A.M. Best Assigns Debt Rating to Aflac Incorporated’s Forthcoming Senior Unsecured Notes
November 05 2014 - 7:57AM
Business Wire
A.M. Best has assigned a debt rating of “a-” to the
forthcoming $750 million 3.625% senior unsecured notes due 2024 of
Aflac Incorporated (Aflac) (Columbus, GA) [NYSE: AFL]. 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, which also could include capital contributions to Aflac’s
subsidiaries, if needed.
A.M. Best anticipates that Aflac’s adjusted financial leverage
ratio, which includes equity credit for a portion of its existing
subordinated debentures, will increase to approximately 24% as a
result of the current notes offering. Despite the increase in
leverage, A.M. Best notes that Aflac’s financial leverage and
interest coverage ratios remain well within A.M. Best’s guidelines
for its current rating level.
The ratings recognize Aflac’s growth in risk-adjusted
capitalization, strong operating earnings and the ongoing execution
of its long-term investment allocation strategy. In addition, the
ratings reflect the company’s status as a leading provider of
individual guaranteed-renewable health and accident insurance both
in Japan and the United States. While operating earnings have been
strong, Aflac continues to report net realized investment losses.
However, A.M. Best notes that the investment losses have been
significantly lower than in prior years. Furthermore, given Aflac’s
strong earnings and the substantial cash flow from its operating
activities, as well as its much improved risk-adjusted
capitalization, A.M. Best believes the organization has the
capacity to withstand a reasonably high level of additional
realized losses should they occur.
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.
Key insurance criteria reports utilized:
- Equity Credit for Hybrid
Securities
- Insurance Holding Company and Debt
Ratings
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 © 2014 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
A.M. Best CompanyTom Zitelli, 908-439-2200,
ext. 5412Senior Financial
Analysttom.zitelli@ambest.comorTom Rosendale,
908-439-2200, ext. 5201Assistant Vice
Presidentthomas.rosendale@ambest.comorChristopher Sharkey,
908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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