Nationwide: Commercial Lines Driving First-Half Growth

NU Online News Service, Aug. 10, 3:16 p.m. EDT

A hardening market and exposure growth in Nationwide's commercial lines segment has led to a 19 percent growth in policy sales during the first half of 2012.

The Columbus, Ohio-based insurer says net income after six months was $386 million, compared to $169 million a year ago when catastrophe losses were a record-setting $1.5 billion.

This year weather-related losses were $850 million during the first six months, driven in large part by a windstorm through the Midwest and Mid-Atlantic states.

Nationwide says direct written premiums for the first half were up more than 7 percent, to $7.9 billion, compared to the same period a year ago.

“We have been getting rate increases, especially at Scottsdale Insurance, our [excess and surplus] company,” says Mark Thresher, chief financial officer. “Exposures are growing as the economy slowly improves.”  

Increases are mostly seen on renewal business; new business remains under pressure by competition, he adds.

About $200 million in the growth of first-half direct written premiums is attributable to the acquisition of Harleysville Mutual Insurance Co., which closed on May 1.

The total consideration paid to Harleysville Group's public stockholders was about $834 million and Harleysville, under the same brand name, is now a part of Nationwide's property and casualty independent agency business unit with Allied Insurance.  

Thresher says the merger puts Nationwide in a better position in the Northeast and Mid-Atlantic where Allied didn't have business.

“It also brings us more of a commercial mix,” Thresher adds. He says a majority of Harleysville's book was commercial, whereas Allied's book consists mostly of personal insurance business.