Aflac's (AFL -0.7%) long-term counterparty rating is lifted to A from A-, and the junior subordinated debt rating to BBB+ from BBB. The agency also affirms the AA- financial strength and counterparty ratings on Aflac's core insurance entities. The outlook, however, is negative.
"We based the upgrade on very strong fixed-charge coverage ratio, 15x as of year-end 2013, moderate financial 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," says analyst Deep Banerjee.
The negative outlook reflects S&P's negative outlook on Japan, and any downgrade of Japan would lead to a similar move on Aflac.