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Press release from Business Wire

A.M. Best Assigns Debt Rating to Aflac Incorporated's Newly Issued Senior Unsecured Notes

Tuesday, June 04, 2013

A.M. Best Assigns Debt Rating to Aflac Incorporated's Newly Issued Senior Unsecured Notes

09:27 EDT Tuesday, June 04, 2013

OLDWICK, N.J. (Business Wire) -- A.M. Best Co. has assigned a debt rating of “a-” to the newly issued $700 million 3.625% senior unsecured notes due 2023 of Aflac Incorporated (Aflac) (Columbus, GA) [NYSE: AFL]. The assigned outlook is stable. Aflac's existing issuer credit and debt ratings are unchanged.

Proceeds from the issuance will be used to repay JPY 34.2 billion aggregate principal amount of the 1.47% samurai notes due July 2014. The balance of the proceeds will be used for general corporate purposes, which also could include the pre-funding of the $300 million 3.14% senior notes due August 2015. Aflac's adjusted financial leverage is expected to increase to approximately 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 Aflac's current rating level.

The ratings recognize Aflac's growth in operating earnings, solid risk-adjusted capitalization, strong sales in Japan and the ongoing execution of its long-term investment allocation strategy. In addition, the ratings reflect the company's status as a leading provider of individual guaranteed-renewable health and accident insurance in Japan and the United States. While operating earnings have been strong, Aflac has reported sizeable impairments within its investment portfolio. However, A.M. Best notes that the investment losses in 2012 were significantly lower than what was experienced in 2011, and that the organization expects investment losses to decrease significantly going forward as Aflac continues its investment de-risking activities related to its new investment strategy.

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. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best
Tom Zitelli, 908-439-2200, ext. 5412
Senior Financial Analyst
tom.zitelli@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Thomas Rosendale, 908-439-2200, ext. 5201
Assistant Vice President
thomas.rosendale@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

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