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Nationwide's Strong 2010 Performance Bolstered by Diverse Business Mix and Customer-Focused Strategy


nationwide

COLUMBUS, Ohio--February 19, 2011: Nationwide - a leading provider of property & casualty insurance, financial services and retirement products, reported $1.1 billion in net operating income* in 2010, up 24 percent from $893 million in 2009. The results reflect a combination of improving property & casualty performance and steady asset growth in the financial services businesses.

"While new business writings were challenged in most lines, we were pleased with the robust growth we experienced in our direct and affinity partnership programs, which were up 13 percent"

In 2010, Nationwide paid more than $12 billion to policyholders in auto, home and life insurance claims. The company ended the year with more than $148 billion in total assets, including $66.1 billion in general account investment assets. Policyholders' equity increased to $16.8 billion in 2010, up from $15.1 billion at the end of 2009.

Total operating revenue* for 2010 was $20.8 billion. Net income was up 34 percent to $959 million through December 31, 2010, compared to $716 million during the same period in 2009.

"Nationwide ended 2010 with real momentum," said Chief Executive Officer Steve Rasmussen. "Our competitive position is strong, our capital position is excellent and our commitment to provide the best customer experience is unwavering. Our unique offering of property & casualty products, combined with attractive life insurance, annuity and retirement products, enabled us to deliver exceptional value for our policyholders. Despite ongoing challenges in our industry and the broader economy, I'm optimistic about 2011 as we strive to help our customers protect what matters most and build a secure financial future."

Financial Services Business Highlights

Nationwide offers individual and employer-sponsored retirement savings and insurance products through three operating brands: Nationwide Financial, Nationwide Retirement Solutions and Nationwide Bank.

Net operating income in the financial services business lines grew to $528 million in 2010, compared to $513 million in 2009, driven by steady growth in sales, net flows and assets. Strong equity market conditions along with continuing consumer preferences for guaranteed products continued to drive business performance. Core sales of insurance and retirement savings products increased 10 percent to $17.2 billion, with strong growth in variable annuities, fixed life insurance and mutual funds. Variable annuities sales were up 32 percent, highlighting the competitiveness of Nationwide's living benefits riders. Sales of first-year fixed life insurance rose 70 percent. Separate account assets underlying all variable products increased more than 12 percent to $64.3 billion, reflecting better market performance and improved retention.

"Our integrated, team-based distribution strategy is delivering improved sales results," said Chief Financial Officer Mark Thresher. "A combination of best-in-class products, a tight focus on distribution effectiveness and better alignment in our marketing is helping us serve advisors and customers better. The momentum we're gaining in variable annuities and fixed-life sales, combined with steady retirement plan sales, offers solid opportunities to further accelerate growth."

Customer deposits in Nationwide Bank reached a record $2.8 billion at the end of 2010, up from $2.4 billion at the end of 2009. Loan balances topped $1 billion for the first time. Total assets for Nationwide Bank grew to $3.9 billion for the year compared to $3.2 billion in 2009.

Property and Casualty Business Highlights

Nationwide also provides personal and commercial protection products through five operating brands: Nationwide Insurance, Allied Insurance, Scottsdale Insurance, Titan Insurance and Nationwide Agribusiness.

Net operating income for the property & casualty businesses was $655 million in 2010, compared to $328 million in 2009, reflecting lower current-year claims. Lower, non-weather-related claims were the result of ongoing implementation of risk management and underwriting initiatives. Payments on prior year claims were also lower than initially estimated, due to claims process improvements, better underwriting and the impact of broader industry trends on several business lines. Weak home and auto sales, stubborn employment conditions and soft commercial markets continued to impact premiums, which were $14.4 billion for the year.

"While new business writings were challenged in most lines, we were pleased with the robust growth we experienced in our direct and affinity partnership programs, which were up 13 percent," said Thresher. "We're also encouraged by new business and retention in the last several months of the year as we began to see signs that the broader economic recovery is taking hold. We're also anticipating a positive impact on future business overall, as planned investments to further improve our distribution, customer service, underwriting and claims service capabilities are realized."

Investments and Capital

Net investment income was up almost 5 percent to $3.1 billion driven by increases in returns from alternative investments. Higher income from bonds was offset by lower mortgage loan income.

General investment assets increased to $66.1 billion, compared to $63.9 billion in 2009. The increase was primarily due to higher valuations from the impact of lower interest rates.

Statutory surplus, a measure of financial strength and claims -- paying ability evaluated by regulators and rating agencies was nearly $13 billion at the end of the year, more than three times the amount required by regulators to cover Nationwide's obligations to its customers.

Outlook

"Looking ahead to 2011, we're optimistic about our performance based on the momentum we experienced in the fourth quarter. We will continue to focus on top-line growth, deepening business relationships and delighting customers with an experience that is second to none," Rasmussen said. "We remain committed to increasing value to our policyholders and spreading our On Your Side® promise through continuous improvement and the dedication of our associates and business partners."