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Nationwide Insurance Reports Net Income of $975M

Columbus, Ohio-based Nationwide Insurance has reported that consolidated net operating income through September 30 was up 39 percent to $975 million. That is compared to $702 million in the first three quarters of 2009. The increase was due to lower property and casualty claims and continued asset growth in financial service lines of business, the company said. Operating revenue was down slightly to $15.5 billion through September 30 compared to $15.8 billion through nine months in 2009.

Nationwide CEO Steve Rasmussen said, “We owe our performance to a balanced offering of industry-leading insurance, retirement and banking products that allows us to pay claims and build capital, even in uncertain times.”

He noted the company has paid out nearly $9 billion to policyholders in the form of auto, home and life insurance claims payments as well as other benefits in the first nine months of 2010. Policyholder equity has increased to $17.3 billion, up from $15.1 billion at the end of 2009.

Net income in 2010 was$569 million through the nine months ending September 30, 2010, compared to $541 million during the same period in 2009.

Nationwide provides individual and employer-sponsored investment and retirement savings vehicles through three operating brands: Nationwide Financial, Nationwide Retirement Solutions and Nationwide Bank.

Net operating income for the financial services business lines through the third quarter was $400 million, up 45 percent compared to the first nine months of 2009. The increase was driven largely by asset growth supporting savings and retirement products.

Core product sales were up 9 percent to $12.7 billion through September 2010 compared to $11.7 billion in 2009. Variable annuity sales were up 28 percent year-over-year to $3.6 billion, while sales of first-year fixed life insurance jumped almost 146 percent to $323 million. Separate account assets stood at $60.3 billion as of September 30. Net flows for variable annuities, retirement plans, and life insurance were $2 billion through the third quarter.

“We’re particularly pleased with strong sales growth of variable annuities and life insurance. We are also experiencing better retention across all our product lines – a clear indication of our product competitiveness and strong customer support,” said Nationwide chief financial officer Mark Thresher. “Lower tolerance for risk is one of the lingering effects of the downturn. We’re seeing this reflected in the market’s attraction to guarantees that are built into our variable annuity and life insurance products.”

Thresher added that Nationwide has gained market share in both variable annuities and life insurance with many distribution partners and in the category as a whole.

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 and casualty business lines for the first nine months of 2010 was $630 million compared to $308 million through the same period in 2009. This improvement primarily reflects lower claims volume. Earned premiums were down about 5 percent to $10.8 billion through the third quarter due to the challenging economic climate along with the ongoing impact of risk management and underwriting initiatives, the company said.

“We’re benefiting from better claims and underwriting performance, but the entire property and casualty industry continues to face headwinds,” Thresher said. “The uneven pace of the economic recovery continues to put pressure on auto and homeowners policy sales. Relatively high unemployment and weak new car and home sales are directly impacting new business growth, and commercial markets also continue to be soft. In this environment, customer sensitivity to price is high. As a result, we’ll continue to focus on careful risk selection and product offerings that strengthen retention and better position all of our property and casualty lines for long-term growth.”

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