Nationwide Reports Balanced Growth, Strong Performance in First Quarter 2013

Net operating income increases to $417 million

COLUMBUS, Ohio--(BUSINESS WIRE)-- Nationwide today reported net operating income of $417 million for the first three months of 20131, compared to $274 million in the same period of 2012. First quarter 2013 performance reflected continued strong operating revenue growth and a balanced contribution from the company's financial services and property & casualty (P&C) businesses.


Nationwide, a mutual insurance company, 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 $3.2 billion in property & casualty claims, life insurance and other benefits to members and business partners during the quarter. Total operating revenue grew almost 12 percent to $5.8 billion for the quarter, and total policyholder equity increased to $19.6 billion, compared to $19.3 billion at the end of 2012.

"We're proud of the strong, balanced results we've achieved in the first quarter of 2013," said Chief Executive Officer Steve Rasmussen. "Our members and business partners know that we will be there to meet their needs, and as we continue to grow, it further reinforces our ability to protect what's most important to them."

"Our earnings results reflect a balanced contribution from our property & casualty and financial services businesses," said Nationwide's Chief Financial Officer Mark Thresher. "Premiums in our P&C businesses were up sharply over last year due to the addition of Harleysville Insurance, as well as gains from main street commercial, specialty and agribusiness lines, and continued strong growth in our direct personal lines. Our financial services businesses also continued to expand, with total customer assets increasing in the strong equity market environment. Nationwide's unique business mix allows us to grow through industry cycles and is a key source of our financial strength and stability."

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

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 quarter P&C net operating income was $231 million, up from $181 million reported in the same period of 2012. Weather-related claims totaled $263 million, compared to $201 million in the first quarter of 2012. The increase was largely the result of a March hail storm that impacted Nationwide's members in southeastern states. Weather claims were offset by improvement in non-weather results and lower than expected payments associated with claims filed in 2012.

Direct written premium grew by 13 percent over the same time last year to $4.2 billion for the quarter. Nationwide's commercial business continues to lead premium growth, with strong performance from Nationwide Agribusiness, Scottsdale and Harleysville.

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.

First quarter net operating income for the financial services business was $182 million, up from $76 million during the first quarter of 2012. Last year's first quarter results included a one-time charge related to customer acquisition costs. Excluding this charge, current year operating performance improved due to higher asset fees and policy charges related to growth in customer assets and increased investment income.

Customer assets climbed to $173 billion during the period, up from $166 billion at the end of 2012, reflecting strong equity market performance and continued business growth.

Total financial services sales were $4.5 billion in the first quarter, down five percent from the prior year. While Nationwide experienced growth in most product lines, the company saw slower sales in variable and fixed annuities, the result of product changes made in 2012 to manage risk and ensure profitable growth in these lines over the long term. Sales of these products were down across the industry as companies continue to modify product features in response to the historically low interest rate environment.

Nationwide Funds, the company's mutual fund operation, grew assets under management to $47.1 billion from $45.0 billion at the end of 2012. On April 1, the company announced the acquisition of 17 mutual funds from HighMark Capital Management, Inc., which will offer a wider array of investment options to financial advisers and clients, and is expected to close in the third quarter of 2013. Customer deposits at Nationwide Bank reached $4.0 billion at the end of the quarter, up from $3.8 billion at the end of last year, and consumer loans grew to $2.0 billion, up from $1.9 billion last year.

Investments and Capital

As of March 31, 2013, general account investments totaled $75.3 billion, which is steady with year end 2012. Nationwide ended the quarter with total assets of $171.8 billion, up from $168.3 billion at the end of last year. Net investment income for the quarter increased to $785 million from $777 million the year before. Net income of $484 million for the quarter was down slightly from the $508 million reported in first quarter 2012 due to lower 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 evaluated by regulators and rating agencies—was $13.7 billion, more than three times the amount required by regulators to cover the company's obligations to its customers.

"The new and enduring connections our associates have built with members and business partners extend our On Your Side promise across the nation and ensure we are able to offer unique solutions for every stage of life," Rasmussen said. "We are also continuing to invest in our people and our communities. During the quarter, Nationwide received the Gallup Great Workplace Award for the second year in a row, a personal point of pride and further proof that we have the best people in place to serve our members' needs. I'm proud of our organization and excited to build upon our success over the course of the year."

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

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.



Nationwide
Dace De La Foret, 614-677-8387
delafod1@nationwide.com
or
Joe Case, 614-249-6349
casej6@nationwide.com

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