A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa” of American Family Life Assurance Company of Columbus (Aflac) (Omaha, NE), American Family Life Assurance Company of Columbus (Japan Branch) and its wholly owned subsidiary, American Family Life Assurance Company of New York (Aflac NY) (New York, NY).
Concurrently, A.M. Best has affirmed the ICR of “a” and the debt ratings of “a” on all outstanding debt of AFLAC, Inc. (Columbus, GA) [NYSE:AFL]. A.M. Best has also assigned a debt rating of “a” to JPY 30 billion 1.87% Samurai notes, due 2012 of AFLAC, Inc. The outlook for all ratings is stable. (See below for a detailed list of the companies and ratings.)
The proceeds of the recently issued debt will be used for general corporate purposes, including the replacement of JPY 30 billion Samurai notes, which matured in June 2007. Following the issuance, Aflac has 70 billion yen remaining on its shelf registration. Aflac presently maintains strong leverage and coverage ratios, primarily reflecting the low cost of its JPY-denominated debt issue in Japan.
Aflac’s ratings reflect its strong capitalization, favorable statutory and GAAP operating results, its dominant position in Japan and its leading market position in the United States. Aflac maintains a leading market position within its product niches, primarily the supplemental health market segment, led by its cancer insurance product. The company has successfully grown its surplus position over the past several years despite the payment of sizeable stockholder dividends. Aflac’s brand name recognition, well-established distribution relationships and focused marketing approach have contributed to its success.
A.M. Best will continue to monitor Aflac’s efforts to reduce its product and geographic concentrations. A.M. Best will also monitor the potential challenges to Aflac’s position in Japan, given the increased competition and the relatively low, but improving, interest rate environment. Furthermore, recent Japanese regulatory scrutiny of all companies selling medical products in Japan has slowed sales demand for medical policies industry wide.
The FSR of A+ (Superior) and the ICRs of “aa” have been affirmed for American Family Life Assurance Company of Columbus and its following subsidiaries:
- American Family Life Assurance Company of Columbus (Japan Branch)
- American Family Life Assurance Company of New York
The following debt ratings have been affirmed:
AFLAC, Inc.—
-- “a” on $450 million 6.5% senior unsecured notes, due 2009
(JPY-Denominated Samurai Notes)
-- “a” on JPY 40 billion 0.71% senior unsecured notes, due 2010
(JPY-Denominated Uridashi Notes)
-- “a” on JPY 15 billion 1.52% senior unsecured notes, due 2011
-- “a” on JPY 10 billion 2.26% senior unsecured notes, due 2016
-- “a” on JPY 20 billion variable interest rate senior unsecured notes, due 2011
The following debt rating has been assigned:
AFLAC, Inc.—
(JPY-Denominated Samurai Notes)
-- “a” on JPY 30 billion 1.87% senior unsecured notes, due 2012
The following indicative rating has been affirmed for securities available under the existing shelf registration:
AFLAC, Inc.—
-- “a” on senior unsecured
For Best’s Debt Ratings, all other Best’s Ratings, an overview of the rating process and
rating methodologies, please visit www.ambest.com/ratings.
Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.
