Fitch Rates Aflac Inc.'s Senior Debt Issues 'A-'
KEY RATING DRIVERS
Aflac intends to use the net proceeds from this offering to redeem all or a portion of its $650 million 2.65% senior notes due 2017. The company intends to use the balance of the net proceeds for general corporate purposes.
Aflac's ratings reflect the company's extremely strong competitive position in the supplemental accident and health insurance markets in Japan and the U. S., extremely strong earnings profile and very strong capitalization. The ratings also incorporate the impact of slow economic growth in Aflac's key Japanese market and its sizeable exposure to Japanese sovereign risk including significant investment concentration in Japanese government bonds (JGB).
[Key rating triggers that could result in a downgrade include:
--A downgrade of Fitch's sovereign rating (local currency) of Japan to 'A-' or lower (currently 'A'/Outlook Negative);
--Significant investment impairments or losses in Aflac's capital position;
--A decline in Aflac's run-rate pre-tax operating margin below 17% in Japan or 15% in U. S.;
--A significant increase in either operating (greater than 16x) or financial leverage (greater than 30%);
--NAIC RBC less than 400%.
An upgrade of Aflac is unlikely in the near term, given Japan's Long-Term Local Currency IDR and Outlook of 'A'/Outlook Negative.]
Fitch currently rates Aflac as follows:
--Long-Term IDR at 'A'; Stable Outlook;
--1.84% Samurai notes due July 2016 'A-';
--2.26% Uridashi notes due September 2016 'A-';
--2.65% USD650 million senior notes due Feb. 15, 2017 'A-';
--2.4% USD550 million senior notes due March 16, 2020 'A-'
--4% USD350 million senior notes due Feb. 15, 2022 'A-';
--3.625% USD700 million senior notes due June 2023 'A-';
--3.625% USD750 million senior notes due Nov. 15, 2024 'A-';
--3.25% USD450 million senior notes due March 17, 2025 'A-';
--6.9% USD400 million senior notes due Dec. 17, 2039 'A-';
--6.45% USD450 million senior notes due Aug. 15, 2040 'A-';
--5.5% USD500 million junior subordinated debentures due Sept. 15, 2052 'BBB'.
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--IFS 'A+'; Negative Outlook.