Reuters logo
Fitch Affirms Aflac's Ratings; Revises IFS Outlook to Stable
May 2, 2017 / 4:33 PM / in 7 months

Fitch Affirms Aflac's Ratings; Revises IFS Outlook to Stable

(The following statement was released by the rating agency) CHICAGO, May 02 (Fitch) Fitch Ratings has affirmed Aflac Inc.'s (Aflac) primary life insurance subsidiaries' Insurer Financial Strength (IFS) ratings at 'A+' and revised the Outlook to Stable from Negative. Fitch has affirmed Aflac's Issuer Default Rating (IDR) at 'A' and senior debt ratings at 'A-'. The Rating Outlook is Stable. A full list of rating actions follows at the end of this release. KEY RATING DRIVERS Today's actions follow Fitch's affirmation of Japan's Long-Term IDR at 'A' and the revision of its Outlook to Stable (see 'Fitch Revises Outlook on Japan to Stable; Affirms at 'A'', dated April 27, 2017, at Fitch views Aflac's ratings as partially constrained by Fitch's sovereign rating for Japan and does not envision Aflac's ratings at levels more than one notch higher than the Japanese sovereign. The constraint reflects Aflac's exposure to the Japanese economy. Aflac Japan comprises more than two-thirds of Aflac's assets, capital and profitability. While Aflac benefits from strong global diversification from its U.S. operations, the company is exposed to continued weak macroeconomic conditions. Exposure to Japan also considers the company's investment concentration in Japan government bonds, which are susceptible to further downgrade in the Japan sovereign rating. The affirmation of 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 consider operating challenges associated with the ongoing low interest rate environment and exposure to the Japan economy. RATING SENSITIVITIES Key rating triggers that could result in a downgrade include: --A downgrade of Japan's sovereign rating (local currency) to 'A-' or lower (currently 'A'/Outlook Stable); --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%, a Prism capital model score below 'Extremely Strong' or SMR sustained below 800%. An upgrade of Aflac's ratings could result from an upgrade of Japan's Long-Term Local Currency IDR to 'A+' or higher. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings and revised the Outlook to Stable from Negative: Aflac Inc. --Long-Term IDR at 'A'; --2.4% USD550 million senior notes due March 16, 2020 at 'A-' --4% USD350 million senior notes due Feb. 15, 2022 at 'A-'; --3.625% USD700 million senior notes due June 2023 at 'A-'; --3.625% USD750 million senior notes due Nov. 15, 2024 at 'A-'; --3.25% USD450 million senior notes due March 17, 2025 at 'A-'; --2.875% USD300 million senior notes due Oct. 15, 2026 at 'A-'; --0.932% JPY60 billion senior unsecured notes due 2027 at 'A-' --6.9% USD400 million senior notes due Dec. 17, 2039 at 'A-'; --6.45% USD450 million senior notes due Aug. 15, 2040 at 'A-'; --4.00% USD400 million senior notes due Oct. 15, 2046 at 'A-'; --5.5% USD500 million junior subordinated debentures due Sept. 15, 2052 at 'BBB'. Fitch has affirmed the following ratings with a Stable Outlook: American Family Life Assurance Co. of Columbus American Family Life Assurance Co. of New York Aflac Japan --IFS at 'A+'. Contacts: Primary Analyst Dafina M. Dunmore, CFA Director +1-312-368-3136 Fitch Ratings, Inc. 70 W. Madison Street Chicago, IL 60602 Secondary Analyst Nelson Ma, CFA Director +1-212-908-0273 Tertiary Analyst Teruki Morinaga Director +81 3 3288 2781 Committee Chairperson Keith M. Buckley, CFA Managing Director +1-312-368-3211 Media Relations: Hannah James, New York, Tel: + 1 646 582 4947, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 26 Apr 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below