|[May 09, 2012]
Nationwide Reports Strong Property and Casualty Sales Growth Through First Quarter 2012
COLUMBUS, Ohio --(Business Wire)--
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
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
"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
Financial Services Business Highlights
individual and employer-sponsored retirement savings, banking and
insurance products through four operating brands: Nationwide Financial,
Nationwide Retirement Solutions, Nationwide Funds Group and Nationwide
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
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
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.
"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."
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
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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