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Aflac Incorporated (NYSE:AFL), a $57.59 billion market cap insurance giant currently trading at $107.42, announced Wednesday that it has entered into two contingent funding arrangements totaling $2 billion through the issuance of Pre-Capitalized Trust Securities (P-Caps). The information is based on a statement in a Securities and Exchange Commission filing. According to InvestingPro data, Aflac maintains strong financial health metrics, with a notably conservative debt-to-capital ratio of 0.21.
According to the filing, on Wednesday, Aflac completed the sale of 1,000,000 P-Caps by Wynnton Funding Trust, redeemable in August 2035, for $1 billion. This arrangement gives Aflac the right, over a ten-year period, to issue and require the trust to purchase up to $1 billion of Aflac’s 5.251% Senior Notes due 2035. The facility fee for this arrangement is set at 0.9875% per annum on the unexercised portion.
A second transaction was also completed Wednesday with Wynnton Funding Trust II. This involved the sale of 1,000,000 P-Caps redeemable in August 2055, also for $1 billion. This agreement allows Aflac to issue and require the trust to purchase up to $1 billion of 5.991% Senior Notes due 2055 over a thirty-year period, with a facility fee of 1.1218% per annum on the unexercised portion.
Both sets of P-Caps were sold as private placements to qualified institutional buyers under Rule 144A of the Securities Act. Proceeds from the P-Caps sales were invested in U.S. Treasury securities.
Under the terms of the agreements, Aflac may exercise its right to issue senior notes to the trusts at any time during the respective periods. The agreements also outline circumstances under which the issuance right may be exercised automatically, such as payment defaults or specific financial conditions.
Aflac retains the option to redeem the senior notes issued to the trusts and may, in some cases, deliver cash in lieu of issuing the notes. The trusts will terminate upon redemption of all outstanding P-Caps or upon certain other events.
The arrangements were made with TD Securities (USA) LLC, Goldman Sachs & Co. LLC, Mizuho Securities USA LLC, SMBC Nikko Securities America, Inc., and Wells Fargo Securities, LLC acting as representatives of the initial purchasers.
Aflac’s common stock is listed on the New York Stock Exchange under the ticker NYSE:AFL.
In other recent news, Aflac reported its second-quarter earnings for 2025, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $1.78, while revenue fell short at $4.16 billion compared to the anticipated $4.33 billion. Aflac’s strong performance in Japan and strategic initiatives were key contributors to these results. The company also announced that its Board of Directors authorized the purchase of up to 100 million additional shares, bringing the total available for repurchase to approximately 130.9 million shares. This move allows Aflac to conduct share repurchases based on market conditions.
Evercore ISI raised its price target for Aflac to $106 due to strong Japan sales and better-than-expected net investment income, although it maintained an Underperform rating. Similarly, BMO Capital increased its price target to $105, reflecting an upward revision of Aflac’s forward earnings per share run-rate for 2025 and 2026. These recent developments indicate continued interest and activity surrounding Aflac’s financial strategies and market performance.
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