A.M. Best Co. has assigned a debt rating of “a-” to the newly issued $250 million 2.65% senior unsecured notes due 2017 of Aflac Incorporated (Aflac) (Columbus, GA) (NYSE: AFL). These additional notes being offered constitute a further issuance of, and are fungible with, the $400 million aggregate principal amount of 2.65% senior notes due 2017 that Aflac issued February 10, 2012. The assigned outlook is stable. Aflac’s existing issuer credit and debt ratings are unchanged.
Proceeds from the issuance will be used for general corporate purposes, including capital contributions to Aflac’s subsidiaries, if necessary. A.M. Best notes that Aflac’s overall financial leverage is expected to remain below 25%, while interest coverage is expected to remain above 10 times. Both measures are well within A.M. Best’s guidelines for Aflac’s current rating level.
The ratings recognize Aflac’s status as a leading provider of life insurance and individual guaranteed-renewable health and accident insurance in both Japan and the United States. In addition to the company’s strong sales growth, Aflac reported improved operating earnings while maintaining adequate risk-adjusted capital ratios in 2011 and into 2012. However, despite strong operating earnings and sales growth, Aflac continues to report sizeable impairments within its investment portfolio. A.M. Best will be monitoring the impact of the company’s new investment portfolio strategy and the potential for further realized investment losses.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
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