AM Best revises issuer credit outlook to positive for Aflac Incorporated and its subsidiaries


OLDWICK, NJ – (BUSINESS WIRE) –Preferably has revised the outlook for the long-term credit rating of issuers (Long-Term ICR) from stable to positive and confirmed the Financial Strength Rating (FSR) of A + (Superior) and the long-term ICR of “aa-” (Superior). of Aflac Life Insurance Japan, Ltd. (Aflac Japan), American Family Life Assurance Company of Columbus (Omaha, NE), American Family Life Assurance Company of New York (Albany, NY), and Continental American Insurance Company (Omaha, NE). The FSR’s outlook is stable. These companies represent the life / health insurance subsidiaries of Aflac Incorporated (Aflac) (Columbus, GA) (NYSE: AFL) and are collectively referred to as the Aflac Incorporated Group. At the same time, AM Best has revised the outlook from stable to positive and confirmed the long-term ICR of “a-” (excellent) as well as all existing long-term issue ratings (Long-Term IR) of Aflac. (See below for a detailed listing of long-term IRs.)

These credit ratings (ratings) reflect Aflac Incorporated Group ”s Balance sheet strength, which AM Best considers strongest, as well as strong operational performance, favorable business profile and adequate enterprise risk management (ERM).

The change in outlook to positive reflects Aflac’s continued development and improvement in its ERM practices. The management team’s focus on improving operational financial metrics and financial management tools to protect the balance sheet is anchored in its actionable risk management plans and practices. The success of the company’s risk management practices was most recently demonstrated in its ability to adapt to operational challenges during the COVID-19 pandemic, including its digitized sales efforts to encourage product growth without personal engagement at the job sites and diversify the product and regions during it Time all of this has been managed by Aflac’s risk management and mature and embedded ERM program, including its well-developed scenario tests and evolving modeling capabilities. AM Best believes that the attention Aflac has paid to risks under this program has guided the company through challenges of market turmoil and guidelines from local governments to protect in the first half of 2020 what hindered new sales growth. The company met these challenges through intensive customer engagement in the individual and group segments. In addition, a new medical device was launched in the Japanese market in early 2021, along with a reactivation of cancer product sales on April 1, 2021 through the relationship with Japan Post, both of which are expected to have a positive impact on sales in Japan.

Aflac is a leading provider of cancer and complementary health insurance in Japan and the distribution of complementary accident and health insurance through the job market in the United States. AM Best has recognized Aflac as a leader in product innovation and customer service and is working on claims payment efficiency. In recent years, Aflac has expanded its portfolio and presence by adding to its group insurance and construction site offerings. The organization has taken a variety of approaches, through buying and partnering group life and disability assets, dental networking skills, and most recently a pet insurance offering. Aflac’s U.S. businesses have faced the challenge of growing through their local sales model for much of 2020 and through 2021, but these diversification efforts, as well as prior investments in digitizing sales processes and diversifying sales channels, have a lack of access to potential new ones and existing customers. Measures to adapt and use innovative sales techniques during the COVID-19 pandemic required years of planning and preparation of risk management for successful implementation.

Aflac Incorporated Group continues to have risk-adjusted capitalization at its strongest as measured by Best’s BCAR, and has cheap risk-based capital levels in the United States and excellent solvency ratios in Japan. The diversified product distribution structure contributes to a strong operating result and stable cash flow for the holding company, which supports its liquidity position and interest coverage measures. Aflac’s adjusted financial leverage was around 25%, with also strong interest coverage ratios. AM Best finds that Aflac’s capitalization, liquidity and access to capital provide financial flexibility and support for the entire company and its operating units.

From an operating performance perspective, reported net income before tax of $ 4.2 billion for the end of 2020 was slightly lower than in 2019, reflecting the existing strategies to contain pandemic risks. This includes Aflac’s strategy of encouraging its US customers to use wellness programs, which has led to more engagement and, in part, has driven the strong persistence measures in 2020. Earnings projections for the U.S. business in 2021 suggest the company expects a return to more normal usage trends as this market experiences more states, restrictions withdraw and access to customer workplaces opens. The company’s forecast earnings are lower margins compared to 2020.

The following long-term IRs were confirmed with a positive outlook:

Aflac Incorporated-

– “a-” (Excellent) on US $ 700 million 3.625% senior unsecured debt due 2023

– “a-” (Excellent) on US $ 750 million 3.625% senior unsecured debt due 2024

– “a-” (excellent) on USD 450 million 3.25% Senior Unsecured Notes, due 2025

– “a-” (Excellent) on JPY 12.4 billion, 0.3% senior unsecured bond due 2025

– “a-” (Excellent) on $ 300 million 2.875% Senior Unsecured Notes due 2026

– “a-” (Excellent) on $ 400M 1.125% Senior Unsecured Notes due 2026

– “a-” (Excellent) on JPY60 billion, 0.932% senior unsecured debt due 2027

– “a-” (Excellent) on JPY 12.6 billion, 0.5% senior unsecured bond due 2029

– “a-” (Excellent) on JPY 13.3 billion, 0.55% senior unsecured debt due 2030

– “a-” (Excellent) on $ 1.0 billion, 3.6% senior unsecured debt due 2030

– “a-” (Excellent) on 29.3 billion JPY, 1.159% Senior Unsecured Notes, due 2030

– “a-” (Excellent) on JPY 9.3 billion, 0.843% senior unsecured bond due 2031

– “a-” (Excellent) on JPY30 billion, 0.633% senior unsecured debt due 2031

– “a-” (Excellent) on JPY 20.7 billion, 0.75% senior unsecured bond due 2032

– “a-” (Excellent) on JPY 15.2 billion, 1.488% Senior Unsecured Notes, due 2033

– “a-” (Excellent) on JPY 12.0 billion, 0.844% senior unsecured debt due 2033

– “a-” (Excellent) on JPY 9.8 billion, 0.934% senior unsecured bond due 2034

– “a-” (Excellent) on JPY 10.6 billion, 0.83% Senior Unsecured Notes, due 2035

– “a-” (Excellent) on JPY 10.0 billion, 1.039% Senior Unsecured Notes, due 2036

– “a-” (Excellent) on JPY 8.9 billion, 1.75% senior unsecured debt due 2038

– “a-” (Excellent) on JPY 6.3 billion, 1.122% Senior Unsecured Notes, due 2039

– “a-” (Excellent) on $ 400 million 6.90% senior unsecured notes due 2039

– “a-” (excellent) on $ 450 million 6.45% senior unsecured debt due 2040

– “a-” (Excellent) on JPY 10.0 billion, 1.264% Senior Unsecured Notes, due 2041

– “a-” (excellent) on 4.0% senior unsecured notes for $ 400 million due 2046

– “a-” (Excellent) on $ 550 million 4.75% senior unsecured debt due 2049

– “a-” (Excellent) on JPY 20.0 billion, 1.56% Senior Unsecured Notes, due in 2051

– “bbb +” (good) on JPY 60 billion, 2.108% subordinated debt, due 2047

The following indicative long-term IRs have been confirmed with a positive outlook for securities available under the existing shelf registration:

Aflac Incorporated-

– “a-” (Excellent) for senior unsecured debt

– “bbb +” (good) for subordinated debt

This press release relates to credit ratings published on the AM Best website. All rating information relating to the press release and relevant disclosures, including details of the entity responsible for issuing each rating referred to in this press release, can be found on the AM Best website for recent rating activity. For more information on the use and limitations of credit ratings, see Best’s Credit Ratings Guide. For information on the media’s proper use of Best’s Credit Ratings and AM Best press releases, see the Media Guide – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press releases.

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