NU Online News Service, Nov. 5, 3:52 p.m. EDT
Losses from a capital hedge it has in place to protect statutory capital in its life insurance segment drove down Nationwide's third-quarter net income to $85 million, compared to $208 million during the same time a year ago.
However, over the first nine months of the year, the Columbus, Ohio-based insurance and financial services company said its diverse business segments–particularly sales growth of variable annuities and life insurance–resulted in a net income of $569 million this year from $541 million a year ago at Sept. 30.
"Overall, we are pleased with our operating performance and our ability to build capital strength," said Mark Thresher, chief financial officer.
Comparing the first nine months of this year to the last, policyholders' equity increased to $17.34 billion from $15.15 billion, and statutory surplus rose to $12.83 billion from $11.72 billion.
Economic conditions continue to put a strain on automobile, homeowners and commercial insurance growth. Mr. Thresher said that despite the lack of growth, Nationwide is "managing losses and claims." In the meantime, the company's plan to become a larger player in fixed life insurance is paying off.
Year-over-year sales of first-year fixed life insurance jumped nearly 146 percent to $323 million through September 2010, while sales of variable annuities rose 28 percent to $3.6 million during the same time.
"Nationwide is always looking to allocate capital in places where there is an opportunity for growth," Mr. Thresher said. "This was a good place to deploy that capital."
Mr. Thresher attributed the performance to a competitive product, changes in the distribution organization and other companies getting out of the business because they have not fared as well.
Lower claims volume helped Nationwide's property and casualty segment record $630 million in net operating income for the first nine months of this year compared to $308 million during the same time last year. Earned premiums were down 5 percent to $10.8 billion.
Nationwide will continue to focus on risk selection and retention in the p&c space, Mr. Thresher said.
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