Nationwide Net Operating Income Increases to $749 Million

Nationwide Net Operating Income Increases to $749 Million

Strong, balanced growth supported by milder weather and improved markets

COLUMBUS, Ohio--(BUSINESS WIRE)-- Nationwide today reported net operating income of $749 million for the first six months of 2013, compared to $373 million during the same period of 2012.¹ Nationwide's strong first half results were balanced across both its property & casualty (P&C) and financial services businesses, each contributing more than $300 million to the company's net operating income. Fewer weather-related claims and equity market strength also drove first half performance.

A privately held mutual insurance company, Nationwide is a leading provider of personal and commercial property & casualty insurance and long-term retirement savings products in the U.S. The company paid more than $6.7 billion in property & casualty claims, life insurance and other benefits to members and business partners during the first six months of 2013.

"Nationwide's diverse product portfolio was hitting on all cylinders in the first half," said Chief Executive Officer Steve Rasmussen. "Our solid business fundamentals, combined with a milder weather season and an improving economy, have generated momentum for Nationwide so far this year. We continue to invest in our businesses and capabilities to ensure we can provide solutions to meet the evolving needs of our members and business partners."

Total operating revenue grew 9 percent to $11.8 billion for the first half. Total policyholders' equity remained steady at $19.1 billion, compared to $19.3 billion at the end of 2012.

"Our operating income doubled during the first half of the year and our capital position remains strong," said Nationwide's Chief Financial Officer Mark Thresher. "In our P&C business, continued premium growth across key product lines drove bottom line results, and weather-related claims were significantly lower than the same period last year. Our financial services results improved with higher asset-based revenue, reflecting growth in customer account values. In addition, we continue to improve the way we do business through our focus on operating efficiency across the enterprise."

A table of financial highlights is available here.

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.

First half P&C net operating income was $344 million, up from $75 million during the same period in 2012. Weather-related claims of $687 million were lower compared to the $855 million reported during the same period in 2012. Non-weather claims were also lower compared to last year.

Direct written premium grew by more than 10 percent to $8.7 billion in the first half of 2013. Nationwide's commercial business continued to lead premium growth, with strong sales performance in standard commercial, Scottsdale and Nationwide Agribusiness. In personal lines, direct channel growth continued at a rapid pace, with premiums up nearly 17 percent year-over-year. In addition, retention continues to be strong and improved over the prior year.

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.

Net operating income for the financial services business was $367 million, up from $258 million during the same period in 2012. Income growth was driven by the combination of increased equity market performance and strong business growth, which led to customer assets climbing nearly 5 percent since the end of 2012. Favorable events for the half included a one-time tax benefit related to the prior year's return.

Financial services sales increased from $9.1 billion in the first half of 2012 to $9.4 billion, with growth in most major product lines. Annuity sales momentum continued, led by variable annuities (VAs) with and without living benefit guarantees. First-year life insurance and private sector retirement plans sales each saw double digit growth over prior year to date.

Nationwide Funds, the company's mutual fund operation, grew assets under management to $47.8 billion from $45.0 billion at the end of 2012, and will further benefit from a funds acquisition from HighMark Capital Management, Inc., which is expected to close later this year. Customer deposits at Nationwide Bank reached $4 billion at the end of the first half, up from $3.8 billion at the end of last year. Consumer loans grew $100 million since the end of 2012 to $2.1 billion.

Investments and Capital

As of June 30, 2013, general account investments totaled $74.6 billion. Net investment income of $1.6 billion for the first half of 2013 remained steady compared to last year. Nationwide ended the half with total assets of $172.0 billion, up from $168.3 billion at the end of 2012.

Net income of $1.1 billion for the half was up significantly from the $386 million reported in the same period in 2012, driven by 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.

Statutory surplus—a measure of financial strength and claims-paying ability as evaluated by regulators and rating agencies—was $14.2 billion, more than three times the amount required by regulators to cover the company's obligations to its customers.

"While we are extremely pleased with our first half performance, we remain focused on our long-term results and our 'members-first' approach," Rasmussen said. "It's an exciting time to be a part of Nationwide - whether as an associate, a valued member or a business partner. We remain well-positioned for future growth and are committed to supporting the promises we make every day."

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

¹Nationwide 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.

Nationwide
Joe Case, 614-249-6349
casej6@nationwide.com

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