S&P gives Aflac notes A-

Standard & Poor's said it assigned its A- senior unsecured debt rating to Aflac Inc.'s $850 million, 8.5% 10-year notes issue.

The rating reflects Aflac's (A-/negative) very strong franchise value, very strong earnings, extremely strong liquidity, and sizeable investment concentrations, the agency said.

According to S&P, of particular concern is Aflac's exposure to financial institution credits in its investment portfolio (more than 40% of invested assets), the weakened credit quality this sector has experienced, and the resulting potential for economic investment losses and weakened statutory capitalization.

"The negative outlook on Aflac reflects its concern that a continued weakening in the credit quality of the company's hybrid security portfolio could ultimately lead to realized investment losses that will exceed the company's statutory earnings and lead to a net reduction in statutory capital," said S&P credit analyst Jon Reichert.

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