AM Best Assigns Issue Credit Ratings to Aflac Incorporated’s Senior Unsecured Notes

AM Best has assigned the Long-Term Issue Credit Ratings (Long-Term IR) of “a-” to the new yen-denominated senior unsecured notes of Aflac Incorporated (Aflac) (Columbus, GA) [NYSE:AFL], which total JPY 82.0 billion. The offering consists of JPY 30.0 billion of 0.633% senior unsecured notes due 2031, JPY 12.0 billion of 0.844% senior unsecured notes due 2033, JPY 10.0 billion 1.039% senior unsecured notes due 2036, JPY 10.0 billion 1.264% senior unsecured notes due 2041 and JPY 20.0 billion 1.56% senior unsecured notes due 2051. The outlook assigned to these Long-Term IRs is stable. Aflac’s existing Long-Term Issuer Credit Ratings remain unchanged.

The proceeds are expected to be used to prefund Aflac’s forthcoming USD 700 million 3.625% senior unsecured notes due in 2023; and under redemption with a make-whole provision, Aflac is expected to pay off this debt early through this process over the next few weeks. Aflac’s financial leverage is expected to increase to approximately 21% for an interim period; AM Best expects the leverage to stay elevated until the notes due 2023 are paid off. The interest coverage has remained favorable in a range of 21.1 to 19.3 times, in 2019 and 2020, respectively, and is expected to remain flat factoring in the additional interest expense.

Aflac’s liquidity position remains solid with cash and cash equivalents at the consolidated entities exceeding USD 5.1 billion and cash flows from operations of approximately USD 6.0 billion reported at year-end 2020. Aflac also maintains other sources of contingent liquidity in its unsecured revolving credit facilities of USD 1.0 billion and JPY 100.0 billion respectively, and has access to an USD 800 million borrowing limit from the Federal Home Loan Bank of Atlanta of which USD 300 million is designated for the short-term liquidity needs of Aflac’s U.S. insurance subsidiaries. This is subject to qualified collateral availability and other conditions.

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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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