DOW JONES NEWSWIRES 
 

Aflac Inc.'s (AFL) second-quarter profit fell 35% as the supplemental insurer reported large investment losses.

Meanwhile, the company backed its 2009 outlook for its Japanese operations, but said it doesn't expect to post sales growth this year in its U.S. division.

The company also announced that it plans to acquire Continental American Insurance Co., based in South Carolina, for $100 million.

Analysts have been concerned about Aflac's concentration in perpetual debentures, which are hybrid securities that combine elements of equity and debt, largely issued by European banks.

The company reported second-quarter earnings of $314 million, or 67 cents a share, down from $483 million, or $1 a share, a year earlier. The latest results included investments losses of 53 cents a share.

Operating earnings rose to $1.20 a share from $1.01 a year earlier. Aflac said in April it expected operating earnings of $1.11 to $1.14 a share.

Revenue fell 0.5% to $4.31 billion. Analysts polled by Thomson Reuters expected revenue of $4.68 billion.

Premium income in yen grew 3.1% in the company's large Japanese operations. Reflecting the stronger yen, premium income in dollars increased 11% to $2.9 billion.

Aflac U.S. posted a 2.8% increase in total premium income to $1.1 billion. Total revenue in the U.S. grew by 2.7% to $1.2 billion.

The company also reiterated that it expects 2009 sales in Japan to be flat to 5% higher. However, the company said it now doesn't expect Aflac U.S. to generate sales growth in 2009. The company previously said it expected Aflac U.S. sales to be flat to up 5% for the year.

Aflac said its objective for 2009 remains an increase of 13% to 15% in operating earnings per diluted share, excluding the impact of foreign currency. An increase of 13% in operating earnings per diluted share would equal $4.51 in 2009, assuming the same average exchange rate as last year.

The company expects third-quarter operating earnings of $1.19 to $1.22 a share. Analysts expect $1.16 a share.

Shares closed Wednesday at $35.45 and were unchanged in recent after-hours activity.

-By Jennifer Hoyt Cummings, Dow Jones Newswires; 212-416-2474; jennifer.cummings@dowjones.com