The fourth-quarter profits of Aflac Inc. plunged a substantial 48 percent - from the year-earlier $382 million to $197 million. The turnaround resulted largely from the insurer's big investment losses - to the tune of $262 million - including losses tied to impairments on investments in Iceland banks.

With a few Iceland's banks collapsing last year due to huge cumulative debts over the years, in the name of rapid growth, Alfac lost nearly $117 million of its investments in three Icelandic banks that the country's government took over. Though Alfac has said that its investments in hybrid securities issued by some of the struggling European banks are performing as per its expectations, the investors are still concerned about them.

Alfac - the world's biggest seller of supplemental disability insurance, banking heavily on US and Japan for bulk business - underplayed its reservations about the investments, which resulted in the loss of one-third of its market value.

Meanwhile, Alfac's operating earnings, excluding investment gains and losses and foreign currency exchanges, rose 20 percent - from $382 million a year back to $458 million. The company also marked a 6 percent rise in its fourth-quarter revenue, which increased to $4.3 billion from $4 billion.

Talking about a "cautious outlook" of the company for 2009, CEO Daniel Amos said: "We believe flat sales to a 5 percent increase in both Japan and the United States are reasonable targets for the year."