S&P upgrades Aflac, debt

Standard & Poor's said it raised its long-term counterparty credit rating on Aflac Inc. to A from A- and its ratings on the senior debt to A from A- and junior subordinated debt to BBB+ from BBB.

At the same time, the agency affirmed its AA- financial strength and counterparty credit ratings on the company's core insurance entities: American Family Life Assurance Co. of Columbus, American Family Life Assurance Co. Japan Branch, and American Family Life Assurance Co. of NY (collectively, Aflac).

The outlook is negative.

"We are raising our rating on the nonoperating holding company, Aflac Inc., making it two notches, instead of the standard three, lower than the financial strength rating of the operating companies," S&P credit analyst Deep Banerjee said in a news release.

"We based the upgrade on very strong fixed-charge coverage ratio, 15x as of year-end 2013, moderate financial leverage – including debt, hybrids, unfunded pension obligations, and net present value of operating leverage – for the current rating level, strong operating company dividend capacity, and liquidity at the holding company relative to its ongoing obligations, such as interest and principal payments on debt."

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