[November 09, 2012]

Nationwide Reports $723 Million Net Operating Income Through Third Quarter 2012

Nationwide today reported net operating income of $723 million through the first nine months of 2012. This compares to $375 million during the same period in 2011.¹

"At a time when so many of our members have been affected by the terrible devastation of Hurricane Sandy, we are doing everything humanly possible to help those who have experienced loss," said Steve Rasmussen, Chief Executive Officer for Nationwide. "While we're still in the early stages of assessing damage and processing claims, we want our members to know that Nationwide is strong and stable with the capital strength to deliver on our promises to protect what matters most."

Nationwide has deployed claims teams and mobile response units across the Northeast, Midwest and Mid-Atlantic regions to adjust claims as quickly as possible. Claims and financial results related to Hurricane Sandy will be reflected in the company's fourth quarter operating results.

Through September, lower weather-related claims and solid growth in the company's property & casualty (P&C) business drove Nationwide's rebound in earnings from the previous year. Nationwide's financial services business also continued to contribute significantly to earnings as customer assets managed by the company reached a record level.

Nationwide paid more than $10.0 billion to members in the form of claims, life insurance benefits and other payments through the first nine months of 2012. Total operating revenue for first nine months was $16.6 billion, compared to $15.6 billion during the same period in 2011.

"We saw a significant jump in P&C earnings through nine months of 2012 due to lower claims and continued business growth, with premiums up across all major commercial and personal business lines," said Chief Financial Officer Mark Thresher. "In our financial services business, robust equity market performance and strong net flows in 2012 drove our customer assets to record levels. While sales through September 30 were modestly below last year, we saw strong sales growth in mutual funds, fixed and immediate annuities and retirement plans. Our broad product portfolio continues to position us well for growth while protecting the financial security of our members."

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

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.

P&C net operating income was $208 million for the first nine months of the year, compared to a net operating loss of $221 million during the same period in 2011. Weather-related claims were down significantly through September, contributing to the climb in earnings. Through nine months, weather claims totaled more than $1.2 billion, compared to $2.2 billion in 2011. Lower investment income through nine months of 2012 partially offset lower claims.

Nationwide's P&C segment performance includes Harleysville's operating results since its May 1, 2012 acquisition date and certain transaction-related expenses, the net of which were not material to operating income.

Year-over-year direct written premium was up 9 percent to $12.2 billion through Sept. 30, 2012. Premiums increased across all major product lines and channels, reflecting growth in new business writings and improved retention. Higher average premiums also contributed to the increase, driven by growth in insured values and rate increases, particularly in commercial lines. The company's main street commercial, agribusiness and excess & surplus businesses accounted for most of the premium growth in the comparable year-to-date periods.

In September, Nationwide Insurance was recognized in the 2012 J.D. Power & Associates Home Insurance Study, where it performed above the industry average. The company also successfully launched the new Join the Nation advertising campaign for its Nationwide Insurance brand.

Financial Services Business Highlights

Nationwide offers life insurance, individual- and employer-sponsored retirement savings and banking products through four operating brands: Nationwide Financial, Nationwide Retirement Solutions, Nationwide Funds Group and Nationwide Bank.

Financial services year-to-date net operating income was $470 million compared to $561 million reported through Sept. 30, 2011. The year-over-year change is largely the result of a one-time net benefit related to customer acquisition costs in 2011 that boosted prior year earnings.

Total customer assets grew to a record $173.2 billion as of Sept. 30, 2012, compared to $160.4 billion at the end of 2011. Asset fees and other policy charges were higher in the first three quarters of the year as market performance and net flows drove higher average customer asset values.

Year-to-date sales totaled nearly $13.5 billion, down 6 percent from the comparable period in 2011. This sales decline was expected, as earlier this year the company modified some variable annuity features to better align the combination of customer benefits and product profitability, underscoring Nationwide's long-term commitment to the business. Declines in variable annuity sales were partially offset by growth in fixed and immediate annuities and retirement plans.

Nationwide Funds Group also continued to grow, reporting $44.4 billion in assets under management. Nationwide Bank continued its positive momentum, with customer deposits reaching $3.8 billion while customer loans were $1.8 billion.

Investments and Capital

As of Sept. 30, 2012, general account investments totaled $74.8 billion, including nearly $4.1 billion acquired in the Harleysville transaction. Declining interest rates and tighter credit spreads have increased the value of the investment portfolio by $1.9 billion since year end 2011.

Net investment income was $2.3 billion during the first nine months of 2012, down 3 percent from $2.4 billion through the same period in 2011. The decrease was driven by a decline in income from bonds and alternative investments.

Net income through the third quarter was $764 million, up from a $712 million net loss reported during the same period in 2011. The change is largely due to the decline in this year's weather-related claims and to last year's non-operating losses in the company's risk and capital management programs, the result of a sharp decline in interest rates. These programs are designed to protect the company's long-term economic results and statutory capital, and are functioning as intended.

Year-to-date statutory surplus was $13.7 billion, more than three times the amount required by regulators to cover the company's obligations to its customers. Total policyholder equity increased to $19.0 billion, compared to $16.2 billion as of Dec. 31, 2011.

In July, Standard & Poor's reaffirmed Nationwide's A+ rating and stable outlook based on the company's strong capital position, risk management program and diversified businesses.²

"Nationwide's overall year-to-date performance is a direct result of our diverse product portfolio, unwavering commitment to provide exceptional service to our members and highly engaged associates," Rasmussen said. "No one is better at serving members than Nationwide. As much as we hate to see people impacted so drastically by the recent Hurricane, it does remind us of why Nationwide is here: we put lives back together."

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

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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.

² Standard & Poor's A+ ranking is 5th strongest of 22. These ratings and rankings reflect Rating Agency assessment of the financial strength and claims-paying ability of Nationwide Life Insurance Company and are subject to change at any time. They are not intended to reflect the investment experience or financial strength of any variable account, which is subject to market risk.

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