A.M. Best has assigned a Long-Term Issue Credit Rating of “bbb+” to Aflac Incorporated’s recently priced yen-denominated 30-year, 2.108% subordinated debentures totaling JPY 60 billion (USD 536 million). The outlook assigned to the Credit Rating (rating) is stable. Aflac’s existing Long-Term Issuer Credit Ratings remain unchanged.

A.M. Best anticipates the proceeds from the sale of the notes to be utilized for the funding of all or a portion of the redemption price of the existing 5.50% subordinated debentures due 2052. Any additional proceeds would be used for general corporate purposes. Aflac’s financial leverage is expected to remain in the 23% range once the repayment of the issue occurs. Aflac’s financial flexibility continues to be strong, and interest coverage was in excess of 16 times as of June 30, 2017.

Aflac’s ratings, which were affirmed on June 13, 2017, recognize its position as one of the world’s leading underwriters of individually issued policies marketed at worksites. The company’s insurance subsidiaries offer a diverse portfolio of supplemental health products in Japan and the United States, which generate strong earnings and steady cash flows to the holding company. A.M. Best believes that Aflac will remain challenged to achieve considerable growth in its domestic operations given the intense competition in the voluntary supplemental insurance market. Additionally, Aflac’s earnings will be impacted due to the weaker Japanese yen relative to the U.S. dollar, and the potential exists for noteworthy realized investment losses as the company continues to execute its long-term asset allocation strategy.