A.M. Best Assigns Debt Ratings to Aflac Incorporated’s Forthcoming Senior Notes
June 30 2011 - 10:31AM
Business Wire
A.M. Best Co. has assigned debt ratings of “a-” to the
yen-denominated (Samurai) bonds to be issued by Aflac
Incorporated (Aflac) (Columbus, GA) (NYSE: AFL). The bonds will
be issued on a senior unsecured basis in three tranches: JPY 28.7
billion (USD 359 million) of three-year fixed-rate notes with a
coupon of 1.47%; JPY 15.8 billion (USD 197 million) of five-year
fixed-rate notes with a coupon of 1.84%; and JPY 5.5 billion (USD
69 million) of three-year floating-rate notes with a coupon of
three-month Japanese yen LIBOR plus 1.15%. The outlook assigned to
the ratings is stable. Aflac’s existing financial strength, issuer
credit and debt ratings are unchanged.
Proceeds from the issuances will be used to repay the JPY 35
billion debt due in September 2011 and for general corporate
purposes. A.M. Best believes the debt offering enhances the
organization’s financial flexibility. Aflac’s overall financial
leverage is expected to remain below 25%, which is consistent with
similarly-rated peers, and interest coverage remains very
strong.
Aflac continues to maintain strong brand recognition in Japan
and the United States, as well as a healthy risk-adjusted capital
position at its operating subsidiaries. Additionally, given Aflac’s
very favorable operating earnings and strong cash flows, A.M. Best
believes the organization can withstand additional potential
write-downs in its investment portfolio from ongoing de-risking
activities. Nevertheless, A.M. Best will continue to monitor
Aflac’s investment performance and capitalization levels.
The principal methodology used in determining these ratings is
Best’s Credit Rating Methodology -- Global Life and Non-Life
Insurance Edition, which provides a
comprehensive explanation of A.M. Best’s rating process and
highlights the different rating criteria employed. Additional key
criteria utilized include: “Rating Health Insurance Companies”;
“Risk Management and the Rating Process for Insurance Companies”;
“A.M. Best Ratings & the Treatment of Debt”; and “Assessing
Country Risk.” Methodologies 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 © 2011 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
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