February 12, 2015
Nationwide Delivers Consistent Growth in 2014
Balanced revenue drives results; total assets and policyholder equity increase
Columbus, Ohio - Nationwide maintained its strong market position and growth momentum in 2014. Nationwide today reported total operating revenue of $25.3 billion1 for 2014, up more than 6 percent over 2013. Year-end results reflect balanced revenue growth and performance across most major product lines in the company’s diverse portfolio. Revenue was driven by business growth and increased customer assets in financial services and continued premium growth in property & casualty (P&C).
Nationwide ended the year with $1.1 billion in net operating income1, while paying more than $15.5 billion in claims and other benefits to members and business partners.
“Nationwide again posted solid gains in 2014, maintaining a track record of consistent, long-term performance that demonstrates the value of our diverse portfolio,” said Chief Executive Officer Steve Rasmussen. “We have great momentum heading into 2015, supported by our transition to one brand, as well as our commitment to our members and business partners.”
Nationwide announced in the third quarter of 2014 that it was moving to a one brand strategy to fully leverage one of its strongest assets, to promote all of its products and increase market share.
“Nationwide’s business fundamentals create a sound foundation for our performance, and the diversity of our portfolio helps us manage the spikes in weather or market conditions,” said Chief Financial Officer Mark Thresher. “We’ve taken advantage of growth opportunities in key markets, gaining new customers and offering current members new solutions. Our capital strength combined with our financial stability positions us well for the future.”
A table of financial highlights is available at www.nationwide.com/financials.
Financial Services Business Highlights
Nationwide’s sales of financial services products increased to $20.8 billion in 2014, up 8 percent over the same period in 2013.
Life insurance and annuity products led financial services sales growth. First year individual life insurance sales increased 31 percent over the same period in 2013, primarily driven by universal life products. Overall annuity sales increased to $7.6 billion at year-end. The 8 percent year-over-year increase represented a balanced mix of variable annuity contracts with and without living benefit guarantees, combined with strong sales growth in fixed indexed and immediate annuities.
Retirement plan sales increased to more than $9.6 billion in 2014 due to plan acquisitions and increased customer rollovers in the public sector.
Mutual fund sales grew 86 percent year over year, driven in large part by continued interest in the mutual funds acquired in 2013 from HighMark Capital Management, Inc. Mutual fund assets under management increased to $59.4 billion in 2014, up from $56.5 billion at the end of 2013.
Bank deposits were $4.8 billion through 2014. Consumer loans increased from $2.5 billion at the end of 2013 to $4.0 billion in 2014.
Nationwide’s financial services lines generated $863 million in net operating income through 2014, up from $713 million during the same period last year. Operating performance was driven by business growth and a 6 percent increase in customer assets, which led to higher fees and policy charges. A one-time benefit related to customer acquisition costs experienced during the first half of the year positively impacted 2014 results.
Property & Casualty Business Highlights
Nationwide grew direct written premium (DWP) by 5 percent for the year across all major P&C businesses to a total of $18.5 billion. Growth for the year continued to be driven by new business, increased exposure and rate adjustments in both commercial and personal lines.
Strong sales performance in standard commercial lines, excess and surplus lines and agribusiness drove commercial DWP to $7.7 billion, a 9 percent increase over 2013. Direct written premium in personal lines grew to $10.9 billion, led by auto and homeowners sales. Nationwide’s direct channel continued its strong growth momentum, with direct written premium up nearly 14 percent over 2013.
Nationwide’s P&C business reported $329 million in annual net operating income. Weather-related claims totaled $1.5 billion due in large part to severe weather experienced in the first half of the year. Non-weather claims totaled $8.9 billion for 2014.
Investments and Capital
As of Dec. 31, 2014, general account investments totaled $82.9 billion. Net investment income of $3.2 billion was up from year-end 2013, driven by higher income from alternative investments, treasury inflation-protected securities and a larger investment portfolio. Total assets grew to $195.2 billion, up from $183.2 billion at the end of 2013.
Nationwide reported net income of $341 million at the end of 2014, including the impact of Nationwide’s strategic risk and capital management programs. As intended, these programs reduce the impact of interest rate movements on the company’s capital position. Despite negative impacts due to benefit plan assumptions, Nationwide’s capital position continued to strengthen in 2014 with both statutory surplus and policyholder equity ending at record year end levels. Statutory surplus – a measure of financial strength and claims-paying ability evaluated by regulators and rating agencies – increased to $14.9 billion, which is more than three times the amount of statutory surplus required by regulators to cover its obligations to customers. Total policyholders’ equity increased to $20.4 billion, compared to $20 billion at the end of 2013.
“We’re pleased with our year-end results and are enthusiastic as we head into the new year,” Rasmussen said. “Our transition to a single brand will simplify operations for our business partners and will lead to an enhanced overall experience for our members. We are optimistic about what we will be able to accomplish in the years ahead.”
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides a full range of insurance and financial services, including auto, commercial, homeowners and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; specialty health; pet, motorcycle, boat and farm insurance. For more information, visit www.nationwide.com.