August 06, 2015
Growth in Retirement Plans and Commercial Lines Propels Nationwide’s Performance Through First Half of 2015
Columbus, OH - Nationwide today reported total operating revenue of $13 billion for the first half of 20151, up 5 percent over the same period in 2014. Strong performance across financial services, commercial lines and personal lines drove $20 billion in sales. Business expansion through increased premiums and growing assets under management in size and number contributed to growth.
Nationwide is one of the largest and strongest diversified insurance and financial services organizations in the U.S. Through the first six months of 2015, the company paid $7.9 billion in claims and other benefits to members and business partners.
Net operating income of $875 million1 for the first half was driven by strong business performance.
“Nationwide is growing. Our focus on core business fundamentals as one brand creates a broader ability to expand relationships with business partners and members,” said Nationwide’s Chief Executive Officer Steve Rasmussen. “Our results demonstrate we are working even more effectively as a coordinated team to drive our overall success through strengthened distribution and enhanced service delivery, allowing us to provide more powerful solutions for our members.”
In May, Standard & Poor’s reaffirmed Nationwide’s A+ rating of financial strength. The company also received a number of awards for providing excellence in customer service and creating a best-in-class workplace.
“We continue to see solid results across both our financial services and property and casualty businesses,” said Chief Financial Officer Mark Thresher. “Our results are in line with our long-term goals aimed at delivering balanced, profitable growth for our company. We attribute much of the growth to our continued focus on delivering new products, enhancing the member experience and becoming more efficient as an organization.”
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 $10.6 billion for the first half of 2015, up 4 percent over the same period in 2014.
Retirement plan sales grew 10 percent over the same period in 2014 to $5.3 billion. During the second quarter, Nationwide’s retirement plans product line reached a milestone $100 billion in assets under management. The company also renewed its contract with the New York State Deferred Compensation plan, extending a relationship that began in 2003 for an additional seven years.
First year individual life insurance sales were 35 percent higher than the same period last year, driven primarily by continued interest in the company’s indexed universal life (IUL) products. In March, Nationwide added two new IUL products to its existing portfolio, offering financial advisors more options to help meet their clients’ individual needs.
While overall annuity sales were down slightly for the half, the company grew sales of fixed annuities by 63 percent over last year, led by the company’s enhanced New Heights product, which added new index allocation strategies through an expanded lineup of four products.
Mutual fund assets under management increased to $60.1 billion from $59.4 billion at the end of the year.
Bank deposits were $5.1 billion through the first half, and consumer loans were $4.0 billion. Nationwide launched a new consumer auto lending solution in June that makes car buying simpler and faster.
Nationwide’s financial services lines generated $573 million in net operating income through the first six months of 2015. Operating performance was driven by business growth and a 4 percent increase in customer assets since the first half of 2014. First half results also include one-time benefits related to updates to variable annuity reserve estimates and customer acquisition costs.
Property & Casualty Business Highlights
Total direct written premium (DWP) grew to $9.6 billion, 4 percent higher than the same period last year. The increase was driven primarily by commercial lines and direct channel sales.
As the No. 1 total small business insurer in the U.S. 2, Nationwide delivered strong performance across all segments of commercial lines with significant growth in standard commercial, excess & surplus/specialty and agribusiness lines. Commercial lines DWP grew to $4.0 billion, up 6 percent over the same period in 2014. Standard commercial insurance led the segment with nearly $1.9 billion in premium driven by increased renewal premiums. Farmowners’ insurance was the fastest growing commercial product line with a 12 percent increase in direct written premium due to both strong new and renewal sales.
Direct written premium in personal lines totaled $5.6 billion for the first six months of 2015, up more than 2 percent over the first half of 2014, driven by increased new writings and renewals in standard auto and homeowners lines. Standard auto led total sales growth, bringing in $3.2 billion in premium, up 2 percent as compared to the same period in 2014, and homeowners insurance grew to $1.5 billion in premiums. Nationwide’s newest product line, aimed at serving the personal lines needs of high-net-worth clients, also continued to gain momentum.
Direct channel sales increased by 10 percent over the same period last year. As part of the company’s focus on offering more products via phone and internet, Nationwide expanded online sales of homeowners policies into more states.
Nationwide’s P&C business reported $309 million in net operating income for the first half of the year while paying $6.3 billion in property and casualty claims. Net operating income reflects strong performance across both commercial and personal lines. Weather claims were lower compared to the same period in 2014.
Investments and Capital
As of June 30, 2015, general account investments totaled $84.1 billion. Net investment income of $1.6 billion remained steady compared to the same period last year. Total assets grew to $196 billion.
Nationwide reported net income of $934 million through the first half. Nationwide’s capital position continued to strengthen with increases in both statutory surplus and policyholder equity during the first half. Statutory surplus – a measure of financial strength and claims-paying ability evaluated by regulators and rating agencies – increased to $15.3 billion, which is more than three times the amount required by regulators to cover its obligations to customers. Total policyholders’ equity increased to $20.8 billion.
“Nationwide had a strong first half and we have great momentum for the second half of the year,” Rasmussen said. “As we plan for the longer term, we will continue to leverage our mutual structure, diverse portfolio and strong relationships in new ways to address the changing market dynamics and ensure we continue to meet member needs.”
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, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com.