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Fitch Rates Aflac Inc.'s Senior Debt Issues 'A-'
January 18, 2017 / 8:59 PM / a year ago

Fitch Rates Aflac Inc.'s Senior Debt Issues 'A-'

(The following statement was released by the rating agency) CHICAGO, January 18 (Fitch) Fitch Ratings has assigned an 'A-' rating to the 0.932% JPY60 billion senior unsecured notes due 2027 issued by Aflac, Inc. (Aflac). The 'A-' rating is equivalent to Fitch's ratings on Aflac's outstanding senior unsecured notes. KEY RATING DRIVERS Aflac intends to use the net proceeds from this offering for general corporate purposes, including replenishing cash used to repurchase the company's 6.9% senior notes due 2039 and 6.45% senior notes due 2040 in its recent tender offer. Fitch does not anticipate a significant change in the company's financial leverage ratio. 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). Fitch affirmed the ratings of Aflac and its insurance operating subsidiaries on Nov. 30, 2016. For more details, see Fitch's press release at www.fitchratings.com. RATING SENSITIVITIES 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%, a Prism capital model score below 'Extremely Strong' or SMR sustained below 800%. An upgrade of Aflac is unlikely in the near term, given Japan's Long-Term Local Currency IDR and Outlook of 'A'/Outlook Negative. FULL LIST OF RATING ACTIONS Fitch has added the following rating: Aflac Inc. --0.932% JPY60 billion senior unsecured notes due 2027 at 'A-'. Fitch currently rates Aflac as follows: Aflac Inc. --Long-Term IDR at 'A'; Outlook Stable; --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 15, 2023 'A-'; --3.625% USD750 million senior notes due Nov. 15, 2024 'A-'; --3.25% USD450 million senior notes due March 17, 2025 'A-'; --2.875% USD300 million senior notes due Oct. 15, 2026 'A-'; --6.9% USD400 million senior notes due Dec. 17, 2039 'A-'; --6.45% USD450 million senior notes due Aug. 15, 2040 'A-'; --4.00% USD400 million senior notes due Oct. 15, 2046 'A-'; --5.5% USD500 million junior subordinated debentures due Sept. 15, 2052 'BBB'. American Family Life Assurance Co. of Columbus American Family Life Assurance Co. of New York Aflac Japan --IFS 'A+'; Outlook Negative. Contact: 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 Martha M. Butler, CFA Senior Director +1-312-368-3191 Media Relations: Hannah James, New York, Tel: + 1 646 582 4947, Email: hannah.james@fitchratings.com. Date of Relevant Rating Committee: Nov. 30, 2016 Additional information is available on www.fitchratings.com. Applicable Criteria Insurance Rating Methodology (pub. 15 Sep 2016) here Additional Disclosures Solicitation Status here 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. 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. 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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. 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