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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - DECEMBER 17, 2003 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Nationwide Group(Nationwide). This rating applies to Nationwide's four property/casualty pool members led by Nationwide Mutual Insurance Company (Nationwide Mutual) and 22 reinsured affiliates. At the same time, A.M. Best has affirmed the "a" debt rating on Nationwide Mutual's existing surplus notes. The outlook on all property/casualty financial strength and debt ratings has been revised to stable from negative.
Concurrently, A.M. Best has affirmed the financial strength ratings of A+ (Superior) of its core life insurance subsidiaries, Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company, as well as the debt ratings of Nationwide Financial Services, Inc. [NYSE: NFS]. The rating outlook on the financial strength and debt ratings remains negative. All the companies listed above are located in Columbus, OH.
Furthermore, A.M. Best has affirmed the financial strength ratings of A (Excellent) of Nationwide Life Insurance Company of America (Pennsylvania) and Nationwide Life and Annuity Company of America (Delaware) (together, referred to as Nationwide Provident) with a stable outlook.
The rating of Nationwide Group is based upon its excellent capitalization and significantly improved operating results. The strong turn-around in underwriting performance of the last two years stemmed from the group's aggressive re-underwriting initiatives, improved pricing standards and expanded tier structure that greatly enhanced underwriting flexibility. These management initiatives should enable the group to sustain the recent improvements in underwriting performance in the near term. In addition, Nationwide benefits from a diversified product offering that includes standard and specialty personal lines, surplus lines and commercial lines of business.
The rating also recognizes Nationwide's market leadership position within the property/casualty industry, its multiple distribution channels, as well as its decentralized operational structure that provides superior service to agents and policyholders.
The life insurance ratings recognize NFS' favorable business profile, which is underpinned by balanced revenue streams, strong and diversified distribution, sound earnings capabilities and high overall investment quality. NFS enjoys a solid position as a provider of life insurance, annuities and retirement plans to retail and institutional markets. The company's ongoing initiatives to enhance distribution capabilities and expand product breadth have enabled it to successfully address shifts in consumer demand while maintaining positive sales momentum in a difficult environment.
In addition, the ratings reflect NFS' reasonable financial leverage, solid interest coverage and the franchise value associated with being a 63%-owned subsidiary of Nationwide Mutual.
Offsetting these strengths is A.M. Best's view that the life insurance subsidiaries have weakened their risk-based capital positions as a result of a combination of recent years' robust growth and more aggressive capital management. A.M. Best now views these companies as relatively less capitalized than similarly-rated peers. Additionally, NFS faces a highly competitive market in several of its core products (as do all U.S. life insurers), and the group will be challenged to achieve sales, earnings and expense reduction objectives for the recently-integrated Nationwide Provident operations. Nevertheless, A.M. Best believes the recent equity market rebound, combined with strategies the company has implemented to augment profitability, enhance efficiency and reduce potential earnings volatility and should enable NFS to improve operating performance and strengthen overall capitalization in the near to medium term.
Additionally, A.M. Best has affirmed the financial strength rating of B++ (Very Good) of Nationwide Indemnity Company (NIC) and the financial strength rating of A- (Excellent) of Nationwide Insurance Company of Florida (NICOF), both with stable outlooks.
The affirmation of NIC's rating reflects the substantial financial support provided by its parent, Nationwide Mutual, and the company's significant invested asset base that furnishes cash flows to fund run-off obligations.
The affirmation of NICOF's rating reflects its solid capitalization, conservative operating philosophy and the financial flexibility and support of its parent, Nationwide Mutual.
For a complete listing of Nationwide Group's financial strength and debt ratings, please visit NATIONWIDE.
For a list of A.M. Best's current debt ratings, please visit DEBT RATINGS.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.