Aflac 2008 Annual Report Download - page 48

Download and view the complete annual report

Please find page 48 of the 2008 Aflac annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 102

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102

44 Aflac Incorporated Annual Report for 2008
Debt and perpetual securities classified as below investment
grade at December 31, 2008 and 2007 were all reported
as available for sale and carried at fair value. The below-
investment-grade securities at December 31 were as follows:
Occasionally, a debt or perpetual security will be split rated.
This occurs when one rating agency rates the security as
investment grade while another rating agency rates the same
security as below investment grade. Our policy is to review
each issue on a case-by-case basis to determine if a split-
rated security should be classified as investment grade or
below investment grade. Our review includes evaluating the
issuer’s credit position as well as current market pricing and
other factors, such as the issuer’s or security’s inclusion on a
credit rating downgrade watch list. As of December 31, 2008,
none of our perpetual securities or CDOs were split rated.
Split-rated debt securities as of December 31, 2008, were as
follows:
The following table provides details on amortized cost, fair
value and unrealized gains and losses for our investments in
debt and perpetual securities by investment-grade status as of
December 31, 2008.
Total Total Percent Gross Gross
Amortized Fair of Total Unrealized Unrealized
(In millions) Cost Value Fair Value Gains Losses
Available-for-sale securities:
Investment-grade securities $ 43,834 $ 42,273 63.9% $ 2,038 $ 3,599
Below-investment-grade
securities 1,274 786 1.2 6 494
Held-to-maturity securities:
Investment-grade securities 24,436 23,084 34.9 571 1,923
Total $ 69,544 $ 66,143 100.0% $ 2,615 $ 6,016
Below-Investment-Grade Securities
2008 2007
Par Amortized Fair Par Amortized Fair
(In millions) Value Cost Value Value Cost Value
Ford Motor Credit $ 329 $ 329 $ 143 $ 263 $ 263 $ 215
Ahold * * * 310 311 272
CSAV 264 264 157 210 210 143
BAWAG*** 154 133 88 123 123 90
IKB Deutsche Industriebank 143 143 47 * * *
Beryl Finance Limited 2008-7**** 110 110 116 * * *
Ford Motor Company 111 57 31 111 122 93
Glitnir Bank HF 95(1) – – * * *
Beryl Finance Limited 2007-14**** 82 53 53 * * *
Beryl Finance Limited 2006-15**** 55 43 43 * * *
Beryl Finance Limited 2007-5**** 55 44 44 * * *
Morgan Stanley Aces 2007-21**** 55 3 3 * * *
Landsbanki Islands HF 55 – – * * *
Rinker Materials Corp. 43 42 23 * * *
Morgan Stanley Aces 2007-19**** 30 4 4 * * *
Kaupthing Bank*** 30 – – * * *
Sprint Capital 22 24 16 * * *
Academica Charter Schools Finance LLC 22 24 17 * * *
International Securities Trading Corp. 18 – – 20 – –
Tiers Georgia**** 11 1 1 * * *
Patrick Family Housing (Patrick AFB) ** ** ** 4 1 1
Aloha Utilities Inc. ** ** ** 2 2 1
Total $ 1,684 $ 1,274 $ 786 $ 1,043 $ 1,032 $ 815
* Investment grade at respective reporting date
** Sold during 2008
*** Perpetual security
**** CDO security
(1) Includes $55 million for a perpetual security
Split-Rated Securities*
Amortized Moody’s S&P Fitch Investment-Grade
(In millions)
Cost Rating Rating Rating Status
Signum (Ahold) $ 352 Baa3 BB+ BBB- Investment Grade
UPM-Kymmene 339 Baa3 BBB- BB+ Investment Grade
Kommunalkredit Austria AG 110 A2 N/A CCC+ Investment Grade
Rinker Materials Corp. 42 Ba3 BBB- BB+ Below Investment Grade
MEAD Corp. 36 Ba1 BBB N/A Investment Grade
Tennessee Gas Pipeline 31 Baa3 BB BBB- Investment Grade
American General Capital II 19 Baa1 B A- Investment Grade
RFMSI 2007-S6 2A4** 24 Ba1 AAA AAA Investment Grade
MBIA INC 17 Ba1 A- N/A Investment Grade
Peco Energy Capital Trust IV 17 Baa1 BB+ BBB+ Investment Grade
Ahold Finance USA Inc. 15 Baa3 BB+ BBB- Investment Grade
Union Carbide Corp. 15 Ba2 BBB- BBB Investment Grade
RAST 2005-A10 A5** 10 N/A AAA BB Investment Grade
Bell Canada 9 Baa1 BB+ BB- Investment Grade
WFMBS 2007-8 1A4** 5 Ba3 AAA AAA Investment Grade
LMT 2006-3 1A5** 4 Aa2 A CCC Investment Grade
WFMBS 2007-10 1A7** 4 Ba2 N/A AAA Investment Grade
* Split-rated securities represented 1.5% of total debt securities and perpetual securities at amortized cost at
December 31, 2008.
** Collateralized mortgage obligations