[May 09, 2012]

Nationwide Reports Strong Property and Casualty Sales Growth Through First Quarter 2012

Nationwide today reported net operating income of $274 million for the first quarter ending March 31, 2012¹, compared to $467 million during the same period in 2011.² First quarter 2012 results reflect an increase in property & casualty premiums, offset by higher claims payments and a one-time charge related to customer acquisition costs. Commercial business, an area of increased emphasis, led Nationwide's continued top-line growth.

Chief Executive Officer Steve Rasmussen (Photo: Business Wire)

Nationwide, a mutual insurance company, is a leading provider of personal and commercial property & casualty insurance and long-term retirement savings products. The company paid out a total of $2.9 billion in property & casualty claims, life insurance and other benefits to policyholders during the quarter.

Total operating revenue of $5.2 billion for the quarter was up over first quarter 2011. Total policyholder equity increased to $17.0 billion compared to $16.2 billion at the end of 2011.

"Coming off the worst weather year in the history of the company, Nationwide continues to be well positioned to serve our customers and to grow," said Chief Executive Officer Steve Rasmussen. "Our customers and business partners put their trust in us every day, and they can rest assured that Nationwide will be here for them long-term. Our financial strength continues to be validated by rating agencies, our customer service has been recognized as industry-leading and our associates remain focused on providing great service to our customers."

Since the beginning of the year, A.M. Best affirmed Nationwide's A+ financial strength rating, J.D. Power and Associates ranked Nationwide as one of the top carriers in terms of satisfaction with property claims service and auto policy purchase experience³ and Gallup recently presented its Great Workplace Award to Nationwide.

A table of financial highlights is available at www.nationwide.com.

Property and Casualty Business Highlights
Nationwide provides personal and commercial property & casualty protection products through five operating brands: Nationwide Insurance, Allied Insurance, Scottsdale Insurance, Titan Insurance and Nationwide Agribusiness. Harleysville Insurance became part of Nationwide on May 1, 2012. (Note: Harleysville's financial results are not included in this update.)

First quarter property & casualty net operating income was $181 million, down from $335 million reported in the same period of 2011. The decrease in operating income was due to higher claims and lower investment income.

Direct written premium was $3.8 billion, up nearly 5 percent over first quarter 2011, the result of increases in new writings, exposure growth and improved retention. Premiums from commercial lines experienced double-digit growth during the quarter compared to the same period in 2011. Premiums in the company's direct and affinity channels also were up nearl 12 percent to $279 million in the quarter. Approximately 25 percent of Nationwide's new standard auto business came from direct and affinity distribution channels during the quarter, reflecting Nationwide's ongoing investment of resources in these distribution methods.

"We continue to see momentum in personal lines sales due to stronger performance across all distribution channels and to an improving economy," said Chief Financial Officer Mark Thresher. "Commercial lines sales were strong, the result of higher average premiums and exposure growth driven primarily by improving market conditions. Overall, we are well positioned to gain market share through sound underwriting, a commitment to great customer service and a dynamic distribution strategy."

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 Group and Nationwide Bank.

First quarter net operating income for the financial services business was $76 million, down from first quarter 2011 due mainly to a one-time charge related to customer acquisition costs. Total deposits and premiums for the quarter were nearly $4.7 billion. Total customer assets climbed to more than $170 billion during the period, up from $163 billion a year ago. Accordingly, asset fees and other policy charges increased as market growth and net flows drove higher average customer asset values.

Excluding sales of variable annuities with living benefit guarantees, overall financial services sales were up 9 percent over first quarter 2011. Retirement plan sales of $2.5 billion reflected growth in the public sector business, which was driven by rollover deposits. Life insurance sales were also up, led by corporate life products. Due to reductions in living benefit guarantees that were implemented late last year to manage risk and capital, variable annuity sales of $1.2 billion were down compared to first quarter 2011.

"Low interest rates and product changes have pressured financial services results early on, but we're optimistic that we'll still have a strong year overall," said Kirt Walker, President and Chief Operating Officer of Nationwide Financial. "We will continue to offer competitively priced retirement planning products while balancing our overall risk so we can be here long-term for our business partners and their clients. We are confident that our product line-up, offered through a multi-channel distribution system, provides us a distinct competitive advantage. We are also excited about additional opportunities to expand our market reach through new independent insurance partners."

Nationwide Funds Group assets under management grew to $44.0 billion from $40.9 billion in the first quarter of 2011, driven by strong equity market performance in the first quarter. Nationwide Bank continued to grow during the first three months of 2012, with customer deposits reaching $3.6 billion, up from $3.1 billion in first quarter 2011, while customer loans were $1.4 billion, compared to $1.3 billion in the same period of 2011.

Investments and Capital
As of March 31, 2012, general account investments totaled $68.6 billion, up from $68.2 billion on December 31, 2011. Nationwide ended the quarter with total assets of $159.3 billion, up from $154.0 billion at the end of 2011. Net investment income for the quarter was $777 million, compared to $849 million in 2011. The decrease was led by lower pre-payment income and declining yields on fixed investments.

Statutory surplus-a measure of financial strength and claims-paying ability evaluated by regulators and rating agencies-was $13.1 billion, more than three times the amount required by regulators to cover the company's obligations to its customers. Net income for the quarter was $508 million, up from $501 million in the first quarter of 2011, due to positive results in our risk management program, as interest rates rose modestly during the quarter.

Outlook
"Nationwide's unique distribution capabilities, product diversity and commitment to great customer service differentiate us in the market and position us well to gain market share," Rasmussen added. "We have the capital strength and risk management capabilities that are critical for balanced growth and stability over the long term."

About Nationwide
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.

Nationwide, the Nationwide frame mark, and On Your Side are service marks of Nationwide Mutual Insurance Company

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¹ 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 investments and hedging instruments, certain hedged items, other-than-temporary impairments, discontinued operations and extraordinary items, all net of taxes. Certain prior- period amounts have been reclassified to conform to current year presentation.

² 2011 amounts include the impact of the Company's retrospective adoption of accounting guidance that modifies the definition of the costs incurred by insurance entities that can be capitalized in the acquisition of new and renewal insurance contracts.

³ According to the 2012 J.D. Power and Associates Property Claims Satisfaction study and the 2012 J.D. Power and Associates Insurance Shopping Study.

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50271770&lang=en

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