November 12, 2013
Nationwide on Pace for a Strong 2013
Columbus, Ohio - Nationwide, a member-driven mutual insurance company, grew its total operating revenue 7 percent to $17.7 billion for the first nine months of 2013. Growth was driven by strategic investments, favorable market conditions and strong demand across the financial services and property & casualty (P&C) businesses.
“We continued to grow across almost all of our businesses, demonstrating the competitive advantage of our diverse product mix,” said Chief Executive Officer Steve Rasmussen. “So far this year, we have paid more than $10 billion in auto, home, life and other claims and benefits to policyholders. Our strong performance allows us to build capital to keep our promises to our members and give back to our communities.”
Nationwide reported $1 billion in net operating income through Sept. 30, 2013, an increase of 38 percent over the same period in 2012.1 Results were driven by strong and balanced core performance in the financial services and P&C businesses, and benefitted from favorable equity markets and milder-than-expected weather in the quarter. Overall weather-related claims were in line with expectations for the year. Total policyholders’ equity was steady at $19.4 billion, compared to $19.3 billion at the end of 2012.
“Our solid business fundamentals in both financial services and P&C underscore our continued growth momentum and profitability,” said Chief Financial Officer Mark Thresher. “These results, combined with our strong capital position, enable us to make strategic investments in our business. Some highlights for the year include the expansion of our direct channel business into six new states and the acquisition of 17 mutual funds from HighMark Capital Management, Inc. We also continue to invest in our business partnerships and enhance the customer 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 5 percent to $14.1 billion through September, compared to $13.4 billion reported the same time last year. Annuity sales momentum continued, led by variable annuities with and without living benefit guarantees. First-year life insurance sales were up 60 percent over prior year, due in part to strong demand for Nationwide’s Indexed Universal Life product. Retirement plan sales also increased during the quarter, driven by a new 401(k) product launch and Nationwide’s role as the provider for the Commonwealth of Kentucky Public Employees Deferred Compensation Authority, effective July 1.
Nationwide’s financial services business generated $524 million in net operating income, up nearly 12 percent from $469 million during the same period in 2012, driven by strong business growth and equity market performance. Operating performance improved due to higher asset fees and policy charges related to a 13 percent increase in customer assets since the end of 2012.
Nationwide Funds, the company’s mutual fund operation, grew assets under management to $53.7 billion from $45 billion at the end of 2012. In September, Nationwide Funds completed its funds acquisition from HighMark Capital Management, Inc., which added approximately $3.6 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 $4.3 billion at the end of September, up from $3.8 billion at the end of last year. Consumer loans grew to $2.4 billion, up from $2.0 billion at the end of 2012.
Property & Casualty 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 grew by nearly 9 percent to $13.3 billion through the end of September. Premium growth reflects rate adjustments in response to changing market conditions, increased exposure and new business in targeted lines. Nationwide’s commercial business continued to lead premium growth, with strong sales performance in standard commercial lines, Scottsdale and Nationwide Agribusiness. In personal lines, direct channel premium grew nearly 18 percent over 2012, driven by expanded geographic reach, marketing initiatives and improved retention.
Nationwide’s core P&C business profitability remains sound. P&C net operating income more than doubled over last year, with $527 million reported through the first nine months of 2013. The improvement in results was due to lower weather and non-weather claims. Weather-related claims of $923 million were down compared to the same period last year.
Investments and Capital
As of Sept. 30, 2013, general account investments totaled $75.5 billion. Net investment income of $2.3 billion remained steady compared to the same period last year. Total assets grew to $177.3 billion, up from $168.3 billion at the end of 2012.
Net income of $1.4 billion through third quarter was up significantly from $764 million reported in the same period 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. Nationwide’s earnings also included the impact of $99 million in after-tax reserve strengthening through the third quarter, associated with asbestos exposures.
Statutory surplus – a measure of financial strength and claims-paying ability as evaluated by regulators and rating agencies – was $14.3 billion, more than three times the amount required by regulators to cover the company’s obligations to its customers.
“While our results have been exceptional so far this year, we continue to keep a close eye on the weather and on the economic dynamics in the marketplace,” Thresher said.
Rasmussen added, “As a mutual company, we remain focused on meeting the needs of our members and business partners over the long term. The stronger we are, the more of an impact we have on our members by providing new and better ways to serve them.”
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.