May 09, 2014
Nationwide’s Strong Performance Continues in First Quarter 2014
Member-driven mission reinforced during severe winter storms
Columbus, Ohio - Nationwide today reported total operating revenue of $6.1 billion for the first three months of 2014, up 5 percent over the same period last year and steady compared to fourth quarter 2013. First quarter operating earnings were balanced across the company’s financial services and property & casualty (P&C) businesses. Nationwide, a privately held mutual insurance company, is a leading provider of auto, life, home, commercial and retirement products in the U.S.
“Nationwide continued to demonstrate strong business fundamentals in the first quarter, and we were focused on responding to the needs of our members who were impacted by the severe winter weather,” said Nationwide Chief Executive Officer Steve Rasmussen. “Whether it’s responding in the event of a claim or providing new products and services, serving our members’ needs over the long term is our top priority.”
The company paid more than $3.5 billion in auto, home, life and other claims and benefits to members and business partners during the quarter. Strong business growth and improving equity markets drove first quarter net operating income of $352 million.1 This was down slightly from the same period in 2013, primarily due to winter storm activity. Quarter-over-quarter performance reflected a continuation of the profitable growth the company delivered in 2013.
“Results were positive during the quarter in both the financial services and P&C businesses,” said Chief Financial Officer Mark Thresher. “In financial services, sales were strong in both new and existing products. P&C business growth was led by commercial lines, and our personal lines direct channel continued to see high demand. While our P&C business was impacted by severe winter conditions, primarily the polar vortex, our capital position remains strong. As a result of our diverse portfolio of businesses and capital strength, Nationwide is well-positioned to manage through times of challenging weather and economic uncertainty, while continuing to invest in enhancing the member experience.”
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 $5 billion during the first three months of 2014, up 12 percent over the same period in 2013. Nationwide continued its strong sales momentum for annuity products both with and without living benefit guarantees. Individual life insurance first-year sales were up 42 percent compared to the same period in 2013 due to strong demand for Nationwide’s Indexed Universal Life product. Nationwide saw balanced results across its public sector (457 and 403(b)) and private sector (401(k)) plans, each contributing more than $1 billion in sales. New plan acquisitions and customer rollovers also remained strong in both sectors.
Nationwide Funds, the company’s mutual fund operation, grew assets under management to $57.2 billion during the quarter, up from $47.1 billion through first quarter 2013. Nationwide Funds continued to see high demand for the mutual funds acquired in 2013 from HighMark Capital Management, Inc. This acquisition has contributed to a 200 percent increase in sales over first quarter 2013 and increases the breadth and competitiveness of funds that Nationwide can offer to financial advisors and their clients.
Customer deposits at Nationwide Bank were $4.4 billion through first quarter. Consumer loans increased 11 percent, bringing the total loan portfolio to $2.8 billion, up from $2.5 billion at year end.
Nationwide’s financial services business generated $184 million in net operating income during the first quarter of 2014, up slightly from the same period last year. Operating performance improved due to higher asset fees and policy charges as a result of a 15 percent increase in customer assets over first quarter 2013.
Property & Casualty Business Highlights
Nationwide provides personal and commercial P&C protection products through six operating brands: Nationwide Insurance, Allied Insurance, Scottsdale Insurance, Nationwide Agribusiness, Harleysville Insurance and Titan Insurance.
Nationwide grew direct written premium across all P&C businesses to $4.5 billion through first quarter 2014, which is up nearly 6 percent over the same time last year. Strong commercial lines performance was up more than 11 percent over first quarter of last year, driven by Scottsdale’s diverse line of product offerings, standard commercial lines and Nationwide Agribusiness. The continued momentum in commercial lines reflected exposure growth, new business and rate adjustments. Personal lines direct written premium grew two percent over first quarter 2013. Nationwide’s direct channel contributed 55 percent of the year-over-year growth in personal lines and was up more than 18 percent over first quarter last year.
Nationwide added two major strategic partnerships during the quarter, announcing a new 10-year sponsorship agreement with The Ohio State University, as well as a partnership with Hagerty Insurance Agency LLC to provide classic car insurance through Nationwide agents.
Nationwide’s P&C business reported $166 million in net operating income for the quarter, down from $231 million during the same period in 2013. The decline was driven by an increase in weather-related claims, which were $378 million for the quarter, up from $263 million reported during the first quarter of 2013, a particularly light winter weather quarter for Nationwide. The January polar vortex event was the primary cause of the increase in weather losses and the decline in net operating income relative to last year.
Investments and Capital
As of March 31, 2014, general account investments totaled $77.7 billion. Net investment income of $807 million for the quarter was up compared to $785 million reported during the same period last year. Total assets grew to $184.7 billion, up from $183.2 billion at the end of 2013.
Statutory surplus – a measure of financial strength and claims-paying ability evaluated by regulators and rating agencies – was $14.8 billion, more than three times the amount required by regulators to cover the company’s obligations to its customers. Total policyholders’ equity increased to $20.6 billion, compared to $20 billion at the end of 2013.
Nationwide reported net income of $140 million for the quarter, compared to $484 million reported in the same period in 2013. The year-over-year difference was primarily driven by 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.
“The momentum we experienced in 2013 is continuing in 2014,” Rasmussen said. “We’re energized about the opportunities to expand our On Your Side promise in the marketplace, and we’re confident in our overall strategy. Nationwide is on the right path, and we’re prepared to help our members meet any challenge they may face – now and in the future.”
Nationwide Mutual Insurance Company, 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.