November 06, 2014 – Columbus, Ohio – Nationwide today reported total operating revenue1 of $18.9 billion for the first nine months of 2014, up nearly 7 percent over the same period last year. The company’s performance was driven by continued premium growth in commercial and personal lines, as well as strong sales in financial services. Nationwide, a privately held mutual company, is a leading provider of auto, home, life, commercial and retirement products in the U.S.
“Our results through the third quarter reflect our continued efforts to fulfill the broad protection and financial needs of our members,” said Chief Executive Officer Steve Rasmussen. “During the last several months we have taken deliberate steps to more fully align as one company. As we begin the transition to one brand, our goal is to be known as one business – one Nationwide – with operations in all 50 states.”
Net operating income1 of $806 million through the third quarter was down from $1 billion during the same period in 2013. The decrease was primarily driven by severe storms during the first half of the year. Nationwide paid $11.6 billion in auto, home, life and other claims and benefits to members and business partners during the first nine months of 2014.
“Our core performance remained strong in both our financial services and property and casualty businesses through the third quarter,” said Chief Financial Officer Mark Thresher. “Continued business growth, along with better weather, helped offset the financial impact of severe storms in the first half of the year. As we evolve our business under one brand, we remain focused on profitable growth, disciplined expense management and capital efficiency.”
A table of financial highlights is available at www.nationwide.com/financials.
Financial Services Business Highlights
Financial services sales increased to $15.3 billion through third quarter 2014, up more than 8 percent over the same period in 2013.
First year individual life insurance sales increased 40 percent over the same period in 2013, primarily driven by universal life products.
Variable annuity sales increased to $4.6 billion through the third quarter, an increase of 10 percent over the same period last year. Nationwide continues to see a balanced mix of contracts both with and without living benefit guarantees. The company also saw strong year-over-year sales growth in fixed indexed and immediate annuities.
Retirement plan sales increased over the same period in 2013 due to recurring deposits and customer rollovers in both the private and public sectors. Nationwide’s mutual fund business continued its strong sales momentum, increasing 153 percent year-over-year, driven in large part by continued interest in the mutual funds acquired in 2013 from HighMark Capital Management, Inc.
Bank deposits were $4.4 billion at the end of the third quarter. Consumer loans increased since the end of 2013, bringing the total loan portfolio to $3.6 billion.
Nationwide’s financial services lines generated $686 million in net operating income through the third quarter, up from $524 million during the same period last year. Operating performance improved due to business growth and equity market improvements, which led to higher asset fees and policy charges. A one-time benefit related to customer acquisition costs experienced during the first half of the year continued to positively impact 2014 results.
Property & Casualty Business Highlights
Nationwide grew property & casualty (P&C) direct written premium across all major lines of business to a total of $14 billion through third quarter – an increase of 5 percent over the same period last year.
Sales in auto and homeowners insurance drove personal lines growth to $8.2 billion. Nationwide’s direct channel continued strong growth performance, increasing direct written premium 14 percent over the same period in 2013.
Commercial lines direct written premium totaled $5.8 billion through the end of the third quarter, up 10 percent over the same period in 2013, primarily driven by standard commercial, excess and surplus and agribusiness. The results reflect a combination of exposure growth, new business and rate adjustments.
Nationwide’s P&C business reported $221 million in net operating income through the first nine months of 2014, down from $527 million during the same period last year. Although weather improved during the third quarter, year-over-year weather-related claims totaled $1.5 billion, which was up from the $923 million reported through the same period in 2013. Weather claims were primarily driven by severe storm activity that occurred during the first half of the year.
Investments and Capital
As of Sept. 30, 2014, general account investments totaled $81.1 billion. Net investment income of $2.5 billion for the first nine months of 2014 was up from the same period last year driven by higher income from alternative investments, treasury inflation-protected securities and a larger investment portfolio. Total assets grew to $190.4 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 $15.1 billion, more than three times the amount required by regulators to cover the company’s obligations to its customers. Total policyholders’ equity increased to $21 billion, compared to $20 billion at the end of 2013.
Nationwide reported net income of $342 million through the third quarter, primarily driven by significant weather in the first half of the year and by the financial impact of certain Nationwide 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 $86 million in after-tax reserve strengthening through the third quarter, associated with asbestos exposures.
“Our move to one brand has been received with great enthusiasm by our members, business partners, agents and associates,” Rasmussen said. “As we work toward a strong finish to the year, our company is focused on leveraging our diverse product offerings and distribution capabilities to provide seamless solutions for our members as one Nationwide.”
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.
Nationwide, Nationwide is on your side and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company.
 Nationwide analyzes operating performance using non-GAAP financial measures called “net operating income” and “net operating revenue,” which the company believes enhances understanding and comparability of its performance by highlighting its results from continuing operations and the underlying profitability drivers. Net operating income and net operating revenue exclude the impact of realized gains (losses) on sales of available-for-sale securities, certain hedging activities, other-than-temporary impairments, discontinued operations and extraordinary items, all net of taxes.
SOURCE: Nationwide Mutual Insurance Company