Aflac Inc.'s (AFL) first-quarter net income rose 20% as the supplemental insurer increased its income in its U.S. and Japanese businesses and was able to manage its net investment losses for the quarter.

Meanwhile, the company issued second-quarter guidance slightly below analysts' expectations.

Aflac's stock has been recovering during the recent broad market rally, particularly after Standard & Poor's recently said the company's ratings were no longer on watch for a downgrade. However, analysts remain concerned about the company's concentration in perpetual debentures, which are hybrid securities that combine elements of equity and debt, largely issued by European banks.

The company reported first-quarter net income of $569 million, or $1.22 a share, up from $474 million, or 98 cents a share, a year earlier.

The latest results included investment losses of 1 cent a share, compared with investment losses of 1 cent a share a year earlier.

Revenue rose 13% to $4.82 billion.

Analysts polled by Thomson Reuters expected earnings of $1.16 a share on revenue of $4.77 billion.

Premium income in yen grew by 3.6% in the company's large Japanese operations. Reflecting the stronger yen, premium income in dollars increased 17% to $3 billion.

Aflac U.S. posted a 5% increase in total premium income to $1.1 billion. Total revenue in the U.S. grew by 4.7% to $1.2 billion.

The company also reiterated that it expects 2009 sales in the U.S. and Japan to be flat to up 5%.

Meanwhile, Aflac also said that it expects 2009 operating earnings per share to be at the low end of its target of 13% to 15% growth target, assuming the same average exchange rate as last year. An increase of 13% in operating earnings equates to $4.51 a share.

The company previously said it expected 2009 earnings of $4.51 to $4.59, excluding the effect of the yen.

For the second quarter, Aflac expects operating earnings of $1.11 to $1.14 a share, slightly below analysts' latest estimate for earnings of $1.15.

Shares closed Wednesday at $29.13 and rose 0.8% to $29.36 in after-hours trading.

-By Jennifer Hoyt, Dow Jones Newswires; 201-938-2474; jennifer.hoyt@dowjones.com