ltd the royal london mutual insurance society · 2021. 1. 7. · moody's investors service...

FINANCIAL INSTITUTIONS

CREDIT OPINION15 December 2020

Update

RATINGS

The Royal London Mutual InsuranceSociety LtdDomicile LONDON, United

Kingdom

Long Term Rating A2

Type Insurance FinancialStrength

Outlook Stable

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Alexandra Aspioti +44.20.7772.5315AVP Mgr-Rtgs & Research [email protected]

Dominic Simpson +44.20.7772.1647VP-Sr Credit [email protected]

Sotirios Mertzios +44.20.3314.2215Associate [email protected]

Simon James RobinAinsworth

+44.20.7772.5347

Associate Managing [email protected]

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

The Royal London Mutual Insurance SocietyLtdSemi-annual update

SummaryThe A2 Insurance Financial Strength Rating (”IFSR”) for The Royal London Mutual InsuranceCompany Ltd. (”Royal London” or “Group”) and the Scottish Life Fund, a sub-fund ofRoyal London, reflects Royal London’s strong capitalisation, low financial leverage, andthe relatively low risk of its product mix. These strengths are mitigated by Royal London’smodest market share in the competitive UK life market, reduced financial flexibility becauseof its mutual status, and an elevated exposure to high-risk assets in its with-profit fundsalthough the investment risk is partially mitigated by considerable hedging protection andthe participating nature of the liabilities.

On 5 June 2020, Royal London's ratings were affirmed with the outlook remaining stable.

Exhibit 1

Net Income (£'m) and Return on Capital (1 yr. avg.)

“Net Income attributable to common shareholders” represents “(Deduction from) / transfer to the unallocated divisible surplusfrom continuing operations, before other comprehensive income”Sources: Moody's Investors Service and company filings

http://www.surveygizmo.com/s3/1133212/Rate-this-research?pubid=PBC_1254066

https://www.moodys.com/credit-ratings/Royal-London-Mutual-Insurance-Society-Ltd-credit-rating-408700

https://www.moodys.com/credit-ratings/Royal-London-Mutual-Insurance-Society-Ltd-credit-rating-408700

https://www.moodys.com/credit-ratings/Scottish-Life-Fund-credit-rating-600021506

https://www.moodys.com/research/Moodys-affirms-Royal-Londons-A2-insurance-financial-strength-rating-outlook--PR_1000002972

MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

Credit strengths

» Strong capitalisation

» Low financial leverage

» Relatively low risk profile with around 60% of IFRS technical liabilities being in unit-linked policies

Credit challenges

» Small, though growing, overall market share relative to leading peers

» Continued regulatory scrutiny in the UK life industry as well as expectations of heightened competitive pressure

» Limited geographic diversification due to a focus on the UK life market

» Mutual status reduces financial flexibility relative to competitors, driven by the lack of access to equity markets and by the limitedaccess to debt markets in potential stress scenarios

» High exposure to risky assets, notably equities, non-investment grade bonds and property, backing its with-profit liabilities, althoughthis risk is mitigated to an extent by the liability profile and the hedging strategy

Rating outlookThe outlook is stable reflecting our expectation that Royal London will preserve its capital strength and will sustain its market position,despite the impact on its credit profile triggered by the coronavirus pandemic.

Factors that could lead to an upgradePositive rating pressure for Royal London could arise from:

» a material increase in market share within the UK life and pensions market with no deterioration in its profitability and capitaladequacy fundamentals; and

» a meaningful increase in scale, without an increase in product risk or a deterioration in capital metrics or financial flexibility.

Factors that could lead to a downgradeNegative rating pressure could arise from:

» a substantial deterioration in the Group's economic capitalisation due to market disruption events or active M&A; or

» a Sharpe ratio consistently below 100% and/or new business margin on Life & and Pension business consistently below 1%; or

» an adjusted financial leverage in excess of 30%; or

» meaningful deterioration in asset quality, notably increasing exposure to high risk assets

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 15 December 2020 The Royal London Mutual Insurance Society Ltd: Semi-annual update


Key indicators

The Royal London Mutual Insurance Society Ltd

The Royal London Mutual Insurance Society Ltd [1][2] 2019 2018 2017 2016 2015As Reported (Pound Sterling Millions)Total Assets 116,779 99,260 99,319 90,631 74,656Total Shareholders' Equity - - - - -Net Income (Loss) Attributable to Common Shareholders 225 (48) 352 76 125Total Revenue 12,404 (1,544) 7,045 11,489 2,977Moody's Adjusted RatiosHigh Risk Assets % Shareholders' Equity 515.6% 514.5% 549.8% 529.1% 369.2%Goodwill & Intangibles % Shareholders' Equity 14.8% 17.6% 15.8% 20.1% 24.4%Shareholders' Equity % Total Assets 1.8% 2.0% 1.8% 1.8% 2.9%Return on Average Capital (ROC) 4.5% -0.6% 8.1% 1.5% 3.2%Sharpe Ratio of ROC (5 yr.) 101.7% 99.6% 143.7% 114.9% 125.3%Adjusted Financial Leverage 21.9% 15.8% 16.3% 18.4% 16.9%Total Leverage 26.4% 17.9% 18.4% 20.8% 19.3%Earnings Coverage 8.9x -0.7x 10.6x 7.4x 4.2xCash Flow Coverage NA NA NA NA NA[1]Information based on IFRS financial statements as of the fiscal year ended 31 December. [2]Certain items may have been relabeled and/or reclassified for global consistency.Sources: Moody's Investors Service and company filings

ProfileRoyal London is a UK-based life assurance group which writes a range of products, most notably unit-linked savings for retail andcorporate customers as well as life protection business, predominantly through the Independent Financial Adviser (IFA) channel. RoyalLondon is the largest mutual insurance group in the UK.

Based on latest disclosure, the issuer reported £116.8 billion of total assets and £4.0 billion of unallocated divisible surplus on its IFRSbalance sheet (YE 19). As at 30 June 2020, it held £139 billion of funds under management (FUM) via its asset management business,Royal London Asset Management.

Detailed credit considerationsMoody's rates Royal London A2 for Insurance Financial Strength, which is in line with the adjusted scorecard-indicated outcome asshown in the Moody's scorecard (exhibit 4).

Insurance financial strength ratingThe key factors currently influencing the rating and outlook are:

Market Position and Brand: Modest market share in the competitive UK life marketRoyal London is a smaller player than most leading peers in the competitive UK life insurance market although the company's marketshare has increased in recent years following good organic growth, benefiting from structural changes in the market. Over the years,Royal London also pursued growth inorganically by completing a number of transactions, such as the acquisition of The Co-operativeInsurance Society Limited (CIS), which significantly increased its scale. These acquisitions have been mostly within the closed-fundwith-profit segment, which contributed to acquiring larger scale to attract further new businesses, especially corporate clients.Furthermore, Royal London has good market positions in the individual pension and intermediary protection segments.

Like a number of domestic UK life insurers, we believe Royal London may be affected by political and regulatory headwinds in themarket as well as heightened competitive pressure from larger players, which may result in lower margins. More positively, RoyalLondon has benefitted from the pension flexibility reforms as evidenced by sustained growth in sales volumes and new business valuein the past few years. As the UK Life industry is entering into a more mature phase, notably following the end of auto-enrolment, weexpect Royal London to experience lower volumes compared to the peak of 2017.

While Royal London has traditionally operated under a multi-brand strategy, the Group has rebranded under a single “Royal London”brand since 2015. We believe this has driven stronger customer recognition over time with limited disruption in distribution channels.



Additionally, in recent years sales benefited from the strategic partnerships, such as the deal with the Post Office in 2017, wherebyRoyal London is the sole provider of Life and Pension products to the Post Office network of 11,000+ branches across UK.

PVNBP (Present value of new business premium) on life and pensions business declined by 5% to £10.7 billion in 2019 due to adecrease in individual pensions (down by 7%) following a slowdown in defined benefit to defined contribution transfers across theindustry. Workplace pensions new business sales were broadly at similar levels as last year, while UK protection volumes were downby 8%, predominantly driven by more selective underwriting. We also note that the Irish protection and the direct-to-consumerbusinesses, while smaller relative to other segments, grew again in 2019, with PVNBP reaching £137 million (YE 18: £112 million) and£423 million (YE 18: £419 million) respectively.

During the first half of 2020, new business sales were adversely impacted by coronavirus. Lockdown restrictions, resulting in logisticalchallenges, coupled with uncertain economic environment hindered demand for pensions and certain types of life products, asevidenced by the 18% drop in PVNBP, year-on-year, to £4.7 billion. Despite the decline in sales across most business segments,protection sales increased by 15%.

Going forward, Royal London is expected to sustain its market position in its core segments, namely pensions and protection, andcontinue to grow its asset management arm as well as its direct to consumer business.

Distribution: Limited diversity of distribution with high reliance on IFAsMoody's views distribution as adequate given Royal London's high reliance on the IFA channel, which accounted for 96% of newbusiness sales in 2019, and relatively modest overall market share. As the IFA distribution network is core to the Group's businessmodel, we expect Royal London to continue to strengthen its long standing relationships with advisers.

In addition, Royal London has been distributing products directly to customers, via its direct-to-consumer division, which benefits fromstrategic partnerships, although sales volumes are still relatively modest. We expect that the group will continue to expand its directdistribution capabilities but without providing financial advice.

Product Risk and Diversification: Business profile predominantly oriented towards unit-linked products and higher marginprotection linesProduct risk has been relatively low as Royal London has in recent years written a large proportion of unit-linked business withoutmaterial guarantees along with protection lines. However, the with-profit back book still contains substantial guarantees albeit at areduced cost following the change in the investment strategy in the Royal London open fund and closed with-profit fund implementedafter the financial crisis in 2008. The ability to share risk with policyholders, especially by adjusting terminal bonuses, mitigates thisguarantee risk to an extent, subject to floor guarantees.

Royal London's liability profile is predominantly oriented towards unit-linked, which continued to increase to around 59% of liabilitiesat YE 19 (54% at YE 18). Participating liabilities accounted for 34% at YE 19 (37% at YE 18) and continued to decrease compared toelevated levels following past acquisitions, notably the acquisition of CIS. We believe that the ability to share risk with policyholders inthe CIS' closed-fund, which remains the largest of its closed funds, in stressed scenarios is meaningful and there remains limited burn-through risk for Royal London.

To complement its existing retirement product offering, Royal London has recently entered the equity release market by partneringwith Responsible Life, an equity release advice firm.

Asset Quality: Significant exposure to equities and real estate, partially mitigated by product profile and asset-liabilitymanagementMoody's considers asset quality to be a relative credit weakness for the Group's ratings, considering the high level of investment risk,although partially mitigated by the participating nature of the liabilities in the various funds and the potential management actionsthat can protect the solvency of the various fund in stress scenarios.

Royal London's high risk asset ratio as a proportion of unallocated divisible surplus remains elevated at 516% as of YE 19 (YE 18: 515%).The ratio captures the high exposure to risky assets, notably equities, non-investment grade bonds and property. However, Moody's



notes that this ratio does not include the economic surplus in the closed-funds (including CIS) which we regard as robust with limitedburn-through risk in stressed scenarios.

The amount of intangibles (including the value in-force of acquired closed books) as a percentage of Moody's adjusted unallocateddivisible surplus has reduced gradually over the years to 14.8% in 2019 (YE 18: 17.6%), driven by strengthening in capitalisation andgradual amortisation of the acquired value of in force.

Capital Adequacy: Strong and relatively robust to adverse market movements; surplus resilient to market volatilityMoody's views Royal London's economic capitalisation as strong with the mutual insurer’s surplus of open and closed funds andregulatory cover ratio remaining resilient under market stress scenarios. At YE 19, under its internal model that was approved by thePRA in September 2019, Royal London’s reported group regulatory Solvency II coverage ratio was 159% (YE 18: 154%), which translatesinto a surplus of £2.6 billion (YE 18: £2.1 billion) . The Group’s surplus and the cover ratio were positively impacted in 2019 by the £600million Tier 2 debt issuance, while other movements in the surplus, including positive economic assumption changes and new businessstrain, only had a marginal impact on aggregate.

We note that the group’s regulatory ratio (which reflects the capital strength of both the open funds and the closed funds) does notinclude the excess capital within the closed funds (YE 19: £3.2 billion). This buffer can only be utilised for the benefit of the closed fundpolicyholders, hence the restriction in the reported ratio. Royal London reported a SII coverage ratio of 219% for its open fund at YE 19(YE 18: 201%) which when combined with the closed funds ratio of 243% (YE 18: 259%) produced a group “investor view” Solvency IIratio of 231% (YE 18: 228%) which we continue to view as strong.

The adverse coronavirus-induced market movements reduced the group’s regulatory cover ratio to an estimated 149% as at 30 June2020, while the group’s “investor view” (the definition of which has changed and now equals the strength of the open fund only)decreased to 212%. The surplus, under both regulatory and investor views, decreased by an estimated £0.1 billion, compared to yearend figures.

We note that Royal London's capital position is supported by relatively limited sensitivity to market movements, as evidenced byreported sensitivities as at 30 June 2020. In particular, a 100bps drop in interest rates would marginally reduce the regulatory viewsurplus by £0.1 billion, benefiting from the adopted hedging strategy, while the group’s cover ratio would reduce by 14ppts, whichcompares favorably to sensitivities reported by peers. This move in the cover ratio is driven by the increase in SCR associated with theclosed funds. A 25% decline in equities would reduce surplus by a modest £0.3 billion and would adversely impact regulatory coverratio by only 4ppts.

Overall, Moody's views Royal London’s position as relatively strong for capital adequacy. This capital strength is a key underpin of therating and therefore any material deterioration in this position would be a major credit negative.

Profitability: Bottom line sensitive to market movements; coronavirus effects have weighed on profitabilityMoody's views the Group's profitability as good, albeit vulnerable to volatility in financial markets materially affecting its bottom lineresults. From an operating perspective, Royal London has benefitted from growth in income drawdown and individual pensions afterpension reforms. Its group pension business is also well placed to attract flows from new workplace schemes as well as compete onthe secondary market, although workplace pension sales reduced significantly in 2018 following the end of auto-enrolment roll-out.Nevertheless we believe the Group's profitability can be vulnerable to political and regulatory headwinds and competitive pressure inthe UK life market.

Royal London reported good operational results in 2019, with EEV operating profit increasing again to £416 million (YE 18: £396million). This mainly reflected a 6% growth in new business contribution (NBC) to £319, driven by significant inflows into its assetmanagement arm. On a bottom-line basis, Royal London reported an EEV profit after tax of £274 million (YE 18: £179 million), whichbenefitted from positive economic experience variances, compared to last year, partly offset by adverse economic assumption changes.

The Group's IFRS result before tax and transfers to unallocated divisible surplus significantly improved to a positive £436 million (2018:loss of £111 million), with a transfer to the unallocated divisible surplus (UDS) result of £225 million (2018: negative of £48 million).The increase in these IFRS results was driven by positive investment returns, compared to a negative figure in 2018. The 5-year average



return on capital (ROC, as measured by transfers to UDS) slightly improved to 3.3%(YE 18: 3.2%) with 1-year ROC of 4.6% in 2019following a negative 0.6% in 2018.

In 2020, Royal London changed its reporting basis to UK GAAP. In the first half of the year, coronavirus-induced reduction in newbusiness sales, investment results, and asset management fees, as well as increased digital investments significantly impactedprofitability. Under the new reporting basis, operating profit decreased by 60% to £36 million (HY 19: £90 million), while the Groupreported a loss of £181 million for the first half of 2020 (HY 19: profit of £397 million).

The overall profitability metric is constrained by the high volatility of the bottom line which is in turn driven by a high correlationwith investment performance. However, we note that this volatility is exacerbated by the mutual status of the company because theinvestment volatility in the with-profit fund affects directly the income statement. In the short term, we expect profitability to remainunder pressure due to lower new business volumes in life and pensions.

Liquidity and Asset/Liability Management: Strong liability and sound ALM capabilitiesLiquidity scores very highly due to the large volume of frequently traded assets on the balance sheet. Moody's views the ALM capabilityas sound and aligned with an Aa rating, although not amongst the market leaders.

Financial Flexibility: Low financial leverage, offset by more limited ability to access markets as a result of the mutual legalstatusOverall Moody's views Royal London's financial flexibility as good for the rating level. Like most mutuals, financial leverage has beenconsistently low, coupled with strong 5-year earnings coverage metric, albeit volatile on 1-year basis affected by volatility affecting itsbottom line. Nevertheless the company's financial flexibility is somewhat constrained by the expectation of limited access to capitalmarkets in stress scenarios. Going forward we expect Royal London's financial leverage to remain relatively low.

In October 2019 Royal London, through its RL Finance Bonds No.4, issued £600 million subordinated notes. The issuance led to anincrease in Royal London’s adjusted financial and total leverage metrics to 21.9% and 26.4% (YE 18: 15.8% and 17.9% respectively),although it remains within Moody's expectation for its rating level.

The 5-year average earnings coverage decreased to 6.1x in 2019 (2018: 6.2x), although it improved significantly on a 1-year basis to8.9x (2018: negative 0.7x), given the loss reported last year.

Exhibit 3

Financial Flexibility

Sources: Moody's Investors Service and company filings



ESG considerationsSocial

Like its life insurance peers, Royal London faces social risks through the handling of customer information, the underwriting andbusiness growth implications (positive and negative) of changing demographics, and the impact of changing consumer preferences ondistribution channels.

We also regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public healthand safety. Furthermore, the rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oilprices, and asset insurance sector. While the breadth and severity of the shock in still uncertain, we expect it will have some impact onRoyal London’s claims, premiums, earnings and capital, at least in 2020.

Governance

Like all other corporate credits, the credit quality of Royal London is influenced by a wide range of governance- related issues, relatingto financial, managerial, ownership or other factors, all of which can be exacerbated by regulatory oversight and intervention.

However, Royal London operates within a strong regulatory environment, being overseen by the UK's PRA and FCA.



Rating methodology and scorecard factors

The Royal London Mutual Insurance Society Ltd

Financial Strength Rating Scorecard [1][2] Aaa Aa A Baa Ba B Caa ScoreAdj ScoreBusiness Profile Baa AMarket Position and Brand (15%) A A

-Relative Market Share Ratio XDistribution (10%) Ba Baa

-Distribution Control X-Diversity of Distribution X

Product Focus and Diversification (10%) Aa Aa-Product Risk X-Life Insurance Product Diversification X

Financial Profile Baa AAsset Quality (10%) B Baa

-High Risk Assets % Shareholders' Equity X-Goodwill & Intangibles % Shareholders' Equity 14.8%

Capital Adequacy (15%) B Aa-Shareholders' Equity % Total Assets X

Profitability (15%) Baa A-Return on Capital (5 yr. avg.) 3.4%-Sharpe Ratio of ROC (5 yr.) 101.7%

Liquidity and Asset/Liability Management (10%) Aaa Aa-Liquid Assets % Liquid Liabilities X

Financial Flexibility (15%) A A-Adjusted Financial Leverage 21.9%-Total Leverage 26.4%-Earnings Coverage (5 yr. avg.) 6.1x-Cash Flow Coverage (5 yr. avg.)

Operating Environment Aaa - A Aaa - APreliminary Standalone Outcome Baa1 A2[1]Information based on IFRS financial statements as of fiscal year ended 12/31/2019. [2]The Scorecard rating is an important component of the company's published rating, reflecting thestandalone financial strength before other considerations (discussed above) are incorporated into the analysis.Source: Moody’s Investors Service

Structural considerationsMoody's ratings of the subordinated bonds at RL Finance Bonds No. 2, RL Finance Bonds No. 3 and RL Finance Bonds No. 4 plc aredriven by the A2 Insurance Financial Strength rating of Royal London. The notching between the A2 IFSR and the Baa1 debt rating istwo notches, reflecting the guarantee provided by Royal London and Moody's standard notching procedures.



Ratings

Exhibit 5

Category Moody's RatingTHE ROYAL LONDON MUTUAL INSURANCESOCIETY LTD

Rating Outlook STAInsurance Financial Strength A2

SCOTTISH LIFE FUND

Rating Outlook STAInsurance Financial Strength A2

Source: Moody's Investors Service



© 2020 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURECREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S(COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAYNOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEEMOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’SINVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, ORPRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTSOF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS ORCOMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DONOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOTAND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS ANDPUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS ANDOTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDYAND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESSAND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENTDECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BYLAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHERTRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANYFORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM ISDEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as wellas other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information ituses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However,MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for anyindirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use anysuch information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses ordamages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of aparticular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatorylosses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for theavoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents,representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDITRATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (includingcorporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating,agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody’sInvestors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regardingcertain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publiclyreported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance —Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s InvestorsService Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intendedto be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, yourepresent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly orindirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as tothe creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’sOverseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a NationallyRecognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by anentity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registeredwith the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferredstock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and servicesrendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

REPORT NUMBER 1254066


http://www.moodys.com


CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454


ltd the royal london mutual insurance society · 2021. 1. 7. · moody's investors service...

Documents