Question-and-Answer Session
Operator
(Operator Instructions) Your first question sir is from Colin Devine, your line is open.
Colin Devine - Citigroup
If Ken or if Kriss is there I'd like to talk about the investment impairment policy. I must say it's a struggle. I can't recall any other insurer that we've covered that has this sort of two processes, one for GAAP and one for stat. With Lloyds now in the paper this morning over and talking about a recapitalization and convergence of the press, what might that mean for AFLAC? It would seem to me that they are going to be converted at discounts and par, which I don't know, then how that's not going to hit statutory capital. Then the other thing that I'd like to know if we even just took the losses this quarter so your impairment of Lloyds and ran that through stat, it seems to me that your RBC ratio will be down to 350%, basically. Is that when you have to step in and raise capital?
Kriss Cloninger
Well, I'm going to let Jerry talk about some of the impairment policy. You know this is Kriss. Regarding raising capital, the 350% is a little bit below our target RBC number, but it's still well in excess of the level at which you would face any regulatory intervention, so to speak. The point at which you have to start producing plans to adjust capitalization is well below 350%.
As you probably know, I mean, we've said it time after time, we strive to maintain higher than average risk-based capital ratios for various reasons, one of which is our exposure to the yen/dollar exchange rate. The yen/dollar exchange rate happens to be very strong at the moment. So that's, we think fairly fully reflected in our RBC model.
Regarding other impairments, Colin, we're just following the accounting rules basically, you know we have to. The accountants changed the rules on us in the third quarter of 2008 regarding the treatment of hybrid securities. They required them to be all treated as equities, essentially for the purpose of addressing impairment policy.
So the equity impairment model requires that if a security is underwater by a certain percent by a specified amount of time, you're required to impair it, regardless of your evaluation of the credit worthiness of the security. And the credit worthiness of the security is what we use on a statutory basis and that's consistent again with statutory accounting rules.
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