BEING CONSIDERED A BENCHMARK.<br/>All information contained herein is obtained by MOODY’S from sources believed by it to be</p> <p style="position:absolute;top:573px;left:108px;white-space:nowrap" class="ft03">accurate and reliable. Because of the possibility of human or mechanical error as well as other</p> <p style="position:absolute;top:592px;left:108px;white-space:nowrap" class="ft03">factors, however, all information contained herein is provided “AS IS” without warranty of any kind.</p> <p style="position:absolute;top:612px;left:108px;white-space:nowrap" class="ft03">MOODY'S adopts all necessary measures so that the information it uses in assigning a credit</p> <p style="position:absolute;top:631px;left:108px;white-space:nowrap" class="ft03">rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when</p> <p style="position:absolute;top:651px;left:108px;white-space:nowrap" class="ft03">appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot</p> <p style="position:absolute;top:670px;left:108px;white-space:nowrap" class="ft03">in every instance independently verify or validate information received in the rating process or in</p> <p style="position:absolute;top:690px;left:108px;white-space:nowrap" class="ft07">preparing its Publications.<br/>To the extent permitted by law, MOODY’S and its directors, officers, employees, agents,</p> <p style="position:absolute;top:732px;left:108px;white-space:nowrap" class="ft03">representatives, licensors and suppliers disclaim liability to any person or entity for any indirect,</p> <p style="position:absolute;top:752px;left:108px;white-space:nowrap" class="ft03">special, consequential, or incidental losses or damages whatsoever arising from or in connection</p> <p style="position:absolute;top:771px;left:108px;white-space:nowrap" class="ft03">with the information contained herein or the use of or inability to use any such information, even if</p> <p style="position:absolute;top:791px;left:108px;white-space:nowrap" class="ft03">MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers</p> <p style="position:absolute;top:810px;left:108px;white-space:nowrap" class="ft03">is advised in advance of the possibility of such losses or damages, including but not limited to:</p> <p style="position:absolute;top:830px;left:108px;white-space:nowrap" class="ft03">(a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant</p> <p style="position:absolute;top:849px;left:108px;white-space:nowrap" class="ft07">financial instrument is not the subject of a particular credit rating assigned by MOODY’S.<br/>To the extent permitted by law, MOODY’S and its directors, officers, employees, agents,</p> <p style="position:absolute;top:892px;left:108px;white-space:nowrap" class="ft03">representatives, licensors and suppliers disclaim liability for any direct or compensatory losses</p> <p style="position:absolute;top:911px;left:108px;white-space:nowrap" class="ft03">or damages caused to any person or entity, including but not limited to by any negligence (but</p> <p style="position:absolute;top:931px;left:108px;white-space:nowrap" class="ft03">excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt,</p> <p style="position:absolute;top:950px;left:108px;white-space:nowrap" class="ft03">by law cannot be excluded) on the part of, or any contingency within or beyond the control of,</p> <p style="position:absolute;top:970px;left:108px;white-space:nowrap" class="ft03">MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers,</p> <p style="position:absolute;top:989px;left:108px;white-space:nowrap" class="ft03">arising from or in connection with the information contained herein or the use of or inability to use</p> <p style="position:absolute;top:1009px;left:108px;white-space:nowrap" class="ft03">any such information.</p> </div> <!-- Page 6 --> <style type="text/css"> <!-- p {margin: 0; padding: 0;}--> </style> <div id="page6-div" style="position:relative;width:918px;height:1188px;"> <img width="918" height="1188" src="http://mco.acquiremedia.com/images/PR_1000003904006.png" alt="background image"/> <p style="position:absolute;top:114px;left:108px;white-space:nowrap" class="ft03">NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS,</p> <p style="position:absolute;top:133px;left:108px;white-space:nowrap" class="ft03">COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF</p> <p style="position:absolute;top:153px;left:108px;white-space:nowrap" class="ft03">ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE</p> <p style="position:absolute;top:172px;left:108px;white-space:nowrap" class="ft07">BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.<br/>Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s</p> <p style="position:absolute;top:215px;left:108px;white-space:nowrap" class="ft03">Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and</p> <p style="position:absolute;top:234px;left:108px;white-space:nowrap" class="ft03">municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s</p> <p style="position:absolute;top:254px;left:108px;white-space:nowrap" class="ft03">Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s</p> <p style="position:absolute;top:273px;left:108px;white-space:nowrap" class="ft03">Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from</p> <p style="position:absolute;top:293px;left:108px;white-space:nowrap" class="ft03">$1,000 to approximately $2,700,000. MCO and Moody’s investors Service also maintain policies</p> <p style="position:absolute;top:312px;left:108px;white-space:nowrap" class="ft03">and procedures to address the independence of Moody’s Investors Service credit ratings and credit</p> <p style="position:absolute;top:332px;left:108px;white-space:nowrap" class="ft03">rating processes. Information regarding certain affiliations that may exist between directors of MCO</p> <p style="position:absolute;top:351px;left:108px;white-space:nowrap" class="ft03">and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and</p> <p style="position:absolute;top:371px;left:108px;white-space:nowrap" class="ft03">have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted</p> <p style="position:absolute;top:390px;left:108px;white-space:nowrap" class="ft03">annually at&#160;</p> <p style="position:absolute;top:390px;left:188px;white-space:nowrap" class="ft06">www.moodys.com</p> <p style="position:absolute;top:390px;left:315px;white-space:nowrap" class="ft03">&#160;under the heading “Investor Relations — Corporate Governance —</p> <p style="position:absolute;top:410px;left:108px;white-space:nowrap" class="ft07">Director and Shareholder Affiliation Policy.”<br/>Additional terms for Australia only: Any publication into Australia of this document is pursuant to the</p> <p style="position:absolute;top:452px;left:108px;white-space:nowrap" class="ft03">Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited</p> <p style="position:absolute;top:472px;left:108px;white-space:nowrap" class="ft03">ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136</p> <p style="position:absolute;top:491px;left:108px;white-space:nowrap" class="ft03">972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale</p> <p style="position:absolute;top:511px;left:108px;white-space:nowrap" class="ft03">clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access</p> <p style="position:absolute;top:530px;left:108px;white-space:nowrap" class="ft03">this document from within Australia, you represent to MOODY’S that you are, or are accessing</p> <p style="position:absolute;top:550px;left:108px;white-space:nowrap" class="ft03">the document as a representative of, a “wholesale client” and that neither you nor the entity you</p> <p style="position:absolute;top:569px;left:108px;white-space:nowrap" class="ft03">represent will directly or indirectly disseminate this document or its contents to “retail clients” within</p> <p style="position:absolute;top:589px;left:108px;white-space:nowrap" class="ft03">the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as</p> <p style="position:absolute;top:608px;left:108px;white-space:nowrap" class="ft03">to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or</p> <p style="position:absolute;top:628px;left:108px;white-space:nowrap" class="ft07">any form of security that is available to retail investors.<br/>Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency</p> <p style="position:absolute;top:670px;left:108px;white-space:nowrap" class="ft03">subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc.,</p> <p style="position:absolute;top:690px;left:108px;white-space:nowrap" class="ft03">a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating</p> <p style="position:absolute;top:709px;left:108px;white-space:nowrap" class="ft03">agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization</p> <p style="position:absolute;top:729px;left:108px;white-space:nowrap" class="ft03">(“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-</p> <p style="position:absolute;top:748px;left:108px;white-space:nowrap" class="ft03">NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated</p> <p style="position:absolute;top:768px;left:108px;white-space:nowrap" class="ft03">obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit</p> <p style="position:absolute;top:787px;left:108px;white-space:nowrap" class="ft03">rating agencies registered with the Japan Financial Services Agency and their registration numbers</p> <p style="position:absolute;top:807px;left:108px;white-space:nowrap" class="ft07">are FSA Commissioner (Ratings) No. 2 and 3 respectively.<br/>MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including</p> <p style="position:absolute;top:849px;left:108px;white-space:nowrap" class="ft03">corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated</p> <p style="position:absolute;top:869px;left:108px;white-space:nowrap" class="ft03">by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to</p> <p style="position:absolute;top:888px;left:108px;white-space:nowrap" class="ft03">MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging</p> <p style="position:absolute;top:908px;left:108px;white-space:nowrap" class="ft07">from JPY125,000 to approximately JPY250,000,000.<br/>MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory</p> <p style="position:absolute;top:950px;left:108px;white-space:nowrap" class="ft03">requirements.</p> </div> </body> </html>