AM Best Affirms Credit Ratings of Aflac Incorporated and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” (Superior) of Aflac Life Insurance Japan, Ltd. (Japan), American Family Life Assurance Company of Columbus (Omaha, NE), American Family Life Assurance Company of New York (Albany, NY) and Continental American Insurance Company (Omaha, NE). These companies represent the life/health insurance subsidiaries of Aflac Incorporated (Aflac) (Columbus, GA) [NYSE: AFL] and are collectively referred to as Aflac Incorporated Group. Concurrently, AM Best has affirmed the Long-Term ICR of “a” (Excellent) and all existing Long-Term Issue Credit Ratings (Long-Term IR) of Aflac. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the Long-Term IRs and shelf registration.)

The ratings reflect Aflac Incorporated Group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).

The rating affirmations reflect Aflac Incorporated Group’s risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR) in the United States and excellent solvency ratios in Japan. Risk-adjusted capitalization has been enhanced by its very strong operating performance, which has more than offset realized investment losses in recent years. Aflac’s GAAP equity declined through first-quarter 2023, following the implementation of changes in discount rate assumptions on long-term insurance contracts. However, the drop was significantly below prior expectations due to changes in the interest rate environment. The organization’s investment team continues to manage the challenges effectively of foreign exchange risk. The organization's invested assets are diverse across asset classes and types, and managed both internally and through highly respected external asset managers. The managers continue to de-risk the investment portfolio, which has resulted in a higher allocation to quality fixed-income assets that have favorably impacted the organization’s risk-adjusted capitalization. AM Best notes that the group’s exposure to real estate from commercial mortgages has performed well with virtually no delinquencies, foreclosures or restructured loans over the last several years. The group enjoys the financial flexibility provided by its publicly traded parent company. The flexibility has been further enhanced through a newly established reinsurance subsidiary, Aflac Re, and ceding a modest portion of Japan older cancer policies liabilities to the new entity. That allowed lower capital requirements in Japan and provided additional dividends to the parent company. AM Best notes that Aflac Incorporated Group’s current adjusted financial leverage and operating leverage remain relatively modest for its rating level.