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annual summary2007
CONTENTS
01 financial highlights
02 letter to policyholders
04 key accomplishments
08 diversity & inclusion
10 corporate citizenship
12 products & services
14 about Nationwide
16 comments about 2007 results of operations
(Unaudited) (Based on U.S. generally accepted accounting principles) 2007 2006 (1) % Change
RESulTS Of OpERaTiONS* (in millions of U.S. dollars, except key performance indicators) income Statement Premium and policy charges $ 17,688 $ 17,427 1.5 Net investment income 3,579 $ 3,398 5.3 Net realized gains on investments, hedging instruments, and hedged items 337 236 42.8 Other income 1,193 1,078 10.7
Total revenue 22,797 22,139 3.0 Total benefits and expenses 20,115 19,245 4.5 Federal and foreign income taxes and other charges2 688 784 (12.2) Net income $ 1,994 $ 2,110 (5.5)
Balance Sheet Total assets $ 161,090 $ 160,216 0.5 Total reserves 49,356 52,412 (5.8) Total liabilities 142,800 143,376 (0.4) Non-controlling interests 2,303 2,548 (9.6)
Total policyholders’ equity $ 15,987 $ 14,292 11.9
NET iNCOmE (lOSS) By SEgmENT Property & Casualty Insurance Operations $ 987 $ 1,206 (18.2)
Scottsdale 246 255 (3.5)
Life and Retirement Savings 627 724 (13.4)
Corporate3 134 (75) 278.7
Total $ 1,994 $ 2,110 (5.5)
KEy pERfORmaNCE iNdiCaTORS Total revenue growth 3.0% 5.5% †
Return on average total equity 13.2% 15.8% †
Statutory Property and Casualty trade combined ratio 97.4% 93.6% †
Statutory Property and Casualty trade combined ratio (excluding Nationwide Indemnity) 96.0% 92.2% †
Nationwide Financial Services (NFS) earnings per share4 $ 4.37 $ 4.80 (9.0)
Full-time equivalent employees (end of period) 36,023 35,877 0.4
*See Comments on 2007 Results of Operations on page 16 † Not applicable or not meaningful.1 2006 results were restated for a change in accounting principle resulting in a $3 million reduction in net income. 2 Other charges include net income attributable to non-controlling interests, discontinued operations, net of tax, and cumulative effect of adoption of accounting principle, net of tax. 3 Includes charges for net income attributable to non-controlling interests. 4 Per diluted common share, which takes into consideration all common stock equivalents. Note: Certain prior year amounts were reclassified to conform to the 2007 presentation.
COmBiNEd TOTal REvENuE(in billions)
03 04 05 06 07
$18.2
$19.8
$21.0
$22.1$22.8
COmBiNEd NET iNCOmE(in millions)
03 04 05 06 07
$659
$1,014 $1,149
$2,110 $1,994
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financial highlights Years Ended December 31
letter to policyholders
Nationwide had another successful year in 2007. We
made very good progress on a number of significant
projects that are critical to our future.
We earned $2.0 billion in net income, and our
operating revenue grew by 3.0 percent over 2006.
Our net operating income totaled $1.75 billion.
While these results are gratifying, we must be realistic
about the conditions that helped create them.
Recently we’ve enjoyed very advantageous business
conditions in our property and casualty businesses.
Our losses have been much lower than expected,
mostly due to favorable hurricane experience.
Nationwide Financial continues to make good progress
toward its strategic financial objectives, and its
performance in 2007 benefited from a one-time item
relating to deferred acquisition costs. Our investment
performance was strong as we took advantage of
opportunities in the market while they lasted.
We’re in a very competitive industry, so we must
build on our past success and financial performance
to meet the new challenges of the future. While
we pursue greater efficiency, we also know future
success will not be determined solely on how well we
manage our expenses. Growing our revenue, the top
line, is our primary goal. We need to invest in things
that help us increase revenue – our operational
capability to help us better deliver an On Your Side
experience, and our marketing and advertising to
reach more and more consumers.
In 2007, we took some significant steps that will help
us achieve our goals in 2008 and beyond. Our focus
on the On Your Side experience is helping us learn
how we can better understand and serve the needs of
our customers, and we have many projects under way
that will help us provide a differentiating experience.
In our Raleigh, N.C., service center we’ve examined
the ways we interact with our exclusive agents and
the customers they serve, and made several changes
that improved their overall level of satisfaction.
For example, we’ve enabled our phone
representatives to complete more than a dozen
different transactions while the customer is on
the phone – procedures that previously had been
handed off to processing centers. We’re now
providing our agents advance notice of premium
changes so they can initiate conversations with
their customers to better advise them about
their needs and how their products work. We’ve
also strengthened our culture to clearly focus
on customers. This includes hiring people with a
preparing to meet new challenges
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strong customer orientation, changing learning and
development systems, and creating rewards based
upon customer service goals.
These are some very meaningful changes we’re
making to benefit our customers.
Our associates’ commitment to the On Your Side effort
demonstrates their ability to adapt and respond in
times of great change. To build on this, we’re investing
heavily in becoming more competitive in serving
targeted segments of customers and realigning
our distribution methods to meet their needs.
Individual customer requirements have changed very
dramatically in the last 20 years, and we can no longer
approach the market with a one-size-fits-all approach.
Whatever challenges we face in the future, we know
we’ll succeed by looking at our business through the
lens of the customer. Our financial success enables
us to face the future from a position of strength and
to continually focus on improving our customers’
experience with us.
W.G. Jurgensen
Chief Executive Officer
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key accomplishments
Nationwide knows that the customers who value us most are the ones who build a relationship with us – either through an agent, a caring associate or through one of the many other ways they interact with us.
We know our customer experience is what will separate us from the pack of organizations clamoring for people’s business. and that’s what we’ve continued to focus on in 2007.
We’ve worked to strengthen our customer relationships – by simplifying processes, developing new products and providing the options our customers say they want. We know we’ll be a better company by looking at our business from our customers’ point of view.
Strengthening our customer relationships
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Property and CasualtyCustomers prefer to buy insurance when and how they want it, and they want options. Nationwide sells a unique mix of product lines – auto, commercial, specialty and homeowners insurance – through multiple distribution channels such as exclusive and independent agents, toll-free contact numbers, the Internet, and employer and group endorsers. This allows Nationwide to meet the diverse needs of its customers, while paving the way for long-term growth and profitability. We are focused on the customer, distribution excellence and operational simplicity as part of our strategy for success.
A key success in 2007 was a direct written premium growth rate of 1.3 percent, despite a weak economy.While that may seem small, we did well when compared to the insurance industry as whole, which had negative growth for the first time since 1943, according to the Insurance Information Institute.
A major part of our strategy featured finding new and better ways to enhance the customer experience. New programs, like piloting new online payment programs and the creation of simpler billing statements, were unveiled during the past year. And existing ones, like our Nationwide AutoWatch program, were expanded and refined. More than 60,000 Nationwide customers were able to see their car being repaired though this innovative program in 2007.
We expanded our specialty capability through the acquisition of three large independent agencies. The largest of these was Eastwood Insurance Services, a $217 million independent specialty insurance agency with 48 locations in five states. Based in Anaheim
Hills, Calif., Eastwood sells insurance to drivers with less-than-perfect driving records.
While there were no major hurricanes in 2007, Nationwide’s property and casualty business did provide On Your Side service to customers experiencing claims. From helping many customers recover from spring hail storms and supporting customers who experienced the wildfires in California, we were there for our customers when they needed us. Throughout the year, we were able to concentrate on delivering day-to-day outstanding experiences.
We also spent a great deal of time assessing our exposure in high-risk areas and improving the balance between the interests of customers and the company. As a result, we’re in a much better position to fulfill our commitments to our customers.
We’ll build on these 2007 successes as we focus on fulfilling our On Your Side promise to customers and operating profitably, which will lead to gains in market share.
Nationwide Financial2007 was a year of solid progress in Nationwide Financial’s effort to accelerate growth and improve returns for shareholders. While turmoil in the capital markets and the threat of recession create uncertainty in the short term, Nationwide Financial is well positioned for growth from a fundamental business perspective. We’re optimistic that enhancements to our operations, combined with the addition of higher return businesses, disciplined expense management and an increasingly efficient
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key accomplishments
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capital structure continue to move us closer to our long-term financial targets.
The three primary components of our strategy are: • Strengtheningourcorebusinesses,while
improving overall efficiency and profitability • Buildingnewsourcesofearnings • Effectivelymanagingcapital
To that end, we made great progress during 2007 achieving improvements in core businesses and acquiring higher-return businesses, while maintaining disciplined expense and capital management.
Our strategy and a focus on simpler solutions in 2007 helped us set records in the following areas: • Netoperatingearningspershareof$4.46* • Operatingrevenuesof$4.7billion • Customerfundsmanagedandadministered • Salesoffixed-lifeproducts • Salesofretirementplans
Nationwide Financial returned more than $650 million to shareholders through dividends and share repurchases. We also increased dividends from 26 cents to 29 cents per share effective in 2008.
We completed the merger of the Nationwide Federal Credit Union with Nationwide Bank, which accelerated the bank’s road to profitability. We also completed the acquisition of a mutual funds business, now called Nationwide Funds Group. These are major steps in our efforts to be a more complete financial services product provider and strengthen our competitive position. *Excludes $0.37 related to a favorable unlocking of deferred acquisition costs.
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Nationwide Better HealthWhen we created Nationwide Better Health in 2006, we were the first company to fully integrate disease and disability management. We currently provide services for some 350 customers, reaching more than 3 million individuals. Increasingly, customers are taking advantage of our “true integration” solution, using both our health and productivity services.
In 2007, we acquired two health promotion organizations, WellCorp and INTERVENT, adding biometric screenings, health risk assessments and lifestyle health coaching. These new services provide best practice health management tools that can help employers focus on preventive solutions and early identification of employee health issues. We earned Full Disease Management Accreditation for our disease and maternity management services. The accreditation underscores Nationwide Better Health’s commitment to provide quality health management programs. We added two new programs in 2007 – oncology and obesity management. The former helps people undergoing cancer treatment better manage its side effects. The latter program focuses on lifestyle and behavior changes to improve health.
Our goal is to help clients keep their employees healthier and improve their lifestyle, while lowering medical expenses and reducing absenteeism.
The Customer ExperienceWe’ve come a long way since improving our financial discipline and achieving record growth in net income
by 2006. In 2007, we sharpened our focus on the value we create for our agent partners and customers. We took the next significant step – re-engineering the customer experience to improve customer loyalty and their willingness to recommend us to others. We strongly believe a superior customer experience will lead us to sustainable and significant growth.
Nationwide’s focus on operational excellence and innovations began in our Raleigh, N.C., service center. We incubated ideas we will export throughout our company that will lead to a positive long-term effect on customers’ experiences. We also introduced several guiding principles for all our associates as key components on our roadmap for success.
Life Comes at You Fast®Sometimes taking a risk can really pay off. Our 2007 Super Bowl ad featuring actor/rapper Kevin Federline paid huge marketing dividends. The pre-event buzz and favorable media hype garnered Nationwide unprecedented free publicity. Nationwide continues the highly successful campaign that uses humor to attract consumers’ attention to the need to protect their property and investments.
diversity & inclusion
In 2007, we continued concentrating on diversity and inclusion. We appointed our first chief diversity officer to guide a newly created Office of Diversity and Inclusion. We also established a diversity and inclusion senior leadership team to help drive initiatives consistently across the company.
With help from leaders and associates throughout the company, we developed diversity strategies in five key areas: • Workforce – to attract and retain the best talent • Workplace – to fuel diverse thinking that leads
to innovation • Marketplace – to grow our company and
increase market share • Community – to build and maintain a positive
community reputation • Suppliers – to enhance and build mutually
beneficial supplier relationships
Key accomplishments across these key areas include: • SupportbeforeCongressoftheEmployment
Non-Discrimination Act. This act makes it illegal to discriminate in the workplace because of sexual orientation or gender identity.
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valuing diverse voicesat Nationwide, we’re focused on building customer loyalty and creating a work environment where every associate’s voice is heard and valued. it begins by creating an environment where we value the views of all our customers, associates, communities and business partners. By understanding their unique differences and preferences, we create a culture that promotes and embraces diverse points of view. Creating this environment will help define our ability to create an On Your Side experience for customers and associates, today and tomorrow.
• Completionofdiversityandinclusion training by more than 80 percent of Nationwide associates.
• Scoringaperfect100forthethirdconsecutive year on the Human Rights Campaign’s fifth annual Corporate Equality Index. The index measures corporate America’s treatment of gay, lesbian, bisexual and transgender employees, consumers and investors. We were the only major company in our industry to achieve this score.
• Expandingassociategroupstoprovidenetworking, mentoring and professional development to all associates that help build richer cultural experiences.
We’re committed to attracting, developing and retaining a diverse and talented workforce that represents the communities and markets we serve. And we’re dedicated to creating an environment where honest, open feedback is given freely and we can reap the benefits of a richly diverse workforce.
This is how we’ll use the power of difference to serve an ever-changing marketplace.
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corporate citizenship
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Transforming livesat critical moments
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Nationwide has a long and proud tradition of corporate citizenship. protecting people, communities and the things they hold dear is part of who we are. doing it at critical moments is part of our unique charge.
We transform lives in three focused ways – through philanthropy, volunteerism and workplace giving. Our associates and agents, along with the Nationwide Foundation, make a difference in the lives of people in need.
In recognition of our corporate citizenship efforts, Nationwide was awarded United Way of America’s prestigious Spirit of America® Award for 2007. It is United Way’s highest national honor, recognizing a company’s outstanding commitment to improve lives in local communities. Nationwide became only the third company to earn this honor twice – we first won the award in 2000.
In 2007, we helped launch Project Mentor in the Columbus City Schools, in partnership with Big Brothers Big Sisters. Project Mentor is a unique program in which our associates mentor at-risk students in schools during work hours. More than 300 Nationwide mentors, partnering with another 900 community volunteers, are helping change young lives by focusing on education and improving graduation rates. We’re proud to be the lead corporate sponsor of this innovative program and pleased to take an active role in helping students achieve academic success.
During 2007, the Nationwide Foundation’s $50 million contribution to Nationwide Children’s Hospital, announced in 2006, led to the creation of three new endowed chairs named for former Nationwide leaders: Dimon R. McFerson, Injury Research; Murray D. Lincoln, Cardiothoracic Surgery; and George H.
Dunlap, Interventional Cardiology. These chairs are in addition to the Dean W. Jeffers Chair in Neonatology created in 2006.
These endowed chairs enable some of the world’s leading physicians to continue their pioneering research and clinical care, solidifying the hospital’s position as a leader in pediatric health care.
In an unexpected tribute to the generosity of our associates and agents, the hospital was renamed Nationwide Children’s Hospital by its Board of Directors. It’s also symbolic of our partnership with the hospital and our commitment to improve the lives of our communities’ children.
Because we’re a company that helps our customers prepare for the unforeseen, we have a proud tradition of stepping up to help people affected by disaster. Our support of the American Red Cross continued to assist people in need in 2007. As a founding partner of the American Red Cross Disaster Relief Fund, Nationwide helps provide assistance at local levels everywhere for people struck by disasters such as house fires and wildfires, earthquakes, tornadoes and hurricanes.
These are just a few examples of the way Nationwide makes a difference. Saving, rebuilding and enriching lives is what Nationwide’s corporate citizenship is all about. Every day, we turn critical moments into powerful possibilities in places where our associates and agents live and work. It’s another way we help people when it matters most.
products & services
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pROpERTy & CaSualTy
Companies products distribution channels
Nationwide Insurance Insurance for autos, motorcycles, boats, RVs,homes and businesses; individual and group health insurance, health savings accounts, health reimbursement accounts, special risk coverage
Exclusive Nationwide agents, individual brokers, sponsor organizations, employers, banks and Internet
Allied Insurance Insurance for autos, motorcycles, boats, RVs, homes, businesses and farms
Independent agents
Nationwide Agribusiness Insurance for farms and agribusinesses; loss-control services
Direct sales, exclusive Nationwide agents, independent agents
Scottsdale Insurance Specialty insurance products for business and individuals, commercial and excess liability coverage, pet insurance
General agents
Titan Insurance Specialty auto insurance Exclusive Nationwide agents, independent agents
HEalTH
Companies products distribution channels
Nationwide Better Health Health and wellness programs; disease, disability, absence,maternity and medical management
Direct sales
BaNKiNg & mORTgagE
Companies products distribution channels
Nationwide Bank CDs, loans, savings and checking accounts Internet, direct sales, service centers and ATMs
Nationwide Advantage Mortgage Mortgages, home equity lines of credit Internet, Nationwide exclusive agents,direct sales
lifE iNSuRaNCE & RETiREmENT SaviNgS
Companies products distribution channels
Nationwide Financial Variable and fixed annuities, life insurance, private-sector retirement plans, immediate annuities
Financial planners, brokers, financial institutions, pension plan administrators, Nationwide Financial Network agents, exclusive Nationwide agents
Nationwide Retirement Solutions Public-sector retirement plans Direct sales
aSSET maNagEmENT
Companies products distribution channels
Nationwide Funds Group Mutual funds Financial planners
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about Nationwide
KEy faCTS aBOuT NaTiONWidEApproximately 36,000 employeesMore than 16 million policies in force
SigNifiCaNT u.S. RaNKiNgS
property and Casualty rankings*4th-largest homeowners insurer6th-largest auto insurer9th-largest commercial insurer6th-largest total property and casualty insurer*Source: A.M. Best 2006 DWP
life and Retirement Savings rankings#1 provider of defined contribution plans1
#7 provider of variable life insurance2
#13 writer of individual variable annuities3
#18 U.S. life insurer based on premium4
#15 U.S. life insurer based on admitted assets4
1 “Plan Sponsor” magazine, June 20072 Tillinghast Q3 20073 VARDS Q3 20074 A.M. Best Q3 2007
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BOaRd Of diRECTORS
Lewis J. AlphinJames B. BachmannA. I. BellTimothy J. CorcoranYvonne M. CurlKenneth D. DavisKeith W. EckelFred C. FinneyW. G. Jurgensen
OffiCE Of THE CEO
W. G. JurgensenChief Executive OfficerNationwide
Patricia R. HatlerExecutive Vice PresidentChief Legal OfficerNationwide
Terri L. HillExecutive Vice PresidentChief Administrative OfficerNationwide
Lawrence A. HilsheimerExecutive Vice PresidentChief Financial OfficerNationwide
Michael C. KellerExecutive Vice PresidentChief Information OfficerNationwide
Daniel T. KelleyM. Diane KokenLydia M. MarshallTerry W. McClureBarry J. NalebuffRalph M. PaigeArden L. ShislerJeffrey W. Zellers
James R. LyskiExecutive Vice PresidentChief Marketing OfficerNationwide
Michael D. MillerPresident and Chief Operating OfficerScottsdale Insurance
Steve S. RasmussenPresident and Chief Operating OfficerProperty and Casualty InsuranceNationwide
Gail G. SnyderSenior Vice PresidentChief Investment OfficerNationwide
Mark R. ThresherPresident and Chief Operating OfficerNationwide Financial
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comments on 2007 results of operationsTOTal REvENuECombined total revenue for 2007 grew 3% to $22.8 billion, up from $22.1 billion a year ago. This growth was driven primarily by increases in premiums, policy charges and net investment income. The increase in premiums over the prior year was a result of modest increases in both policies in force and average premium per policy. This increase was in spite of competitive pressures in the private passenger auto, main-street commercial, non-coastal homeowners and specialty markets. Policy charges grew more than 5% in 2007 over the prior year, based upon higher average account balances.
Net investment income increased 5% to $3.6 billion in 2007, compared to $3.4 billion in 2006, as credit spreads expanded considerably and the yield curve shifted from inverted to more normally sloped. In response to these economic factors, the Company moved to being more fully invested in long-term assets. Net realized gains on investments, hedging instruments and hedged items for 2007 increased significantly, up nearly 43% over 2006. The significant increase is due to realized gains from the sale of equity securities of $440 million. These sales occurred as the Company shifted its investment strategy from equity to fixed maturity securities. The realized gains were partially offset by $127 million of impairment charges related to changes in valuations that were deemed other-than-temporary. The higher level of other income was primarily due to bank products and alternative investment returns.
NET iNCOmECombined net income for 2007 declined slightly from 2006 to $2.0 billion, a decrease of $116 million, or 6%. Loss and loss adjustment expenses exceeded revenue growth due in part to frequency (increased rate of occurrence) in auto claims and severity (average per claim) in homeowner claims. Included in the increases are more than 1,500 claims related to wildfires, for which we established reserves of $122 million ($79 million after tax). Additional notable items include the recognition of $127 million of other-than-temporary impairment charges ($83 million after tax), reorganization costs of $102 million ($66 million after tax) to change the distribution model in Florida from exclusive to independent agencies, and the favorable impact of unlocking deferred policy acquisition costs of $36 million (after tax and minority interest). The Company’s effective tax rate returned to historical levels of 22% in 2007 from 29% in 2006. The 2006 increase in deferred taxes related to the excess of carrying value over tax basis in NFS.
The Property and Casualty Insurance Operations (PCIO) segment income declined $219 million or 18%. Modest revenue growth was offset by increased loss frequency and severity for current year claims. However, loss results are out-performing the industry and are
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comments on 2007 results of operations
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consistent with the trends of key competitors. Total benefits and expenses were negatively impacted by increases in reserves for wildfires and costs associated with the Florida agent reorganization as discussed previously. Prior year reserve development continued to exhibit favorable trends for the PCIO segment.
Scottsdale’s net income for 2007 was down slightly, $9 million or 4%, over the prior year. The slight decrease was consistent with the 4% decline in premium revenues. This decline was due to increased competition for the specialty market customer. Due to increased pressure for customer growth, standard carriers with strong capital positions are aggressively writing policies for customers they were not interested in over the last couple of years. Net income from the Life & Retirement Savings segment was down $97 million or 13% primarily due to increased income tax expense ($119 million) over 2006. The year-over-year increase in income tax expense was a result of the release of tax contingency reserves in 2006. Revenues were flat when compared to the prior year as increases in asset fees ($82 million) and other income ($105 million) were offset by declines in realized investment gains and losses ($175 million). Operating income before taxes was consistent with prior year levels.
The Corporate segment captures investment results, discontinued operations, non-controlling interests and all of the residual operating results of Nationwide, including Nationwide Indemnity. Nationwide Indemnity loss reserve development was fairly consistent between 2007 and 2006. Pre-tax reserve strengthening related to asbestos and environmental exposures was $225 million ($146 million after tax) in 2007, compared with $208 million ($135 million after tax) in 2006. After tax net income attributable to non-controlling interests decreased in 2007 to $169 million, from $232 million in 2006, which is commensurate with the net income decrease in the Life & Retirement Savings segment.
THE COmpaNyNationwide is one of the largest insurance and financial services companies in the U.S., with almost $23 billion in revenue and $161 billion in assets (Fortune 104 in 2006). Nationwide consists of three core businesses: domestic property and casualty insurance operations, life insurance and retirement savings, and specialty insurance lines underwritten through the Scottsdale family of companies. The Company is also engaged in various strategic investments including mortgage loan origination and servicing, third party claims administration and real estate development. Nationwide provides a full range of products and financial services
that includes auto, fire, life, health and commercial insurance; administrative services; annuities; mutual funds; and retirement plans. These products are offered through multiple distribution channels.
Nationwide Mutual is the sole stockholder of Nationwide Indemnity, a reinsurance company. Nationwide Indemnity holds run-off environmental and asbestos business, which was assumed from both affiliated and unaffiliated companies.
CREdiT RaTiNgSNationwide does business in all 50 states, the District of Columbia, and the Virgin Islands. Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company are rated “A+” (Strong) with a stable outlook by Standard & Poor’s Rating Service, a division of The McGraw-Hill Companies, Inc. (“S&P”), “Aa3” (Excellent) with a stable outlook by Moody’s Investor Service, Inc. (“Moody’s”), and “A+p” (Superior) with a mixed outlook by A.M. Best. Nationwide Life Insurance Company (NLIC) (and its insurance subsidiary) and Nationwide Life Insurance Company of America (NLICA) (and its insurance subsidiary) are both rated “A+g” (Superior) with a stable outlook by A.M. Best, and both NLIC and NLICA’s claims paying ability/financial strength are rated “Aa3” (Excellent) by Moody’s and “AA-” (Very Strong) with stable outlook by S&P. The commercial paper issued by NLIC is rated “AMB-1” by A.M. Best, “P-1” by Moody’s and “A-1+” by S&P.
BaSiS Of aCCOuNTiNgNationwide prepares its combined financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). For analytical purposes, including understanding performance trends, decision-making and peer comparison, management of Nationwide makes certain adjustments to some data, resulting in non-GAAP financial measures. The following term defines one of those financial measures:
Statutory Property and Casualty Trade Combined Ratio: A formula used by property and casualty insurance companies to relate premium income to claims, administration and dividend expenses. It is calculated by dividing the sum of incurred losses by earned premium and underwriting expenses by written premium. It indicates the profitability of the insurer’s operations by combining the loss ratio with expense ratio (including dividends if any). This is termed the statutory combined ratio and measures the amount that an insurer must pay to cover claims and expenses per dollar of earned premium. The combined ratio does not take into account investment income.
NationwideOne Nationwide PlazaColumbus, Ohio 43215
Nationwide, the Nationwide framemark and On Your Side are federally registered service marks of Nationwide Mutual Insurance Company. G-9536-B
