AFL AFLAC Inc

A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and has assigned issuer credit ratings (ICR) of "aa" to American Family Life Assurance Company of Columbus (AFLAC) (NYSE: AFL) (Omaha, NE), American Family Life Assurance Company of Columbus (Japan Branch), and its wholly-owned subsidiary, American Family Life Assurance Company of New York (AFLAC NY) (New York, NY). Concurrently, A.M. Best has assigned debt ratings of "a" to all of AFLAC Inc's (Columbus, GA) outstanding debt and its shelf registration All ratings have a stable outlook. These ratings reflect AFLAC's sustained favorable capitalization, improving statutory and GAAP returns and its leading market position. AFLAC has been able to successfully grow its surplus position over the past several years despite the payment of substantial stockholder dividends and its debt service requirements. The group presently maintains strong leverage and coverage ratios, primarily reflecting the low cost of its yen-denominated debt issued in Japan. AFLAC has also reported improved earnings from operations in 2004. While the prior year's net income was somewhat depressed following a significant one-time realized loss from Parmalat, earnings continue to track well. Though sales in both the United States and Japan were somewhat disappointing through 2004 and early 2005, AFLAC continues to maintain a leading market position in both geographic markets. AFLAC's core supplemental health segment--led by its cancer insurance product--represents a dominant market share in both countries; however, management will need to focus on its strategic plans to improve diversification going forward. AFLAC's brand name recognition, well-established distribution relationships and focused marketing approach have contributed to its success. However, AFLAC's management is presently focused on improving customer awareness of its products and the benefits they provide with hopes that it will improve domestic sales. A.M. Best will continue to monitor AFLAC's efforts to reduce its product and geographic concentrations. A.M. Best will also look to monitor the potential challenges to AFLAC's position in Japan, given the extended weakened economic conditions, very low interest rate environment and increased competition. A.M. Best believes that AFLAC would improve its spread of risk and its operations would be better positioned if the organization successfully implements its diversification plan, including further expansion of its U.S. market share and reduction of the product concentrations within its inforce block of business. The financial strength rating of A+ (Superior) has been affirmed and issuer credit ratings of "aa" have been assigned to American Family Life Assurance Company of Columbus and its following subsidiaries: -- American Family Life Assurance Company of Columbus (Japan Branch) -- American Family Life Assurance Company of New York The following debt ratings have been assigned: AFLAC Inc-- -- "a" on $450 million 6.5% senior unsecured notes, due 2009 (Yen-Denominated Samurai Notes) -- "a" on JPY 30 billion 1.55% senior unsecured notes, due 2005 -- "a" on JPY 40 billion 0.87% senior unsecured notes, due 2006 -- "a" on JPY 30 billion 0.96% senior unsecured notes, due 2007 The following indicative rating has been assigned for debt securities available under the existing shelf registration: AFLAC Inc-- -- "a" on senior unsecured debt For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.