In a concerted effort to fortify its financials,
) has increased the size of its debt issuance. The company said
that it has priced senior unsecured notes worth $250 million. This
follows a $400 million offering that was issued on February 10,
The $250 million long-term unsecured notes, due in 2017, will be
issued at a price of $103.105. They bear a coupon rate of 2.65%
with yield of 1.932%. The proceeds from the issue of this debt will
be used to finance the company's daily operations. Additionally, it
might be used to augment the capital position of Aflac's
According to a Reuters report,
) is the bookrunning manager for the sale of these notes. Following
the news, Aflac's shares gained 5.3% over last Thursday's closing
price of $41.48.
A.M. Best Co. conferred a rating of "a-" to the senior unsecured
notes issued by Aflac, with a stable outlook. The rating agency has
not changed the existing issuer credit and debt ratings. It expects
the company's interest coverage to remain over 10x and financial
leverage to stay below 25%.
The rating comes on the back of the company's leading position
in both Japan and the U.S., further strengthened by growth in
sales, improved earnings and satisfactory risk-adjusted capital
ratios maintained since 2011. However, certain impairments in
Aflac's investment portfolio continue to blemish the positives.
Aflac recently announced its second quarter 2012 operating
earnings per share of $1.61, which came in line with the Zacks
Consensus Estimate, but surpassed the year-ago quarter's earnings
of $1.55. Operating earnings climbed 3.9% year over year to $755
million. A stronger yen/dollar exchange rate boosted the operating
earnings by 1 cent per share.
The company seems to be in a formidable position currently and
is well prepared to face its competitors such as
Employers Holdings Inc.
Both Unum and Employers Holdings are slated to release their
second quarter earnings on August 1 and August 7, respectively.
According to the Zacks Consensus Estimate, Unum is expected to
report operating earnings of 76 cents a share, while Employers
Holdings is projected to report 3 cents per share.
Aflac currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We also maintain a long-term Neutral
recommendation on its shares.
AFLAC INC (AFL): Free Stock Analysis Report
EMPLOYERS HLDGS (EIG): Free Stock Analysis
MORGAN STANLEY (MS): Free Stock Analysis Report
UNUM GROUP (UNM): Free Stock Analysis Report
To read this article on Zacks.com click here.