Moody's rates Aflac debentures Baa1

Moody's Investors Service said it assigned a Baa1(hyb) subordinated debt rating, with a stable outlook, to the $450 million issuance of 40-year fixed rate subordinated debentures to be issued by Aflac, Inc. (A3/stable).

Proceeds will be used for general corporate purposes.

"The modest additional debt issuance will have minimal impact on Aflac's strong financial flexibility. Proforma adjusted financial leverage will increase slightly to 26% from 24% at year-end 2011, as shareholders' equity has increased due to strong earnings in the first half of this year," Moody's assistant vice president Shachar Gonen said in a statement.

Moody's said that Aflac's ratings reflect its very strong franchise and market position in supplemental health insurance in both Japan and the United States, well-established niche distribution channels, and strong and predictable earnings capacity, the agency said.

The financial profile of the company is further supported by strong capital adequacy.

Offsetting these strengths are Aflac's limited product diversification and concentrated investment portfolio, including European sovereign and financial institution exposures, according to the agency.

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