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Aflac (AFL) & its Units' Ratings Reiterated by A. M Best
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The rating giant, A.M. Best reiterated the ratings of Aflac Inc (AFL - Free Report) and its subsidiaries. It affirmed Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (ICR) of “aa-” of Aflac’s life and health insurance subsidiaries, which include American Family Life Assurance Company of Columbus (Omaha), American Family Life Assurance Company of Columbus (Japan), American Family Life Assurance Company of New York and Continental American Insurance Company (Columbia). Concurrently, A.M. Best also affirmed the Long-Term ICR of “a-” and all existing Long-Term Issue Credit Ratings of Aflac. The outlook remained stable.
Aflac has always received favorable credit ratings as its stability and healthy risk-based capital continue raising optimism among ratings agencies.
These ratings have cemented shareholders’ confidence in the stock. Year to date, the stock has gained 12%, outperforming the Zacks categorized Accident and Health Insurance industry’s gain of 9.9%.
Factors Driving the Affirmation
This recent rating affirmation acknowledges Aflac’s continued strong risk-adjusted capitalization and financial flexibility. Aflac’s well-managed investment portfolio protected the company even during the sustained low interest rate environment in Japan and the United States, resulting in to modest investment income. The company’s strategic allocation of cash flows to investment grade corporate bonds, middle-market loans and infrastructure also impress. The rating giant has also appreciated Aflac’s tactical hedging strategy aimed at improving duration matching and proactive management of hedge costs.
The ratings also show Aflac’s strong position in the increasingly competitive market.
In addition, the company plans to convert its Japan Branch operations into a Japan insurance subsidiary. A.M. Best is expected to closely monitor the execution of the Japan Branch conversion, as the milestone would substantially add to the company’s hold in the market.
What Can Trigger a Change in Ratings?
Aflac, however, faces challenges to grow sales of its products, particularly in the U.S,. It thus needs to further enhance distribution strategies, as well as tackle macroeconomic pressures that exist within its Japan markets. If these headwinds increase significantly in the future, they are likely to result in a rating downgrade. According to A.M Best, Aflac also requires to focus on client retention strategies and administrative efficiencies..
Rating affirmations or upgrades from credit rating agencies play an important role in retaining investor confidence as well as in maintaining credit worthiness. On the other hand, rating downgrades hurts business and increase the cost of future debt issuances.
Some better-ranked stocks in the same space include Assurant, Inc. (AIZ - Free Report) , Cigna Corporation (CI - Free Report) and Old Republic International Corporation (ORI - Free Report) . Each of these stocks carry a Zacks Rank #2 (Buy).
Assurant offers risk management solutions for housing and lifestyle markets worldwide. The company delivered positive surprises in three of the last four quarters with an average beat of 6.82%.
Cigna provides insurance and related products and services in the U.S. and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 1.35%.
Old Republic deals in the insurance underwriting and related services business, primarily in the U.S. and Canada. The company delivered positive surprises in two of the last four quarters, with an average beat of 12.71%.
3 Stocks to Ride a 588% Revenue Explosion
At Zacks, we're mostly focused on short-term profit cycles, but the hottest of all technology mega-trends is starting to take hold...
By last year, it was already generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for those who make the right trades early. See Zacks' Top 3 Stocks to Ride This Space >>
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Aflac (AFL) & its Units' Ratings Reiterated by A. M Best
The rating giant, A.M. Best reiterated the ratings of Aflac Inc (AFL - Free Report) and its subsidiaries. It affirmed Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (ICR) of “aa-” of Aflac’s life and health insurance subsidiaries, which include American Family Life Assurance Company of Columbus (Omaha), American Family Life Assurance Company of Columbus (Japan), American Family Life Assurance Company of New York and Continental American Insurance Company (Columbia). Concurrently, A.M. Best also affirmed the Long-Term ICR of “a-” and all existing Long-Term Issue Credit Ratings of Aflac. The outlook remained stable.
Aflac has always received favorable credit ratings as its stability and healthy risk-based capital continue raising optimism among ratings agencies.
These ratings have cemented shareholders’ confidence in the stock. Year to date, the stock has gained 12%, outperforming the Zacks categorized Accident and Health Insurance industry’s gain of 9.9%.
Factors Driving the Affirmation
This recent rating affirmation acknowledges Aflac’s continued strong risk-adjusted capitalization and financial flexibility. Aflac’s well-managed investment portfolio protected the company even during the sustained low interest rate environment in Japan and the United States, resulting in to modest investment income. The company’s strategic allocation of cash flows to investment grade corporate bonds, middle-market loans and infrastructure also impress. The rating giant has also appreciated Aflac’s tactical hedging strategy aimed at improving duration matching and proactive management of hedge costs.
The ratings also show Aflac’s strong position in the increasingly competitive market.
In addition, the company plans to convert its Japan Branch operations into a Japan insurance subsidiary. A.M. Best is expected to closely monitor the execution of the Japan Branch conversion, as the milestone would substantially add to the company’s hold in the market.
What Can Trigger a Change in Ratings?
Aflac, however, faces challenges to grow sales of its products, particularly in the U.S,. It thus needs to further enhance distribution strategies, as well as tackle macroeconomic pressures that exist within its Japan markets. If these headwinds increase significantly in the future, they are likely to result in a rating downgrade. According to A.M Best, Aflac also requires to focus on client retention strategies and administrative efficiencies..
Rating affirmations or upgrades from credit rating agencies play an important role in retaining investor confidence as well as in maintaining credit worthiness. On the other hand, rating downgrades hurts business and increase the cost of future debt issuances.
Zacks Rank and Stocks to Consider
Currently, Aflac carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same space include Assurant, Inc. (AIZ - Free Report) , Cigna Corporation (CI - Free Report) and Old Republic International Corporation (ORI - Free Report) . Each of these stocks carry a Zacks Rank #2 (Buy).
Assurant offers risk management solutions for housing and lifestyle markets worldwide. The company delivered positive surprises in three of the last four quarters with an average beat of 6.82%.
Cigna provides insurance and related products and services in the U.S. and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 1.35%.
Old Republic deals in the insurance underwriting and related services business, primarily in the U.S. and Canada. The company delivered positive surprises in two of the last four quarters, with an average beat of 12.71%.
3 Stocks to Ride a 588% Revenue Explosion
At Zacks, we're mostly focused on short-term profit cycles, but the hottest of all technology mega-trends is starting to take hold...
By last year, it was already generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for those who make the right trades early. See Zacks' Top 3 Stocks to Ride This Space >>