Fitch Ratings affirmed its credit and insurance strength
) and its subsidiaries, reflecting its confidence in the
fundamental growth of the company.
Accordingly, Aflac and its subsidiaries continue to enjoy an
insurance financial strength (IFS) rating of "AA-" and long-term
issuer default rating (IDR) of "A." The outlook was also affirmed
at stable, which was upgraded from negative in Apr 2011.
Despite the challenging economic conditions that have recently
marred the insurance industry in Japan, Aflac continues to enjoy
a modest liquid position.The company's investments and cash
position is experiencing steady growth. At 2012-end, total
investment and cash stood at $118.2 billion compared with $103.46
billion at 2011-end, while shareholders' equity totaled $16.0
billion against $13.50 billion during the comparable period.
Furthermore, Aflac's National Association of Insurance
Commissioners (NAIC) risk-based capital ratio strongly increased
137 basis points to 630% at the end of 2012. Moreover, gross
unrealized investment losses narrowed to $0.9 billion at 2012-end
from $2.2 billion at 2011-end. Going ahead, this strong capital,
statutory surplus position and earnings-generation capacity is
expected to mitigate balance sheet risk and provide liquidity
cushion to its long-term growth.
Based on these factors, Fitch has affirmed the ratings of
Aflac although it maintains "A+" sovereign rating on Japan with a
negative outlook. The ratings agency further expects to continue
to affirm the company's ratings as long as Japan carries a rating
of "A" or above. This also validates Fitch's confidence in Aflac
that has the potential to deliver strong earnings despite vast
exposure to the Japanese market.
Although the company's investment portfolio comprises about
43% in Japanese government bonds amid low interest-rate
environment, Fitch believes that this market feature induces
Aflac to retain such long-term securities until maturity.
Overall, Aflac has been achieving its earnings target for the
last 20 years, which is reflected in its consistent dividend
increment. Once the economy treads on a more stable path, we
believe that the company will be able to gain traction from the
increased client activity and product profile.
While Aflac carries a Zacks Rank #4 (Sell), other insurers
that are outperforming include
CNO Financial Group Inc.
). All of these carry a Zacks Rank #1 (Strong Buy).
AFLAC INC (AFL): Free Stock Analysis Report
AMERISAFE INC (AMSF): Free Stock Analysis
CNO FINL GRP (CNO): Free Stock Analysis
PROGRESSIVE COR (PGR): Free Stock Analysis
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