Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
25 Apr 2001
MOODY'S ASSIGNS Aa3 RATING WITH POSITIVE OUTLOOK TO AARP'S $125 MILLION OF FIXED RATE DEBENTURES, SERIES 2001
Moody's Investors Service has assigned an Aa3 rating, with a positive outlook, to AARP's issue of $125 million of fixed rate debentures to be privately placed. The issue will, along with an additional $75 million of variable rate debt issued concurrently, refinance a bridge loan used to finance the purchase of AARP's headquarter's facility in Washington D.C. The bonds will be an unsecured general obligation of the organization.
The Aa3 rating reflects:
--The strength of AARP's core business, providing membership services to that portion of the population aged 50 and older,
--Strong levels of unrestricted cash available to support operations and debt, and
--Well-diversified revenue base which contributes to long term operating stability.
The positive outlook reflects our expectation that AARP will be successful in translating its current strategic investments into increased market share, which should result in stronger operating performance and continued growth in financial reserves.
In December, 2000, Moody's assigned a Aa3 issuer rating to AARP. At that point, the organization was considering financing the headquarters facility with a $50 million equity contribution and $150 million of debt. With further analysis, the organization has decided to issue $200 million of debt and not make the equity contribution. While this does increase the organization's debt load beyond that anticipated when the issuer rating was assigned, AARP will also preserve $50 million as a cash cushion. Furthermore, the organization's net assets in FY 2000 increased by $21 million reflecting strong investment performance, compared to an expected $8 million decline in net assets that was projected.
As a 501(C )(4) tax-exempt organization under the Internal Revenue Code, AARP is not eligible to issue tax-exempt financing, unlike organizations that carry 501(C ) (3) status. As a result, the current issue is taxable.
STRONG MEMBERSHIP BASE WITH STRATEGIC INITIATIVES LIKELY TO RESULT IN FURTHER GROWTH:
Moody's believes that the AARP's core business position is strong, as evidenced by its high market penetration and demographic growth in the aged 50 and older population. AARP's 34.7 million members represent 46% of the over 50 population in the United States. Members benefit not only from the organization's advocacy efforts for older Americans, but also from a wide variety of discount services and programs. These include such things as group health insurance, discounted car rentals, and investment programs, along with educational and community programs. All members also receive one of AARP's bimonthly magazines, Modern Maturity or My Generation, depending on age. Additionally AARP publishes the AARP Bulletin, an 11 issue per year membership newspaper. Membership satisfaction with this array of programs is evidenced by an 80% annual renewal rate.
Under its strategic plan, AARP plans to increase its membership levels up to 50% of the aged 50 plus population. This segment of the population is expected to double over the next 30 years. By 2003, AARP anticipates enrolling approximately 40 million members. In order to achieve this growth, the organization has undertaken a number of initiatives. These include expanding from providing regionally based services to establishing offices in all states and territories by end of 2001, significantly increasing advertising, and shaping its services to be more attractive to the various segments of its target market.
To fund a portion of these initiatives, AARP has implemented a membership fee increase. After having held steady at $8 annually since 1992, fees increased to $10 in 2000. We believe that the organization has the price elasticity to support additional fee increases if needed, and that this pricing flexibility will be increased as new member services are introduced.
We believe that AARP's initiatives make strategic sense, although recognize there is some risk that the investment the organization is making in these endeavors may not yield targeted results on the time frame indicated. For example, in FY 2000, AARP did not, in fact, meet originally targeted membership revenue increases, in part because of a later than anticipated roll-out of the fee increase. However, membership does not appear to have been negatively affected by the fee increase, climbing to 21.14 million household accounts from 20.78 in the prior year.
STRONG LEVELS OF UNRESTRICTED CASH PROVIDE GOOD SUPPORT FOR OPERATIONS AND PROJECTED DEBT LEVELS:
Moody's expects AARP's financial reserve position to remain strong for the foreseeale future. At the end of FY 2000 (December fiscal year end), the organization had over $546 million of unrestricted cash. This covers the organization's $200 million of debt by nearly two and half times or would fund nearly one full year's of operations.
Historically, AARP has invested the bulk of its portfolio in government securities. However, the organization has begun to diversity its portfolio to include an up to 30% allocation to equity investments. To smooth out the volatility of portfolio returns and to assist with stabilized budgeting of investment income, AARP has entered into a book value wrap contracts for a portion of its portfolio.
Our analysis incorporates the fact that AARP's headquarters building is not an immediately liquid asset but is attractive office space strategically located in downtown Washington D.C. Bondholders do not, however, benefit from a mortgage pledge on the facility.
AARP'S REVENUE BASE IS WELL DIVERSIFIED, CONTRIBUTING TO OPERATING STABILITY:
Although AARP's budget continues to call for a modest decline in net assets for the current fiscal year as it makes strategic investments, we anticipate that the organization will return to historical balanced operating performance over the medium term time frame. Furthermore, these investments, if successful, should enhance the long-term financial health of the association. The organization's operating stability is bolstered by the diversity of its revenue streams as well as annual budgeting contingency reserves. Adjusting investment income to 4.5% of the previous year's market value of cash and investments, the largest revenue contributors are membership fees (28%), royalty income from AARP's guaranteed health insurance plan (20%), royalty income from a broad variety of other diversified programs (20%), and publication advertising income (13%).
Of these revenue streams, the most vulnerable appears to be the royalty income from the health insurance plan given ongoing changes in the health care market place. While this income has been volatile in recent years, it appears to have stabilized due to a several initiatives undertaken by AARP and its partner organizations.
Potential debt associated with the headquarters facility acquisition should not negatively affect operating performance, as debt service will substitute for current lease payments.
The positive outlook on AARP's issuer rating reflects our expectation that AARP will further solidify its already strong market position, resulting in longer-term strengthening of the organization's financial profile.
AARP: Douglas Gledhill, Acting Chief Financial Officer, 202-434-6506
Underwriter: Steve Taylor, First Union Securities, 704-383-6248
Financial Advisor: Dawn Carpenter, Eos Financial Group, 202-336-7092
KEY FACTS (fiscal 2000):
Number of members: 34.7 million
Total Debt: $200 million
Unrestricted Cash and Investments to Debt: 2.5 times
Unrestricted Cash and Investments to Operations: 1 year
No Related Data.
© 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 FUTURE CREDIT 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 MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND 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 RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM 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 IS DEFINED 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 well as 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 it uses 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 any indirect, 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 any such 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 or damages, 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 a particular 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 compensatory losses 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 the avoidance 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 CREDIT RATING, 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 (including corporate 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's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain 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 publicly reported 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 Investors Service 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 intended to 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, you represent 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 or indirectly 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 to the 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's Overseas 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 Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity 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 registered with 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 preferred stock 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 services rendered 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.