February 13, 2014
Nationwide Delivers Significant Growth and Value for Members in 2013
Columbus, Ohio - Nationwide, a member-driven mutual insurance company, grew its total operating revenue 6 percent to $23.9 billion and paid more than $13.8 billion in auto, home, life and other claims and benefits to policyholders in 2013. Core business performance, coupled with favorable equity markets and milder-than-expected weather, resulted in net operating income of $1.3 billion.1
“Nationwide had an exceptional year,” said Chief Executive Officer Steve Rasmussen. “While we benefited from improved equity markets and milder weather, our strong business fundamentals also drove outstanding results. We saw solid growth and returns in all of our major businesses, which helps us protect the financial security of our members and business partners.”
Nationwide provides auto, life, home, commercial and retirement products – one of the most diverse set of offerings by a privately-held company in the U.S.
“Many people know Nationwide as a personal lines property and casualty carrier, but we showed operating revenue growth across most of our product lines in 2013,” said Chief Financial Officer Mark Thresher. “Sales in financial services were strong in both new and existing products, and our P&C businesses benefitted from growth in commercial lines as well as stability in personal lines. In addition, our P&C and financial services businesses contributed evenly to our net operating income, which supports our strong capital position.”
Statutory surplus – a measure of financial strength and claims-paying ability as evaluated by regulators and rating agencies – was $14.4 billion, more than three times the amount required by regulators to cover the company’s obligations to its customers. Total policyholders’ equity increased to $20 billion in 2013, up from $19.3 billion in the prior year.
A table of financial highlights is available at www.nationwide.com/financials.
Financial Services Business Highlights
Nationwide offers individual and employer-sponsored retirement savings, banking and insurance products through four operating brands: Nationwide Financial, Nationwide Retirement Solutions, Nationwide Funds and Nationwide Bank.
Financial services sales increased to $19.3 billion in 2013, up more than 6 percent over the prior year. Annuity sales momentum continued with strong growth in variable annuities, led by contracts without living benefit guarantees. Life insurance sales were up 20 percent over 2012 due to strong demand for Nationwide’s Indexed Universal Life product. Retirement plan acquisition results were strong in both public and private sectors, and customer rollovers remained strong in public sector plans.
Nationwide Funds, the company’s mutual fund operation, grew assets under management to $56.5 billion from $45 billion in 2012. Nationwide Funds saw high demand for the mutual funds acquired in September from HighMark Capital Management, Inc., which added approximately $3.8 billion in new assets under management. This transaction increases the breadth and competitiveness of funds that Nationwide can offer to financial advisors and their clients.
Customer deposits at Nationwide Bank reached $4.5 billion in 2013, up from $3.8 billion in the prior year. Consumer loans increased 29 percent, bringing the total loan portfolio to more than $2.5 billion, up from $2 billion in 2012.
Nationwide’s financial services business generated $713 million in net operating income in 2013, up nearly 18 percent from 2012. Operating performance improved due to higher asset fees and policy charges as a result of an 18 percent increase in customer assets over the prior year.
Property & Casualty (P&C) Business Highlights
Nationwide provides personal and commercial P&C protection products through six operating brands: Nationwide Insurance, Allied Insurance, Harleysville Insurance, Scottsdale Insurance, Titan Insurance and Nationwide Agribusiness.
Direct written premium (DWP) grew by more than 8 percent to $17.6 billion during 2013. Premium growth reflects new business, increased insured exposure and rate adjustments in response to changing market conditions. Nationwide’s commercial businesses continued to lead premium growth, with strong sales performance in standard commercial lines and Scottsdale. For the first time, Nationwide Agribusiness achieved more than $1 billion in DWP in a single year. In personal lines, direct channel premium grew 18 percent over 2012, driven by expanded geographic reach, marketing initiatives and improved retention.
Nationwide’s P&C business reported $707 million in net operating income, an increase of $590 million over 2012. Results improved due to increased operating revenue, lower weather-related claims, a more efficient cost structure and improving non-weather loss trends compared to 2012. Weather-related claims of $1.1 billion were lower than the $1.6 billion reported in 2012, while non-weather claims totaled $8.3 billion in 2013.
In October, Nationwide began targeting the affluent insurance market through its insurance subsidiary, Crestbrook Insurance. Crestbrook currently operates in Illinois, with plans to expand to additional states in 2014.
Investments and Capital
As of Dec. 31, 2013, general account investments totaled $76.5 billion. Net investment income of $3.1 billion was flat compared to the prior year. Total assets grew to $183.2 billion, up from $168.3 billion in 2012.
Net income of $1.9 billion for 2013 was up significantly from the $940 million reported in 2012. The increase was the result of net operating income growth and gains on Nationwide’s risk and capital management programs. These programs are designed to protect the company’s long-term economic results and statutory capital and are functioning as intended.
“Our foundation is strong, and we have great momentum going into 2014,” Rasmussen said. “Our business has changed significantly since our start in 1926, but our mutual-based values have not. We don’t answer to shareholders, so we put our energy toward adapting to the changing needs of our members and business partners now and in the future.”
Nationwide Mutual Insurance 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 customers a full range of insurance and financial services, including auto insurance, motorcycle, boat, homeowners, pet, life insurance, farm, commercial insurance, administrative services, annuities, mortgages, mutual funds, pensions, long-term savings plans and specialty health services. For more information, visit www.nationwide.com.