Disability insurance provider Aflac Inc. (NYSE: AFL) said Tuesday it plans to exchange two investment securities with Lloyds Banking Group PLC (NYSE: LYG) to improve its capital ratio, according to Associated Press.
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The exchanges, which were accepted by Lloyds, are expected to settle Dec. 1.
Aflac will exchange its investment in Lloyds TSB Bank yen-denominated, upper tier II perpetual securities into yen-denominated, lower tier II fixed-maturity securities. The securities were valued at $222 million on Sept. 30.
The company will also exchange its holdings of Bank of Scotland PLC yen-denominated, upper tier II perpetual securities into yen-denominated, lower tier II fixed-maturity securities. Those securities were valued at $188 million on Sept. 30.
The newly issued securities are enhanced capital notes, which convert to common equity if Lloyds' core tier I capital ratio falls below 5 percent.
Aflac now expects to incur an after-tax realized investment loss of $66 million on two of its Lloyds holdings in the fourth quarter. Previously, the company said it expected to book an impairment charge of $100 million in the fourth quarter.
Shares of Aflac fell 36 cents to $44.52 at Tuesday’s close.
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