AM Best has affirmed the Financial Strength Rating of A+
(Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR)
of “aa” (Superior) of Aflac Life Insurance Japan, Ltd. (Japan),
American Family Life Assurance Company of Columbus (Omaha, NE),
American Family Life Assurance Company of New York (Albany, NY) and
Continental American Insurance Company (Omaha, NE). These companies
represent the life/health insurance subsidiaries of Aflac
Incorporated (Aflac) (Columbus, GA) [NYSE: AFL] and are
collectively referred to as Aflac Incorporated Group. Concurrently,
AM Best has affirmed the Long-Term ICR of “a” (Excellent) and all
existing Long-Term Issue Credit Ratings (Long-Term IRs) of Aflac.
The outlook of these Credit Ratings (ratings) is stable. (See below
for a detailed listing of the Long-Term IRs and shelf
registration.)
The ratings reflect Aflac Incorporated Group’s balance sheet
strength, which AM Best assesses as strongest, as well as its
strong operating performance, favorable business profile and very
strong enterprise risk management (ERM).
The rating affirmations also reflect Aflac Incorporated Group’s
maintenance of risk-adjusted capitalization at the strongest level,
as measured by Best’s Capital Adequacy Ratio (BCAR), as well as
strong NAIC risk-based capital (RBC) in the United States and
excellent solvency ratios in Japan. The group’s risk-adjusted
capitalization continues to be enhanced by its strong operating
performance, which has more than offset unrealized foreign currency
losses in recent years. Aflac’s GAAP equity increased over 18%
through the second half of 2024, with improvement in retained
earnings. The organization’s investment team continues to manage
the challenges effectively of foreign exchange risk. AM Best
considers the organization’s investment management capabilities to
be strong and overall invested assets are diverse across asset
classes and types, as these are managed both internally and through
highly respected external asset managers. However, the group’s
investment portfolio includes some exposure to commercial mortgage,
transitional real estate and real estate owned loans. Aflac’s
mortgage loan portfolio has historically performed well but has
experienced a rise in delinquencies and foreclosures since 2023. AM
Best acknowledges that the mortgage and real estate portfolios
comprise a small but material portion of Aflac’s invested assets.
The group enjoys the financial flexibility provided by its publicly
traded parent company. The flexibility has been further enhanced
through its reinsurance subsidiary, Aflac Re, which assumes a
modest portion of older cancer policies liabilities from Aflac Life
Insurance Japan, Ltd. Furthermore, AM Best notes that Aflac
Incorporated Group’s current adjusted financial and operating
leverages remain relatively modest for their rating levels.
The rating affirmations also reflect Aflac Incorporated Group’s
continued strong operating margins in the Japan and U.S. markets.
The organization has a trend of strong return on equity, which
exceeded 20% in 2023. The earnings continue to be favorably
impacted by lower benefit utilization in the U.S segment partially
offset by higher administrative expenses. While the U.S. and Japan
operating segments historically have produced favorable results,
the group continues to be challenged to reverse the trend of
premium decline and grow new sales materially, due to the
increasingly competitive market. However, AM Best does recognize
that the decrease in premiums in 2023 had improved from prior
years. The company continues to focus actively on client retention
strategies, product enhancements and operational capabilities to
meet evolving market demands and facilitate growth.
Aflac’s ERM management capabilities are very strong and are
deeply embedded in the organization’s strategy and decision making,
which has positively impacted its balance sheet strength,
operational performance and business profiles. The ERM program has
continued to demonstrate robust processes within its framework that
are effective in identifying potential risks, managing those risks
and mitigating them. AM Best’s assessment also includes an
evaluation of the program’s risk defense capabilities on multiple
exposures and has determined that most are managed with very high
capabilities.
Aflac’s favorable business profile is supported by its
market-leading position in the Japan market and its strong market
presence in the U.S. market. The company is the leader in providing
both medical and cancer insurance in Japan, and its strong
partnership with Japan Post solidifies its standing as a formidable
competitor in that market. Furthermore, Aflac Japan continues to
refresh its product offerings to remain competitive in the market.
In the U.S. market, Aflac continues to be a leader in the
supplemental medical insurance space. Additionally, management has
made numerous investments in its U.S. market segment to position
the company for growth over the next few years.
The following Long-Term IRs have been affirmed with stable
outlooks:
Aflac Incorporated—
— “a” (Excellent) on JPY 12.4 billion, 0.3% senior unsecured
notes, due 2025
— “a” (Excellent) on USD 300 million, 2.875% senior unsecured
notes, due 2026
— “a” (Excellent) on USD 400 million, 1.125% senior unsecured
notes, due 2026
— “a” (Excellent) on JPY 60 billion, 0.932% senior unsecured
notes, due 2027
— “a” (Excellent) on JPY 12.6 billion, 0.5% senior unsecured
notes, due 2029
— “a” (Excellent) on JPY 13.0 billion, 1.048% senior unsecured
notes, due 2029
— “a” (Excellent) on JPY 33.4 billion, 1.075% senior unsecured
notes, due 2029
— “a” (Excellent) on JPY 13.3 billion, 0.55% senior unsecured
notes, due 2030
— “a” (Excellent) on USD 1.0 billion, 3.6% senior unsecured
notes, due 2030
— “a” (Excellent) on JPY 29.3 billion, 1.159% senior unsecured
notes, due 2030
— “a” (Excellent) on JPY 9.3 billion, 0.843% senior unsecured
notes, due 2031
— “a” (Excellent) on JPY 27.9 billion, 1.412% senior unsecured
notes, due 2031
— “a” (Excellent) on JPY 30 billion, 0.633% senior unsecured
notes, due 2031
— “a” (Excellent) on JPY 20.7 billion, 0.75% senior unsecured
notes, due 2032
— “a” (Excellent) on JPY 21.1 billion, 1.32% senior unsecured
notes, due 2032
— “a” (Excellent) on JPY 15.2 billion, 1.488% senior unsecured
notes, due 2033
— “a” (Excellent) on JPY 12.0 billion, 0.844% senior unsecured
notes, due 2033
— “a” (Excellent) on JPY 9.8 billion, 0.934% senior unsecured
notes, due 2034
— “a” (Excellent) on JPY 7.7 billion, 1.682% senior unsecured
notes, due 2034
— “a” (Excellent) on JPY 10.6 billion, 0.83% senior unsecured
notes, due 2035
— “a” (Excellent) on JPY 10.0 billion, 1.039% senior unsecured
notes, due 2036
— “a” (Excellent) on JPY 6.5 billion, 1.594% senior unsecured
notes, due 2037
— “a” (Excellent) on JPY 8.9 billion, 1.75% senior unsecured
notes, due 2038
— “a” (Excellent) on JPY 6.3 billion, 1.122% senior unsecured
notes, due 2039
— “a” (Excellent) on USD 400 million, 6.90% senior unsecured
notes, due 2039
— “a” (Excellent) on USD 450 million, 6.45% senior unsecured
notes, due 2040
— “a” (Excellent) on JPY 10.0 billion, 1.264% senior unsecured
notes, due 2041
— “a” (Excellent) on USD 400 million, 4.0% senior unsecured
notes, due 2046
— “a-” (Excellent) on JPY 60 billion, 2.108% subordinated
debentures, due 2047
— “a” (Excellent) on USD 550 million, 4.75% senior unsecured
notes, due 2049
— “a” (Excellent) on JPY 20.0 billion, 1.56% senior unsecured
notes, due 2051
— “a” (Excellent) on JPY 12.0 billion, 2.144% senior unsecured
notes, due 2052
The following indicative Long-Term IRs have been affirmed with
stable outlooks on securities available under the existing shelf
registrations:
Aflac Incorporated—
— “a” (Excellent) on senior unsecured debt
— “a-” (Excellent) on subordinated debt
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Guide to Best's Credit Ratings. For information
on the proper use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
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Jennifer Asamoah Senior Financial Analyst +1 908 882
1637 jennifer.asamoah@ambest.com Christopher Sharkey
Associate Director, Public Relations +1 908 882 2310
christopher.sharkey@ambest.com ChanYoung Lee Director
+85 2282 73404 chanyoug.lee@ambest.com Al Slavin
Senior Public Relations Specialist +1 908 882 2318
al.slavin@ambest.com Sally Rosen Senior Director
+1 908 882 2284 sally.rosen@ambest.com