Pacific LifeCorp And Insurance Subsidiaries

Transcription

1 Pacific LifeCorp And Insurance Subsidiaries Primary Credit Analyst: Anthony J Beato, New York (1) ; anthony.beato@spglobal.com Secondary Contacts: Robert N Roseman, New York (1) ; robert.roseman@spglobal.com Michael E Gross, San Francisco (1) ; michael.gross@spglobal.com Research Assistant: Katherine Qiu, New York Table Of Contents Rationale Outlook Base-Case Scenario Company Description Business Risk Profile Financial Risk Profile Other Assessments Accounting Considerations Related Criteria And Research SEPTEMBER 20,

2 SACP* Assessments SACP* Support Ratings Anchor aa- Business Risk Very Strong + Modifiers 0 ERM and Management 0 = aa- Liquidity Group Support 0 = Financial Strength Rating AA-/Stable/-- Holding Company Rating Financial Risk Very Strong Holistic Analysis 0 Sovereign Risk 0 Gov't Support 0 A-/Stable/-- *Stand-alone credit profile. See Ratings Detail for a complete list of rated entities and ratings covered by this report. Rationale Business Risk Profile: Very Strong Top-decile market position in its chosen lines of business, including market leadership in universal life products Strong penetration into the ultra-high-net-worth and affluent market segments Consistent growth in operating income and margins, as evidenced by diversification of business lines Regulatory risk in the company's retirement solutions division remains high, but with mitigation plans in place Financial Risk Profile: Very Strong Very strong capitalization due to improved line of sight into the company's nondomestic reinsurance and captive (XXX/AXXX) reinsurance subsidiaries Declining legacy variable annuity (VA) exposure as a percentage of total adjusted company assets Operating income volatility associated with Pacific Life's exposure to volatile equity markets and interest rates Continued investment in large commercial real estate loans that continue to outperform industry norms but can stress the balance sheet during economic disruption Other Factors Management and governance practices remain dedicated to de-risking the product and investment portfolios to protect against market and operating performance volatility Rapidly improving enterprise risk management (ERM) program centered on the organization's risk controls and culture SEPTEMBER 20,

3 Factors Specific to the Holding Company The issuer credit rating on Pacific LifeCorp, Pacific Life's intermediary holding company, is three notches lower than S&P Global Ratings' financial strength rating on the group's operating companies. The rating on the intermediary holding company reflects the regulated sources of earnings from its insurance operations, which can dividend annually to the holding company. Historically, Pacific LifeCorp has received dividends of approximately $100 million annually from its operating subsidiaries. As of year-end 2015, the company did not elect or require to receive dividends from its operating subsidiaries, holding in excess of its future needs at its nonoperating holding company, which maintained more than $300 million cash and short-term investments. For purposes of our capital and earnings analysis, we did not include these funds, as the company has historically utilized these monies for various bolt-on acquisitions and re-investment in its core operations. SEPTEMBER 20,

4 Outlook: Stable The stable outlook on Pacific Life and its core insurance operating subsidiaries reflects our expectation that the company will maintain its very strong competitive position in the highly affluent life and annuity marketplace, with a focus on maintaining superior customer service and low lapse and surrender metrics. We expect this focus on service and pricing discipline to result in a relative flattening of gross premiums during the year to between $2.3 billion and $2.7 billion. We also expect that during the period, Aviation Capital Group Corp. (ACG) and the company's reinsurance subsidiary (Pacific Life Re Ltd.) will continue to add to the diversification of the overall earnings base, reporting consolidated enterprise adjusted EBIT of between $700 million and $1 billion, which remains somewhat exposed to volatility in both the interest rate and equity markets. We expect the company to maintain capitalization in excess of our 'AA' ratings level, as measured by our risk-based capital (RBC) model. We also expect financial leverage to be consistently below 25% with EBITDA fixed-charge coverage consistently in excess of 7.0x. Furthermore, we expect Pacific Life to maintain strong ERM controls, while focusing on de-risking its legacy in-force VA liabilities as a percentage of total reserves to help keep the company relatively risk averse. We expect the company's focus to remain on market-related risks and its strong hedging program effectiveness. Downside scenario We could lower our ratings on Pacific Life and its core insurance operating subsidiaries if, contrary to our expectations, the company's operating performance as measured by adjusted EBIT, return on assets, or return on equity were to deteriorate to significantly less than our expectations for a prolonged period of time outside of our two-year ratings horizon. Such would be exacerbated by outsize investment losses or significant margin deviation from plan on the company's legacy VA portfolio. We would also consider lowering the ratings if the company were to show investment losses or operating performance degradation that directly affected its capital base and our RBC model outcome. Also, if the company were to become increasingly aggressive in its financial policies, resulting in heightened financial leverage metrics in excess of 35% with EBITDA fixed-charge coverage figures of less than 5.0x for a prolonged period of time, we would consider a downgrade. Upside scenario We could raise the ratings on Pacific Life and its core insurance operating subsidiaries if the company were to continue to build its capital and surplus organically, maintaining risk-based capitalization in excess of 750% or in excess of the 'AAA' ratings level as measured by our RBC model consistently. This would include any prospective dividend activity and bolt-on acquisitions of approximately $400 million-$500 million, with consistent declines in the company's legacy VA portfolio. We would also expect the company's return on equity metrics to remain consistently in excess of 8% per year, with financial leverage of less than 15% and EBITDA fixed-charge coverage in excess of 10.0x annually. SEPTEMBER 20,

5 Base-Case Scenario Macroeconomic Assumptions U.S. Real GDP growth of about 2% in 2016 and 2.4% in 2017 Average 10-year U.S. Treasury yield of about 1.6% in 2016 and 1.7% in 2017 Average payroll employment of million in 2016 and 145 million in 2017 Average unemployment of 4.8% in 2016 and 4.5% in 2017 Company-Specific Assumptions Continued investment in product offering and additional distribution capabilities, specifically following the acquisition of Genworth's term life insurance platform Growth in premium volume from the company's individual life and nondomestic insurance operations Generally accepted accounting principles (GAAP) premiums of between $2.3 billion and $2.7 billion GAAP adjusted EBIT of between $700 million and $1 billion Capitalization in excess of the 'AA' ratings level as measured by our capital model, coupled with RBC ratios consistently in excess of 600% Financial leverage of less than 25%, with EBITDA fixed-charge coverage ratios in excess of 7.0x Further improvement in the company's de-risking efforts surrounding legacy VA and equity risk exposures Continued top-line growth from ACG, consistently representing 15%-20% of revenue and pretax operating income Key Metrics --Year ended Dec (Mil. $) 2017* 2016* Gross premiums written 2, , , , ,702.0 EBIT , Net income S&P capital adequacy/redundancy AAA AAA AAA AAA AA Financial leverage (%) Fixed-charge coverage (x) *Forecast data reflect Standard & Poor's base-case assumptions. Company Description Pacific LifeCorp is a mutual holding company based in Newport Beach, California. Its core insurance operating subsidiaries, Pacific Life Insurance Co. and Pacific Life & Annuity Co., target the highly affluent market segment. Through its insurance operations, the company maintains top-10 rankings in many of its core business lines, including annuities (fixed indexed and variable), universal life, structured settlements, and pension risk transfers. The company's aircraft leasing subsidiary (Aviation Capital Group Corp.), reinsurance subsidiaries (Pacific Life Re), and its asset SEPTEMBER 20,

6 management division all add diversification to the organization's growing earning base. Business Risk Profile: Very Strong Pacific Life's business risk profile reflects the company's well-recognized brand and market standing as a top-10 life insurer nationally with significant ranking among the annuities (fixed indexed and variable), universal life, structured settlements, and pension risk transfers lines of business. The company operates in the relatively low-risk North American life insurance market, with significant penetration in the highly affluent market segment. Further informing our view of Pacific Life's business risk profile is the company's level of diversification in its revenue and operating income from its aircraft-leasing operations and reinsurance operations that provide consistency within the company's growing earnings base. Insurance industry and country risk We believe Pacific Life faces low industry and country risk based on our low risk assessment for the U.S. life insurance sector. Our view of Pacific Life's low country risk stems from the economic growth prospects, relatively effective and stable political institutions, sophisticated financial system, and strong payment culture in the U.S. In our view, Pacific Life's insurance operations are exposed to low industry risks due to moderate product risk as evidenced by a strong track record of maintaining asset-liability mismatch within one year. The availability of fixed-income instruments of sufficient duration to match insurance liabilities in the capital markets greatly supports this capability. However, we see sensitivity to interest rates and equity market volatility as offsetting this somewhat, affecting long-term operating return prospects. We believe a weak global economy, persistent low interest rates, and intense competition will limit the sector's growth prospects and potential for higher operating margins. Table 1 Industry And Country Risk Insurance sector IICRA Business mix (%) U.S. life Low risk U.K. life Low risk 3.00 Ireland life Low risk 1.00 Canada life Low risk 1.00 Competitive position: Strong and diversified operation targets the highly affluent market segment We regard Pacific Life's competitive position as very strong and a significant strength to the overall enterprise profile. The company maintains a differentiated brand and reputation in a relatively commoditized market, as exhibited through its logo, the humpback whale, as well as its trademarked slogan, "The Power to Help You Succeed." This level of differentiation has helped the company further develop its distribution capabilities while maintaining its leading position in the highly affluent market. Pacific Life also maintained top-10 rankings in many of its core lines through year-end 2015, including annuities (fixed indexed and variable), universal life, structured settlements, and pension risk transfers, but also in the life insurance industry as an aggregate domestically. SEPTEMBER 20,

7 Table 2 Competitive Position --Year ended Dec (Mil. $) Gross premiums written 2,471 2,174 2,063 2,215 1,586 Net premiums written 2,077 1,793 1,702 1,882 1,244 Total assets under management 126, , , , ,445 Growth in assets under management (%) (0.5) Pacific Life through its subsidiaries, Pacific Life Insurance Co., Pacific Life and Annuity Co., and Pacific Life Reinsurance Co. Ltd., markets competitive protection-based and wealth-accumulation products. The company utilizes a multipronged distribution approach to its product offering, including independent producers/planners, financial advisors, and financial institutions (including regional banks and wirehouses). This approach to distribution continues to play to Pacific Life's strengths while lessening many of the fixed costs associated with directly employing captive agents. As of year-end 2015, the company reported gross premiums of $2.5 billion, growing approximately 14% from the prior year. This level of growth was fueled by the company's reinsurance subsidiary, which showed premium growth in excess of 25% due to strong longevity reinsurance and risk-transfer transactions, including the addition of a sizable block of retroceded business from the Reinsurance Group of America (RGA). Through the same period, Pacific Life in its life and retirement lines of business maintained a top-decile position in the individual life and annuity market segments, reporting mixed to flat sales vis-à-vis the industry. To further improve its position within the individual life segment, Pacific Life earlier this year acquired Genworth's term life insurance new business platform. The company will utilize this acquisition to entrench itself into the individual term life insurance marketplace with innovative products and service capabilities. Although this is an area of emphasis for Pacific Life in working its way into the mass market, this transaction and strategy remain in their early stages and we expect little growth in both sales and premium during the next 18 months associated with this product line. One of the headwinds the company faces in growing in this market remains the balance between high-touch service (Pacific Life's cornerstone) and the high volume nature of the lower-margin term life insurance business. Historically, Pacific Life maintained significant exposure to equity market-linked products (i.e., VAs with guaranteed living benefit riders), which as a percentage of its total adjusted asset base exceeded 40%. As of year-end 2015 that exposure declined to 23%, and continues to decrease. The company has made a concerted effort not only to lower the risk profile of this product segment, but also to reduce the exposure of the overall enterprise by maintaining its pricing and appropriate benefit levels in the competitive landscape while building a balanced mix of business. Further improving the company's competitive position is the diversification of its underlying business units, which include its reinsurance and aircraft-leasing divisions, ACG. Together these two subsidiaries provide approximately 35% of the company's overall revenue and operating earnings, while allowing it to benefit from an earnings stream that is not as affected by changes to or performance of the U.S. equity and bond markets. We recently revised our group status of ACG to strategically important from moderately strategically important due to the strong ties between ACG and Pacific LifeCorp. This includes significant back-office alignment and a history of equity infusions to foster growth. SEPTEMBER 20,

8 These ties are partially offset by Pacific LifeCorp's potential intent to IPO a portion of the company to provide this subsidiary growth capital necessary for additional aircraft purchases. Pacific Life's GAAP operating performance through year-end 2015 continued to improve in tandem with earnings from ACG and its core lines of business. The company reported an adjusted EBIT for the year of $1.04 billion--growth of about 29% over the prior year. This level of growth is a result of ACG's strong performance and strong investment results. Offsetting this is the company's higher-than-expected claims activity and actuarial assumption review that caused some volatility in the underlying run-rate of earnings. As the company continues to invest in its ideal mix of product liabilities, we expect operating earnings to continue growing, though returns may not be as strong due to the enterprise's mutual status. We expect Pacific Life to continue to benefit from product diversification, sound underwriting, and strong expense-management practices through year-end The company's earnings will continue to be bolstered by its superior customer experience, favorable mortality, persistency rates, and underwriting discipline that sets it apart from its peers in the space. We expect this to translate to continued growth in underlying operating income, offset by increases in expenses associated with the Department of Labor fiduciary ruling and the low interest rate environment, and mark-to-market accounting volatility associated with the legacy VA block. This would result in an adjusted EBIT of between $700 million and $1 billion and returns on equity that continue to approach 8%. Financial Risk Profile: Very Strong Pacific Life's financial risk profile is based on its extremely strong capital adequacy as measured by our statutory RBC model and the consistent operating earning capabilities of the enterprise. The company also maintains strength in its EBITDA fixed-charge coverage and financial leverage metrics. Offsetting these strengths is Pacific Life's somewhat elevated risk profile, driven by its legacy VA with guaranteed living benefit exposure (which is declining) and mark-to-market accounting exposure that could cause capital and earnings volatility. Capital and earnings: Balance-sheet strength to help protect against product and market-derived volatility Pacific Life's very strong capital and earnings capabilities are primarily driven by the company's strong RBC ratio, which ended 2015 within the highest quartile in the industry at approximately 632%. As of year-end 2015, the company's U.S. operating subsidiaries reported statutory total adjusted capital of $8.4 billion--strong growth of approximately 8.3% over the prior year. This growth in RBC and capital is a result of strong operating performance offset by higher capital charges associated with growth in the investment portfolio and required capital as a result of equity market volatility affecting the VA portfolio. The company's key balance-sheet risks are the VA offering, and the portfolio's credit and interest rate-related risks. Furthermore, we include Pacific Life's captive reinsurance subsidiaries in our analysis while utilizing a mixture of both GAAP and SAP financials to assess the capital and earnings capabilities of Pacific Life's U.S. and international reinsurance operations. SEPTEMBER 20,

9 Table 3 Capitalization Statistics --Year ended Dec (Mil. $) Common shareholders' equity 10,108 10,231 8,973 9,499 8,285 Change in common shareholders' equity (%) (1.2) Total reported capital 20,513 19,397 17,642 18,115 16,296 Change in total capital (reported) (%) (2.6) Table 4 Earnings Statistics --Year ended Dec (Mil. $) Total revenue 8,428 7,712 7,521 7,250 6,660 EBIT adjusted 1, EBITDA adjusted 1,378 1,146 1, ,157 Net income (attributable to all shareholders) Return on revenue (%) Prebonus pretax return on assets (%) Net expense ratio (%) On a statutory basis, Pacific Life's subsidiaries continue to perform well, albeit showing some mild volatility due to the company's hedging program that targets the GAAP impact on reserves with a statutory-based target consistently as a floor. Through year-end 2015, the company's operating margin as measured by statutory adjusted EBIT declined slightly to $746.1 million from $815.6 million during the prior period as a result of approximately 3.7% growth in net premiums and improved investment yields. This led to a return on assets metric (excluding realized gains and losses) of 60 basis points (bps), a slight decline from the prior year, while maintaining consolidated capitalization (including its international reinsurance operations) in excess of the 'AA' ratings level as measured by our RBC model. Through 2016, we expect Pacific Life's statutory operating subsidiaries to continue to grow in operating margin and retained earnings by approximately 5%-10% annually, reporting earnings before income and taxes of approximately $500 million-$750 million annually, with risk charges associated with the investment portfolio increasing by between 4% and 5%. We also expect the company to report a return on assets consistently in excess of 50 bps annually, while maintaining capitalization on a consolidated basis in excess of our 'AA' ratings level as measured by our RBC model. Risk position: Well-diversified investment portfolio with heightened exposure to commercial mortgage loans Pacific Life's intermediate risk position reflects, in our opinion, its well-diversified investment portfolio and the absence of material risks that are not captured in our capital and earnings analysis. The company also does not have many risks that would make its capital and surplus base significantly volatile. The company maintains a very small amount of high-risk assets when compared to its total adjusted capital and asset bases. However, the company has exhibited an industry-wide trend, which is a slow but steady increase to national association of insurance commissioners (NAIC) rated '2' designated assets, as well as a proportion of its investment portfolio being allocated to commercial mortgage SEPTEMBER 20,

10 loans--taking on some levels of illiquidity risk in place of yield. Pacific Life's allocation more specifically to commercial mortgage loans and backed securities, albeit with some relatively large loan exposures to high-end resorts and hotels, continues to outperform peers', with little or no experienced losses to date. This we believe could be at greater risk in stressed economic scenarios to create some form of volatility, albeit somewhat muted by its large capital base and significant strength in underwriting. Table 5 Risk Position --Year ended Dec (Mil. $) Total invested assets 121, , , , ,739 Net investment income 2,623 2,476 2,352 2, Net investment yield (%) Net investment yield including realized capital gains/(losses) (%) Financial flexibility: Diversified mutual conglomerate with proven access to capital markets We consider Pacific Life's financial flexibility to be adequate, driven by its mutual status that precludes it from overly accessing external capital markets for funding. The group raised external capital to help offset losses associated with the equity market disruption in This included $1 billion in surplus notes and $450 million in senior notes. We view this demonstrated access to external capital favorably, particularly with regard to its support of capitalization. However, we view its additional sources of capital and liquidity to be somewhat limited. Nevertheless, given the stability of Pacific Life's customer base, very strong capitalization, and exceptional liquidity, we do not expect outsize needs for external capital. The company's primary sources of financial flexibility as measured by its capital and earnings generation have led to improved metrics, including a financial leverage ratio of 20% as of year-end 2015 and EBITDA fixed-charge coverage of 8.8x. Table 6 Financial Flexibility --Year ended Dec (x) EBITDA fixed-charge coverage including realized and unrealized gains/(losses) EBITDA fixed-charge coverage Financial leverage including pension deficit as debt (%) Debt leverage excluding pension deficit as debt (%) Through year-end 2016, we expect Pacific Life to maintain financial leverage of less than 25% through additional accretive earnings that will increase its equity base. In line with this assumption, we expect the company to maintain EBITDA fixed-charge coverage in excess of 7x consistently. Other Assessments SEPTEMBER 20,

11 Enterprise risk management: Improving program focused on economics while effectively managing policyholders' capital We view Pacific Life's ERM program as continuing to improve. Over the past few years, Pacific Life has improved its ERM program by investing significantly in the measurement and quantification of its risk-control metrics. This in tandem with our overall view of the enterprise's risk profile and the mitigation of legacy equity risk from its residual VA block, has led us to change our view of ERM to adequate with strong risk controls from adequate. This was underscored by the company's process improvements surrounding risk, specifically in response to VA-related volatility that led to outsize losses exiting the 2008 period of economic disruption. This investment improved significantly its equity risk modeling and measurement capabilities, further augmenting its strong insurance underwriting protocols. The hallmark of Pacific Life's ERM program remains its risk-management culture, which is supported by the tolerance guidelines that define risk positions that are measured at various confidence intervals. The definition of these risks is underscored by risk-based capital floors and its capital-protection framework, which is measured quarterly based on economic value, risk-based capital ratio changes, and net income on both statutory and GAAP bases. The company also maintains fundamental strengths in credit and counterparty risk controls, supported by its strong investment guidelines based on asset, industry, and single-name exposure. Opportunities for growth in Pacific Life's ERM program include the company's interest rate risk and strategic risk-management capabilities. This includes further defining actions for interest rate risk limit breaches, as well as prospective impacts of disintermediation risk per block and its tie-back to hedging protocols. From a strategic risk prospective, we expect the company to continue to invest in its economic capital model while investing in risk attributes of its non-u.s. domiciled and aircraft-leasing businesses. Management and governance: Continued strategic strength with a focus on de-risking the enterprise We believe Pacific Life's management and governance practices are satisfactory, and the company has a clear strategic planning process that is balanced with its risk appetite. The risk appetite statement has a well-defined set of risk tolerances with respect to statutory capital and GAAP earnings. However, equity and interest rate exposures related to VA living benefits have created volatility in reported results. Management has reduced equity market exposure in its VA business by shifting the sales focus to fixed-indexed annuities and investment-only VAs, as well as diversifying its business profile by developing its life reinsurance and retrocession businesses. In addition, the group has shifted its life insurance offerings to become the leading writer of indexed universal life insurance in the industry. Liquidity: Exceptional with assets far exceeding liability needs Pacific Life's liquidity ratio as of year-end 2015 continued to improve, ending the period at 242%. The stand-alone liquidity profiles of each of its U.S.-domiciled operating subsidiaries remain strong from a liquidity perspective. The invested asset base also continues to be well-diversified with the portfolio far exceeding its liquid liabilities. Pacific Life has additional borrowing capacity through its commercial paper, lines of credit, and Federal Home Loan Bank holdings to access during stress events. SEPTEMBER 20,

12 Accounting Considerations In our analysis of Pacific Life, we rely on audited statutory financial statements for the regulated insurance units and audited GAAP financial statements for Pacific Life Mutual Holding Group and its subsidiaries. We make two material adjustments in our analysis of Pacific Life's leverage and capitalization: We exclude all nonrecourse debt related to ACG to Pacific Life and its parent, Pacific LifeCorp, when calculating financial leverage and fixed-charge coverage; and we remove surplus notes credit from our capital modeling that are within 20 years of maturity. Rating Score Snapshot Holding Company Rating Financial Strength Rating Anchor Business Risk Profile IICRA* Competitive Position Financial Risk Profile Capital & Earnings Risk Position A-/Stable/-- AA-/Stable aa- Very Strong Low Risk Very Strong Very Strong Very Strong Intermediate Risk SEPTEMBER 20,

13 Rating Score Snapshot (cont.) Financial Flexibility Adequate Modifiers 0 ERM and Management 0 Enterprise Risk Management Adq, Strong Risk Controls Management & Governance Satisfactory Holistic Analysis 0 Liquidity Exceptional Support 0 Group Support 0 Government Support 0 *Insurance Industry And Country Risk Assessment. Related Criteria And Research Treatment of U.S. Life Insurance Reserves And Reserve Financing Transactions, March 12, 2015 Methodology For Assessing Capital Charges For U.S. RMBS And CMBS Securities Held By Insurance Companies, Aug. 29, 2014 Group Rating Methodology, Nov. 19, 2013 Insurers: Rating Methodology, May 7, 2013 Enterprise Risk Management, May 7, 2013 Methodology For Linking Short-Term And Long-Term Ratings For Corporate, Insurance, And Sovereign Issuers, May 7, 2013 Methodology: Management And Governance Credit Factors For Corporate Entities And Insurers, Nov. 13, 2012 Methodology For Assessing Capital Charges For Commercial Mortgage Loans Held By U.S. Insurance Companies, May 31, 2012 Refined Methodology And Assumptions For Analyzing Insurer Capital Adequacy Using The Risk-Based Insurance Capital Model, June 7, 2010 Use Of CreditWatch And Outlooks, Sept. 14, 2009 Hybrid Capital Handbook: September 2008 Edition, Sept. 15, 2008 Ratings Detail (As Of September 20, 2016) Holding Company: Pacific LifeCorp Issuer Credit Rating Senior Unsecured A- Operating Companies Covered By This Report Pacific Life Insurance Co. Financial Strength Rating Counterparty Credit Rating Financial Enhancement Rating A-/Stable/-- AA-/Stable/-- AA-/Stable/A-1+ AA-/--/-- SEPTEMBER 20,

14 Ratings Detail (As Of September 20, 2016) (cont.) Commercial Paper Subordinated Pacific Life & Annuity Co. Financial Strength Rating Issuer Credit Rating Pacific Life Reinsurance Company II Ltd. Financial Strength Rating Issuer Credit Rating Pacific Life Re Ltd. Financial Strength Rating Domicile A-1+ A AA-/Stable/-- AA-/Stable/-- AA-/Stable/-- AA-/Stable/-- AA-/Stable/-- Nebraska *Unless otherwise noted, all ratings in this report are global scale ratings. S&P Global Ratings credit ratings on the global scale are comparable across countries. S&P Global Ratings credit ratings on a national scale are relative to obligors or obligations within that specific country. Issue and debt ratings could include debt guaranteed by another entity, and rated debt that an entity guarantees. SEPTEMBER 20,

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