Allianz Global Corporate & Specialty

Transcription

1 Primary Credit Analyst: Jean Paul Huby Klein, Frankfurt (49) ; Secondary Contact: Volker Kudszus, Frankfurt (49) ; Table Of Contents Major Rating Factors Rationale Outlook Corporate Profile: A Leading Player In Industrial And Specialty Lines Business Competitive Position: Particularly Strong In Europe And Improving In U.S. Markets Management And Corporate Strategy: A Strong Execution Track Record Enterprise Risk Management: Strongly Integrated Into Allianz Group's ERM Framework Accounting: We Focus Our Analysis On IFRS Results Operating Performance: Strong Earnings, Partly Thanks To Reserve Releases Investments: A Conservative Investment Approach Liquidity: Very Strong, With Access To Allianz SE's Resources AUGUST 31,

2 Table Of Contents (cont.) Capitalization: Strong And Of High Quality Financial Flexibility: Very Strong, Thanks To The Allianz Group AUGUST 31,

3 Please note that the ratings covered by this full analysis apply only to core entities of Allianz Global Corporate & Specialty (AGCS), which are listed below. AGCS is a core business of Allianz SE. These ratings do not apply to any noncore or nonrated entities of AGCS. Ratings assigned to noncore entities of the group are published individually. Major Rating Factors The major rating factor for the Allianz Global Corporate & Specialty group is its core status to Allianz SE. However, on a stand-alone basis, the strength and weaknesses of the Allianz Global Corporate & Specialty group are the following: Strengths: Operating Companies Covered By This Report Strong capitalization. Strong underwriting results. Strong management track record in strategy implementation and integration. Weaknesses: Operating performance possibly affected by soft pricing climate and difficult capital markets. Necessary ongoing development and investment in IT systems because of continuous integration of portfolios into globally consistent platforms. Rationale The ratings on Germany-based insurer Allianz Global Corporate & Specialty AG (AGCS AG), Allianz Global Corporate & Specialty (France) (AGCS France), Allianz Global Risks U.S. Insurance Co. (AGR U.S.) and related subsidiaries under an intercompany pooling agreement, as well as Allianz Fire and Marine Insurance Japan Ltd. (AZFM) reflect their core status to their ultimate parent Allianz SE (AA/Negative/A-1+) and collectively comprise the worldwide Allianz Global Corporate & Specialty (AGCS) business. Standard & Poor's Ratings Services considers AGCS AG, the main carrier of the AGCS group, to be integral to Allianz SE's strategy. This is owing to AGCS AG's status as the Allianz group's dedicated carrier for global industrial and specialty lines business, as the second-largest property and casualty insurer within the Allianz group; its competitive position; and strong capitalization. The core status of AGCS France stems from the company's operational integration with AGCS and management's plans for full integration. The core status of AGR U.S. is based on its operational integration with AGCS, its strategic role for the global corporate lines business, and the stop-loss protection provided by AGCS AG for AGR U.S.'s entire portfolio. The core status of AZFM reflects the comprehensive reinsurance agreement that it has with AGCS AG. AGCS is a significant contributor to Allianz SE's property and casualty operations, accounting for 13% of Allianz SE's operating profit in this segment in In our view, AGCS' creditworthiness is underpinned by strong capitalization, strong underwriting results, and management's demonstrated ability to implement its global strategy. These factors are partly offset by the ongoing AUGUST 31,

4 pressure on earnings from a soft pricing climate, although it has improved slightly in 2012; lower investment returns, and high investments in information technology (IT) to further optimize the integration of additional portfolios into AGCS' globally consistent platforms and improve the realization of cost synergies. We expect AGCS' capitalization to remain strong because of its currently extremely strong capital adequacy and adequate reserving with loss reserves covering gross premiums by 1.8x. Further business expansion and exposure to catastrophes or other large loss events would require AGCS, in our view, to operate with capital adequacy above what we consider to be strong. In addition, we believe that Allianz SE is committed to maintaining AGCS' capitalization at a level commensurate with our expectations for a core operation and to support AGCS financially if necessary. AGCS' operating performance remains strong, but is still currently hampered by a softening underwriting cycle in several lines of business and regions, as well as by lower investment returns. The company again experienced large catastrophe losses in 2011, owing to the Japanese earthquake and tsunami, the floods in Australia and Thailand, and the earthquake in New Zealand. However, strong underwriting discipline, a well-diversified portfolio, and sound reinsurance contracts enabled the company to partly offset these losses. Despite these large losses, the reported combined ratio remained stable at 93%. The return on revenues consequently remained stable as well at 16%, after 15% in In both years, the results were positively influenced by reserve releases of about 18 percentage points of the combined ratio in 2011 and 10 percentage points in We therefore estimate the underlying combined ratio to have been about 97% in 2011 and 95% in 2010, after adjusting for the natural catastrophes and a normalized reserve release of 4% each. We think that rates might remain under pressure in 2012, although to a lesser extent than in prior years, mainly owing to a highly competitive market environment with a high level of capacity and only selective rate increases in some business lines that have been hit by large losses. Furthermore, the company's exposure to sizable catastrophe losses and the still challenging market and economic conditions may cause volatility in AGCS' earnings. However, we still expect the underlying combined ratio to reach at least 97% and the return on revenues to remain higher than 10%, leading to an operating profit of about 450 million for 2012 and We view AGCS' strong track record of strategy implementation and integration as a positive rating factor. As Allianz SE's dedicated carrier for industrial and specialty lines business, the company has been actively widening its branch and subsidiary network, taking over portfolios from various subsidiaries of Allianz SE. We think that the company will likely continue to grow organically, increasing its truly global footprint, among others things through a newly created company in South America (Brazil), which will be an affiliate of AGCS' subsidiary Allianz Risk Transfer AG (ART; AA-/Negative/A-1+). Management has a demonstrated track record of integrating portfolios and entities into AGCS' systems and processes. AGCS has a strong competitive position in Europe, benefiting from its ability to offer significant capacity, brand strength, and strong underwriting services. We view its position in the U.S. markets as good, and it is developing through the diversification of the business mix. AGCS' being structured within the Allianz group has further improved the customer interface and operational controls through a unified technical infrastructure, harmonized product and distribution policy, and the transfer of regional industrial and specialty lines portfolios throughout the Allianz group to AGCS' entities and branches. However, the group's full operation under the globally consistent platform requires AUGUST 31,

5 further development of the IT platforms because of the business expansion. The investments undertaken in this respect are, in our view, necessary to improve the operational efficiency and increase the resulting cost synergies. Outlook The negative outlook on AGCS directly reflects that on the parent company Allianz SE. The ratings and outlooks on AGCS AG, AGCS France, and AGR U.S. will therefore move in tandem with those on Allianz SE because they are Allianz SE's core subsidiaries. The ratings on AZFM will also move in tandem with those on Allianz SE, but are constrained by the sovereign ratings on Japan (unsolicited ratings AA-/Negative/A-1+). We could also lower the ratings if, although unexpected, AGCS's strategic role within the Allianz group were to weaken. We view a positive rating action as unlikely over the next months. Corporate Profile: A Leading Player In Industrial And Specialty Lines Business AGCS is Allianz SE's dedicated carrier for its global corporate and specialty segment and it focuses on corporate clients. AGCS AG is the main risk carrier, accounting for about 56% of AGCS' gross written premiums in AGCS is well advanced in the process of broadening its global branch network by transferring existing industrial and specialty lines portfolios from Allianz's subsidiaries to the balance sheets of AGCS' entities and by establishing new offices. The company is planning to expand organically in the coming years by establishing new operations, mainly in growth markets. In Germany, France, the U.S., Japan, Switzerland, and other parts of the world, AGCS maintains separate legal entities. In 2011, AGCS wrote gross premiums of 4.9 billion globally. The French industrial business line underwritten by Allianz IARD () has been transferred to AGCS France retroactively as of January In December 2009, AGCS France became a subsidiary of AGCS AG and will further streamline its integration into AGCS. We believe that the developments in the EU's Solvency II regulations may provide an additional incentive for this integration process as AGCS strives to enhance capital efficiency and reduce regulatory and administrative requirements. In the U.S. and Canada, AGCS continues to operate through its affiliate, AGR U.S., including its subsidiaries, which also trades under the Allianz Global Corporate & Specialty brand. In 2009, AGCS took over the management of AGCS Marine Insurance Co. (), the inland marine business of Fireman's Fund Insurance Co. (A+/Stable/--),, which became a subsidiary of AGR U.S. at the beginning of AGCS has expanded its business in Asia, and in the second quarter of 2010, Japan-based AZFM became a subsidiary of AGCS. The majority of AZFM's business lines are identical to those of AGCS. The significant client overlap among global corporate clients underpins the strategic importance of the Japanese business for AGCS. We expect AZFM to benefit from its integration into AGCS, through the successful exploitation of AGCS' know-how and customer base. Furthermore, at the end of 2010, AGCS acquired Allianz SE's insurance portfolios in Hong Kong and Singapore. In 2012, both portfolios were transferred into branch offices of AGCS AG. Since 2006, AGCS AG has held a 100% stake in Switzerland-based ART, which arranges alternative risk-transfer AUGUST 31,

6 solutions for corporate clients and underwrites AGCS' industrial and specialty lines business in Switzerland and the Gulf region. Furthermore, the company is aiming to increase its AGCS type of business underwriting industrial and specialty lines in South America through a newly established subsidiary. ART's strong operational integration and joint business relationships with AGCS and increasingly important role as the competence center for alternative risk-transfer solutions within the group highlight ART's strategic importance to Allianz SE and contribute to an enhanced service offering to AGCS' clients. Since the termination of the alternative-assets business, which was placed into run-off in 2009, ART has focused on three strategic business segments: Corporate Solutions, Insurance-Linked Markets, and Reinsurance Solutions. This underlines ART's renewed focus on insurance- and reinsurance-related risks, which often supports other Allianz group initiatives. Competitive Position: Particularly Strong In Europe And Improving In U.S. Markets Table 1 Allianz Global Corporate & Specialty AG Competitive Position --Year ended Dec (Mil. ) Total revenues 1,987 1,878 1,819 1,426 1,385 Gross premiums written 2,725 2,409 2,339 2,233 2,258 Annual change in gross premiums written (%) (1.1) (2.4) Net premiums written 1,758 1,656 1,763 1,223 1,162 Annual change in net premiums written (%) 6.1 (6.1) (19.5) Premium split by line (%)* Property Marine Aviation Liability Engineering Energy Financial lines Other Premium split by region (%)* U.K Germany France Americas Rest of Europe Asia Pacific Other *AGCS global including Allianz Risk Transfer AG lines of business. AGCS' competitive position is strong and sustainable, in our view. The group's competitive strengths include a premier AUGUST 31,

7 brand and a truly global footing, based on Allianz SE's extensive network and ability to offer significant global capacity. The established quality of the underwriting and claims services provided to brokers and clients and the financial security of the Allianz group are other positive factors. We expect AGCS' status as a dedicated carrier to reinforce its competitive position in many ways. Product innovation and cross selling, historically a relative weakness, are likely to intensify. This is because AGCS is further integrating its IT platform on a global basis to facilitate a unified customer approach. Ultimately, this will also involve significantly closer cooperation with other corporate segments within the Allianz group, such as credit insurance or alternative risk-transfer solutions. However, the increased number of companies that are being integrated as a result of the large international expansion has caused additional IT requirements and is somewhat delaying the full integration of AGCS' global platform. AGCS is addressing these requirements by increasing its investments in IT. Geographically, AGCS' European operations, which represent about 64% of its business book, demonstrates its strong competitive position. In this region, AGCS benefits mainly from its premier brand and well-established industry expertise, making it a top-five player in the global industrial and specialty insurance business. In North America, which contributes 30%, we expect the group to be able to maintain its good position in the U.S. and Canadian industrial-risk markets and to continuously diversify away from property business, which has shown limited growth in recent years. Our view of a sustainable North American market position is also based on AGCS' extensive industry know-how and customized product solutions in a variety of sectors. The Asia-Pacific business, which represents 5% of AGCS' global portfolio, is expanding after the integration of the Japanese operations and the Hong Kong and Singapore businesses, and we believe that it is likely to be a key growth stimulus over the coming years. In terms of business lines underwritten, AGCS maintains a diversified portfolio. In 2011, its classes were property (23%), marine (18%), liability (15%), ART (12%), aviation (12%), engineering (9%), financial lines (5%), energy (3%), and other (3%) based on gross premiums written. This move toward greater business diversity is also shown by AGCS' expansion of its overall financial lines business and by the portfolio transfer of Fireman's Fund's marine business. Prospective We expect AGCS to maintain a conservative stance toward underwriting in view of relatively low rates and to refrain from focusing on premium growth. In our view, AGCS' medium-term growth potential will comprise a balance of selective organic growth, backed by the strengthening of its broker relations. This should allow AGCS to achieve gross premiums of about 5.2 billion over the medium term and further portfolio diversification by business line and region. Management And Corporate Strategy: A Strong Execution Track Record AGCS' management and corporate strategy is, in our view, a positive rating factor. The management team has demonstrated a strong track record in integrating Allianz SE's industrial and specialty business portfolios into AGCS' operations. Management focuses on the group's competitive strengths and is committed to continuously improving AGCS' operational and risk controls, while maintaining its sound financial profile. AUGUST 31,

8 The transformation of AGCS involves a shift toward a consistently customer-centered philosophy and product innovation. This move aims to exploit the group's core strengths in industrial and specialty lines insurance through a unified product and distribution approach, while simultaneously realizing cost efficiencies. We believe that the strategic rationale for the reorganization is well founded because it addresses some of the key deficiencies of the more decentralized approach of the past. Operational management AGCS' operational management is strong, in our view, but further improvements are needed to allow the group to exploit the full potential of its target operating model. As part of its "Global Change" program, AGCS is moving toward a global platform to establish an integrated global portfolio and to produce globally consistent processes and data definitions. In our view, this project might be essential to AGCS' target of positioning itself for sustainable long-term growth. The company has been strengthening its underwriting controls through a global platform, which should facilitate more effective cycle management. Financial management We regard financial management as strong. In line with Allianz's group standards, AGCS has to report a return on risk-adjusted capital that is at least equal to the cost of capital. AGCS' capital adequacy and retention strategy are based on Allianz SE's internal risk-based model. Earnings targets are difficult to achieve continuously, given the potential for earnings volatility from large loss events. However, we regard the group's recent, favorable history of earnings, although boosted by reserve releases, and its geographic and business diversity as positive. Enterprise Risk Management: Strongly Integrated Into Allianz Group's ERM Framework As a core member of Allianz SE, AGCS forms part of Allianz SE's enterprise risk management (ERM) program. We consider Allianz SE's ERM to be strong. As such, we consider it unlikely that Allianz SE will experience major losses outside its risk tolerance. Our assessment is based on the Allianz group's strong risk-management culture, strong controls for the majority of key risks, and strong strategic risk management. Furthermore, the company is underway in preparing for the implementation of the EU Solvency II framework. We view the group's controls for underwriting, reserve, reinsurance, and catastrophe risk as strong, and these controls are particularly relevant for AGCS' business model. AGCS has implemented a global underwriting platform that contains clear authority limits for individual underwriters. Underwriting guidelines and authority limits are set centrally and systems are in place to identify and deal with potential breaches. Centralized accumulation control and regular business reviews support operational controls. AGCS is enhancing its ERM framework by increasingly entrenching its risk strategy into the business strategy and incentive systems, as well as fine-tuning its risk-based portfolio steering. Furthermore, AGCS has a policy that requires new products to have the approval of the underwriting committee before they can be launched. AUGUST 31,

9 Accounting: We Focus Our Analysis On IFRS Results We base our analysis mainly on the global consolidation of AGCS' businesses, which is used for internal reporting within the Allianz group and complies with International Financial Reporting Standards (IFRS). The financial tables shown in this report are mainly presented according to German generally accepted accounting principles and are publicly available in AGCS AG's annual report. AGCS AG, as AGCS' main carrier, generated about 56% of the group's gross premiums written in In our capital analysis, we focus on AGCS' global operations. Operating Performance: Strong Earnings, Partly Thanks To Reserve Releases Table 2 Allianz Global Corporate & Specialty AG Operating Performance --Year ended Dec Return on revenue (%) Return on equity (%) Net loss ratio (%) Total net expense ratio (%) Net combined ratio (%) Net investment income to net premiums earned (%) Net income (mil. ) AGCS' operating performance remains strong, but is still under pressure from a softening underwriting cycle in several business lines and regions, as well as lower investment returns. We see some slight improvements in the development of rates in some business lines, stemming mainly from the high frequency and severity of catastrophes in 2010 and However, the soft pricing climate in Europe and the U.S. and lower investment yields may dampen future profitability. Additionally, the exposure to large catastrophe losses may cause some earnings volatility in the future. AGCS was able to partly counterbalance the softening pricing environment of the past few years through stronger underwriting discipline, improved cost efficiency, and a diverse business portfolio. This has resulted in a five-year average net combined ratio of 92% for the overall group. The reported combined ratio for 2011 remained stable at 93% despite high catastrophe losses from the earthquakes in Japan and New Zealand, as well as the floods in Australia and Thailand. However, we do not view these results as sustainable because extraordinary reserve releases accounted for about 18 percentage points of the net combined ratio in 2011 and about 11 percentage points on average over the past five years. We estimate the underlying combined ratio was about 97% in 2011 and 95% in 2010, after adjusting for natural catastrophes and a normalized reserve release of 4% each. We expect a slight decline in investment returns to affect operating results in 2012, due to the persistent low-interest-rate environment. However, we are confident that AGCS can maintain strong underwriting results. This is despite large net losses, especially in its property portfolios, resulting from the earthquake in Italy and tornados in the U.S. in first-half 2012 and a smaller amount of reserve releases than in prior years. This is because AGCS' diverse AUGUST 31,

10 portfolio mix supports earnings stability, and we believe earnings from the rest of the portfolio can more easily offset the weaker performance of a single line. We expect the underlying combined ratio for the global business to reach 97% or better for The return on revenues should remain higher than 10%. We expect lower expenditures under the Global Change program after the necessary IT investments and continued streamlining of the property portfolio to support earnings. This should translate into an operating profit of at least 450 million in Investments: A Conservative Investment Approach Table 3 Allianz Global Corporate & Specialty AG Investments --Year ended Dec (%) Net investment yield Net investment yield including all capital gains/(losses) Investment portfolio composition* Fixed income Equity Cash Real estate *AGCS global. ACGS' investment strategy is strong and conservative, in our view. We consider its aggregate fixed-income portfolio to be very liquid and of high quality, with instruments rated 'BBB' or higher. About 53% of the fixed-income investments are rated 'AAA', and the exposure to debt issued by southern European sovereigns is low. For 2012, we expect about 96% of AGCS' total investments to be in fixed-income assets or cash, less than 3% in equities, and the remainder in real estate. AGCS has a policy of closely matching the duration and currency of its assets and liabilities. AGCS' investment income rose to 321 million in 2011 from 307 million the previous year, mainly because of an expanding asset base, an increase in foreign exchange gains, and higher realized gains. We do not assume material impairments on equities and bonds in our current rating assessment, but lower interest rates could depress the group's investment results in the future. Liquidity: Very Strong, With Access To Allianz SE's Resources AGCS' liquidity is very strong, thanks to sound cash flows, a highly liquid investment portfolio, and access to Allianz SE's ample liquidity resources. AUGUST 31,

11 Capitalization: Strong And Of High Quality We assess AGCS' capitalization as strong, benefiting from currently extremely strong capital adequacy and adequate reserving levels. A further business expansion, which will likely increase capital requirements, and exposure to catastrophe or other large loss events would require AGCS, in our view, to operate with capital adequacy above what we consider strong. We regard quality of capital as strong; the majority consists of hard capital components such as shareholders' funds. In our view, the existing profit and loss transfer agreement between Allianz SE and AGCS AG reflects Allianz SE's commitment to maintaining AGCS' capitalization at a level commensurate with our expectations for a core company. Reserves We expect AGCS to maintain adequate reserves. Despite the reserve releases reported from 2008 to 2011, we believe that reserves have remained adequate. AGCS books its reserves based on "best estimate" plus a risk margin, and they are reviewed on a regular basis. We expect a long-term average run-off result of about 4%. Reinsurance: Effective balance-sheet protection AGCS' reinsurance program provides the group with comprehensive coverage against high-severity, low-frequency losses, and this program displayed its efficiency in 2011 by reducing the volatility of the underlying business. AGCS' general purchasing philosophy is to buy a 250-year return period for individual perils and to have an additional layer for extreme scenarios. As a group, AGCS benefits from significantly larger scale and internal diversification. Management aims to exploit this potential to achieve higher capital efficiency through higher retentions for selected segments; the purchase of further protection, comprising nontraditional products available in the capital markets; and internal reinsurance arrangements with affiliated companies. Reinsurance providers are of high quality. Reliance on a few reinsurers is still high, although to a lesser extent than in previous years. AGCS places about 40% of its reinsurance needs with the Allianz group's internal reinsurance unit and the remainder with several external reinsurers with a minimum rating of 'A+' for long-term business and 'A' for short-term business. Financial Flexibility: Very Strong, Thanks To The Allianz Group Table 4 Allianz Global Corporate & Specialty AG Financial Flexibility --Year ended Dec (Mil. ) Shareholders' equity 1,153 1,153 1, Equalization reserves Reinsurance utilization (%) Loss reserves/net premiums written (%) AUGUST 31,

12 AGCS' financial flexibility is very strong, in our view, reflecting the group's status as one of Allianz SE's core operations. As a result, we expect Allianz SE to provide support if AGCS were to need substantial additional funds in a stress situation. AGCS will, we believe, be able to meet its future capital needs, thanks to its strong capitalization and the sound earnings capacity expected for 2012 and Ratings Detail (As Of August 31, 2012) Operating Companies Covered By This Report Allianz Global Corporate & Specialty AG Counterparty Credit Rating AGCS Marine Insurance Co. Issuer Credit Rating Allianz Fire and Marine Insurance Japan Ltd. AA-/Negative/-- Issuer Credit Rating AA-/Negative/-- Allianz Global Corporate & Specialty (France) Issuer Credit Rating Allianz Global Risks U.S. Insurance Co. Issuer Credit Rating Allianz Underwriters Insurance Co. Issuer Credit Rating Related Entities Allianz SE Issuer Credit Rating AA/Negative/A-1+ Commercial Paper A-1+ Junior Subordinated A Junior Subordinated A+ AUGUST 31,

13 Ratings Detail (As Of August 31, 2012) (cont.) Senior Unsecured Subordinated Domicile AA AA- Germany *Unless otherwise noted, all ratings in this report are global scale ratings. Standard & Poor's credit ratings on the global scale are comparable across countries. Standard & Poor's credit ratings on a national scale are relative to obligors or obligations within that specific country. Additional Contact: Insurance Ratings Europe; InsuranceInteractive_Europe@standardandpoors.com AUGUST 31,

14 Copyright 2012 by Standard & Poor's Financial Services LLC. All rights reserved. No content (including ratings, credit-related analyses and data, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an "as is" basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT'S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P's opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process. S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, (free of charge), and and (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at AUGUST 31,