A.M. Best Assigns Ratings to Aflac Incorporated’s Forthcoming New Senior Unsecured Notes
February 09 2012 - 11:15AM
Business Wire
A.M. Best Co. has assigned debt ratings of “a-” to the
forthcoming senior unsecured notes of Aflac Incorporated
(Aflac) (Columbus, GA) [NYSE: AFL]. The securities will be issued
in two tranches: $400 million 2.65% senior unsecured notes due 2017
and $350 million 4.00% senior unsecured notes due 2022. The outlook
assigned to both ratings is stable. Aflac’s existing issuer credit
and debt ratings are unchanged.
Proceeds from the issuance will be used to repay $347 million
aggregate principal amount of the 1.87% Samurai notes due June
2012. The balance of the proceeds will be used for general
corporate purposes, including capital contributions to its
subsidiaries, if necessary. Aflac’s overall financial leverage is
expected to drop back below 25% following the repayment of the
Samurai notes, while interest coverage should remain in the high
teens, driven by the company’s strong operating earnings profile.
Both ratios are well within A.M. Best’s guidelines for its 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 more than adequate
risk-adjusted capital ratios in 2011. Despite strong operating
earnings, 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. Key
criteria utilized include: “Risk Management and the Rating Process
for Insurance Companies”; “Rating Health Insurance Companies”;
“Assessing Country Risk”; and “A.M. Best’s Ratings & the
Treatment of Debt.” 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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