NU Online News Service, Nov. 11, 11:48 a.m.EST

More than $2 billion in weather-related losses andmark-to-market losses in investments drove a third-quarter net lossof $852 million at Nationwide.

The company turned a profit of $85 million during the 2010 thirdquarter.

About $400 million of the $2.2 billion in losses related toweather was from the third quarter, including $290 million fromHurricane Irene.

Chief Financial Officer Mark Thresher added that there were some“modest adjustments” to weather-related losses from priorquarters.

For the year, Nationwide has recorded a net loss of $632million. It says it has paid more than $10.1 billion this year inclaims.

The Columbus, Ohio-based multiline insurer posted a net realizedloss on investments of about $1.26 billion related tomarket-to-market losses in its risk management programs, Threshersaid in an interview.

“The weather losses are why we are in business and theinvestment-related losses are manageable as we take steps toprotect statutory surplus,” Thresher added.

As of Sept. 30 statutory surplus was $12.4 billion, whichNationwide says is three-times the amount required by regulators tomeet the insurer's obligations.

Underlying signs of growth remain, said Thresher. Direct andaffinity sales are up 14 percent for the year compared to 2010.

Positive growth has also been seen in commercial lines.

Direct written premiums at Scottsdale Insurance, Nationwide'sexcess and surplus lines subsidiary, are up 13 percentyear-to-date.

The increase can be attributed to “some rate increases and somenew business.”

Sales of variable annuities are up 46 percent year-to-date inthe company's financial services business. Overall sales in thisbusiness totaled $14.3 billion after the first nine months of theyear, up 13 percent from the same period in 2010.

In a statement, Chief Executive Officer Steven Rasmussen saidNationwide's mutuality allows it to look long-term and itsdiversity enables the company to “pay record weather-related claimswhile maintaining strong capital.”

“While the markets and the weather have presented challenges,sales trends, customer retention and other business fundamentalscontinue to improve across our business portfolio,” he added.

Nationwide Mutual Insurance Co. recently said it will acquire Harleysville Mutual Insurance Co. in a deal valued ataround $800 million.

Under the deal, which is expected to close early next year,Harleysville Mutual will merge with Nationwide Mutual whileHarleysville Group, the publicly traded company, will become anewly formed subsidiary of Nationwide Mutual.

The companies' executives say they believe producers will benefit from the transaction.