OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa-” of the four participating property/casualty pool members and 32 reinsured affiliates of Nationwide Group (Nationwide). The outlook of these Credit Ratings (ratings) is negative. (See link below for detailed list).
Concurrently, A.M. Best has downgraded the FSR to B++ (Good) from A+ (Superior) and the Long-Term ICR to “bbb” from “aa-” of Titan Insurance Company (Titan). The outlook of these ratings has been revised to stable from negative.
Additionally, A.M. Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of “a” of five surplus notes totaling $2.2 billion issued by Nationwide Mutual Insurance Company (Nationwide Mutual). The outlooks of these ratings is negative.
Also, A.M. Best has affirmed the FSR of B+ (Good) and the Long-Term ICR of “bbb-” of Nationwide Indemnity Company (NIC), the group’s run-off entity for asbestos and environmental claims. The outlook of these ratings is stable.
In addition, A.M. Best has affirmed the FSR of A+ (Superior) and Long-Term ICR of “aa-” of Nationwide Life Insurance Company and its subsidiary, Nationwide Life and Annuity Insurance Company.
Additionally, A.M. Best has upgraded the FSR to A+ (Superior) from A (Excellent) and the Long-Term ICR to “aa-” from “a” of Jefferson National Life Insurance Company (Dallas, TX). These companies are the key life/annuity subsidiaries of Nationwide Financial Services Inc. (NFS), and collectively are known as Nationwide Life Group. A.M. Best has also affirmed the Long-Term ICR of “a-” of NFS and all of its Long- and Short-Term IRs. The outlook of these ratings is stable.
Additionally, A.M. Best has also affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Harleysville Life Insurance Company (HLIC). The outlook of these ratings is stable. All companies are headquartered in Columbus, OH unless otherwise specified. (See link below for a detailed listing of all the companies and ratings.)
The ratings of Nationwide reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM). Nationwide’s ratings also consider the breadth of resources of the organization as reflected in the consolidated results of the enterprise.
The negative outlook captures concerns with operating performance within the core property and casualty lines of business. Nationwide continues to develop and implement strategic actions to address operating results, while recognizing strong investment returns. However, variability and unprofitable results within the underwriting portion continues to weigh adversely. While risk-adjusted capital has been supportive of significant weather-related events and natural catastrophe related losses, frequency and severity trends continue to drag on profitability. If trends in underwriting performance continue to be unprofitable or volatile in the near term, further downward rating action would be considered. An established improving trend in underwriting performance could eventually lead to consideration of the outlooks being revised to stable.
The ratings of Titan reflect its balance sheet strength, which A.M. Best categorizes as adequate, as well as its marginal operating performance, limited business profile and appropriate ERM. The ratings reflect the support provided by the Nationwide organization across all aspects of Titan’s short-term and long-term operations.
Effective January 1, 2017, Titan was removed from Nationwide’s internal reinsurance programs. Subsequently, its operating results and business profile are impacted by its realignment to a focused target market with nuanced dynamics. Nonetheless, day-to-day operations remain within Nationwide.
The ratings of NIC reflect its balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, very limited business profile and appropriate ERM. The ratings reflect the operational and financial support provided by the Nationwide organization.
NIC retains its role as a receptacle for asbestos and environmental reserves within the organization. With this, future operating performance is restrained and there is no expectation of modification to its established role. NIC continues to have the support of its parent, Nationwide Mutual.
The ratings of Nationwide Life Group reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, favorable business profile and appropriate ERM. The balance sheet is supported by favorable growth in total capital, and risk-adjusted capitalization that is assessed at the strongest level by Best’s Capital Adequacy Ratio (BCAR). However, A.M. Best notes that capitalization is supported quantitatively by surplus notes issued to the parent holding company and two captive insurers to support redundant reserves and reduce volatility related to variable annuities with guaranteed benefits. Financial flexibility is viewed as a positive due to its ability to access internal and external sources of capital and liquidity. The group has reported strong earnings and return metrics consistently on a statutory and U.S. GAAP basis, benefiting from favorable diversification of the business profile and strong market positions in its core products.
However, A.M. Best notes that the profile maintains elevated exposure of the liabilities to changes in equity markets and interest rates. Additionally, A.M. Best views the group’s target markets as highly competitive, which could impact future sales and profitability. The upgrade of Jefferson National Life reflects its strategic integration into the Nationwide Life Group and its role as the provider of variable annuities through the fee-based and Registered Investment Advisor (RIA) distribution channels.
The ratings of Harleysville Life reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management. Harleysville Life stopped writing new business in 2014 and its legacy business continues to run-off as expected.
A complete listing of Nationwide Group’s FSRs, Long-Term ICRs and Long- and Short-Term IRs also is available.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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