Business & Finance
Business and Finance
Business and Finance
Thu, June 30, 2011 A.M. Best Assigns Debt Ratings to Aflac Incorporateda?s Forthcoming Senior Notes
OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has assigned debt ratings of aa-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. Aflaca™s existing financial strength, issuer credit and debt ratings are unchanged.
"Risk Management and the Rating Process for Insurance Companies"
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 organizationa™s financial flexibility. Aflaca™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 Aflaca™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 Aflaca™s investment performance and capitalization levels.
The principal methodology used in determining these ratings is [ Besta™s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition ], which provides a comprehensive explanation of A.M. Besta™s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: aRating Health Insurance Companiesa; aRisk Management and the Rating Process for Insurance Companiesa; aA.M. Best Ratings & the Treatment of Debta; and aAssessing Country Risk.a Methodologies can be found at [ www.ambest.com/ratings/methodology ].
Founded in 1899, A.M. Best Company is the worlda™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.
