COLUMBUS, Ohio--(BUSINESS WIRE)--Nationwide today reported total operating revenue of $12.5 billion1 for the first six months of 2014, up 6 percent over the same period last year. The company’s broad-based growth was driven by strong sales and assets growth in the financial services business and continued premium growth in the property & casualty (P&C) business. Nationwide, a privately held mutual insurance company, is a leading provider of auto, home, life, commercial and retirement products in the U.S.
“Our performance was solid in the first half of the year, as growth continued across all major lines of business,” said Chief Executive Officer Steve Rasmussen. “We’ve launched several new products, announced new services and expansion opportunities, and provided new, mobile-friendly sales and servicing solutions – all aimed at helping our customers protect what’s most important. Nationwide is able to leverage our broad portfolio of products and services to meet the diverse needs of our members and business partners.”
First half net operating income of $534 million1 was down from $749 million reported during the same period in 2013, primarily due to severe storms that resulted in $1.2 billion in weather-related claims. Overall, the company paid $7.8 billion in auto, home, life and other claims and benefits to members and business partners during the first six months of 2014.
“We experienced significant weather activity during the first half of the year, which created hardship for many of our members,” said Chief Financial Officer Mark Thresher. “Although weather claims affected net operating income, our priority is protecting our members and business partners – and to do this, we must also protect our capital position. Through the first half of 2014, we continued to focus on disciplined growth and expense management. We were also able to refinance a significant portion of our long-term debt at a lower interest rate during the second quarter, which provides ongoing capital efficiency.”
A table of financial highlights is available at www.nationwide.com/financials.
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.
Financial services increased sales to $10.2 billion through second quarter 2014, up more than 8 percent over the same period in 2013. First year life insurance sales rose 36 percent over the same period last year, driven by Nationwide’s Universal Life product suite. Total annuity sales were up 8 percent over last year due to strong sales in variable and immediate annuities. Sales of annuity contracts without living benefit guarantees gained momentum during the second quarter, as the company continued to see a balanced mix of contracts both with and without living benefit guarantees.
Nationwide Funds, the company’s mutual fund operation, grew assets under management to $58.8 billion during the quarter, up from $56.5 billion at the end of 2013. Nationwide Funds continued to see high demand for the mutual funds acquired in 2013 from HighMark Capital Management, Inc. This acquisition contributed to a 200 percent increase in sales over the same period in 2013, and has increased the breadth and competitiveness of the funds Nationwide can offer to financial advisors and their clients.
Nationwide saw balanced results across its public sector and private sector retirement plans businesses. New plan acquisitions and customer rollovers remained strong in both sectors, as total retirement plan deposits increased over the prior year period.
Customer deposits at Nationwide Bank were $4.4 billion at the end of the second quarter. Consumer loans have increased 25 percent since the end of 2013, bringing the total loan portfolio to $3.2 billion.
Nationwide’s financial services business generated $497 million in net operating income through the first six months of 2014, up from $367 million reported during the same period last year. Operating performance improved due to higher asset fees and policy charges, the result of a 17 percent increase in customer assets over second quarter 2013. First half results also included a one-time benefit related to customer acquisition costs.
Property & Casualty Business Highlights
Nationwide provides personal and commercial P&C protection products through six operating brands: Nationwide Insurance, Allied Insurance, Scottsdale Insurance, Nationwide Agribusiness, Harleysville Insurance and Titan Insurance.
Nationwide grew direct written premium across all major P&C businesses to a total of $9.2 billion through second quarter, up 5 percent over the same period last year. Sales of standard and specialty product offerings continued to drive growth in commercial lines. The results reflect a combination of exposure growth, new business and rate adjustments. In personal lines, direct written premium grew by 2 percent over the same period in 2013 to $5.3 billion, led by auto and homeowners sales. Nationwide’s direct channel continued its strong growth momentum, with direct written premium up 16 percent over second quarter 2013.
Nationwide’s P&C business reported $32 million in net operating income through the first six months of 2014, down from $344 million during the same period in 2013. Weather-related claims totaled $1.2 billion for the first half of the year, primarily associated with the Polar Vortex in January and significant storm activity in the second quarter. Nationwide has a proportionately higher market share in several Midwestern states that were harder hit by June weather, which was reflected in second quarter results.
Investments and Capital
As of June 30, 2014, general account investments totaled $79.6 billion. Net investment income of $1.6 billion for the first half of 2014 was relatively flat compared to the same period last year. Total assets grew to $189.7 billion, up from $183.2 billion at the end of 2013.
Statutory surplus – a measure of financial strength and claims-paying ability evaluated by regulators and rating agencies – was $14.9 billion, more than three times the amount required by regulators to cover the company’s obligations to its customers. Total policyholders’ equity increased to $21.1 billion, compared to $20 billion at the end of 2013.
Nationwide reported net income of $198 million for the first half of 2014. This was down compared to the same period in 2013, primarily driven by weather and 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.
“Nationwide has great growth momentum going into the second half of the year, and we are bolstered by a strong equity market and improving economy,” Rasmussen said. “We look forward to opportunities to build on our successes and provide On Your Side® experiences for our members and business partners.”
About Nationwide
Nationwide Mutual Insurance Company, a Fortune 100 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 a full range of insurance and financial services, including auto, commercial, homeowners and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; specialty health; pet, motorcycle, boat and farm insurance. For more information, visit www.nationwide.com.
Nationwide, Nationwide Financial, On Your Side and the Nationwide frame mark 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 available-for-sale securities, certain hedging activities, other-than-temporary impairments, discontinued operations and extraordinary items, all net of taxes.
