2006 Nationwide Annual Report
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Transcript of 2006 Nationwide Annual Report
Nationwide 2006 Annual Report
on your side:
Protecting what matters most...inside
Cover Financial highlights
01 Letter to shareholders
02 On Your Side
04 Key accomplishments
08 Corporate citizenship
10 diversity & inclusion
12 safety
13 environment
14 Products & services
16 Board of directors &
office of the Ceo
Pocket Key facts about nationwide
& significant u.s. rankings
nationwide has Provided On YOur Side serviCe to its Consumers For more than 80 years.
80
Financial highlights years ended december 31
(unaudited, based on u.s. generally accepted accounting principles) 2006 2005 % change
Results of Operations (in millions of u.S. dollars, except key performance indicators) Income statementPremiums and policy charges $ 17,427 $ 16,467 5.8%net investment income 3,400 3,280 3.7net realized gains on investments, hedging instruments and hedged items 237 285 (16.8)other income 1,189 1,094 8.7
total revenue 22,253 21,126 5.3total benefits and expenses 19,469 19,438 0.2Federal and foreign income taxes and other charges1 671 539 24.5net income $ 2,113 $ 1,149 83.9%
Balance sheettotal assets $160,009 $158,501 1.0%total reserves 52,412 54,272 (3.4)total liabilities 143,178 143,549 (0.3)non-controlling interests 2,549 2,478 2.9
total policyholders’ equity $ 14,282 $ 12,474 14.5%
Net Income (Loss) by SegmentProperty and Casualty insurance operations $ 1,206 $ 709 70.1%scottsdale 255 163 56.4Life and retirement savings 714 599 19.2asset management 298 (49) *Corporate2 (360) (273) (31.9)
total $ 2,113 $ 1,149 83.9%
Key Performance Indicatorstotal revenue growth 5.3% 6.5% *return on average total equity 15.8% 9.4% *statutory Property and Casualty trade combined ratio 93.6% 100.1% *statutory Property and Casualty trade combined ratio (excluding nationwide indemnity) 92.2% 95.0% *nationwide Financial services (nFs) earnings per share3 $ 4.74 $ 3.90 21.5%Full-time equivalent employees (end of period) 35,877 34,740 3.3
* Not applicable or meaningful.1 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.2 Includes charges for net income attributable to non-controlling interests.3 Per diluted common share, which takes into consideration all common stock equivalents.Note: Certain prior year amounts were reclassified to conform to the 2006 presentation.
Consolidated Total Revenue(in billions)
02 03 04 05
$21.1
$19.8
$18.3
$15.9
06
$22.3
02 03 04 05
$1,149$1,010
$662
$172
Consolidated Net Income(in millions)
06
$2,113
TOTAL ReveNueCombined revenue for 2006 grew to $22.3 billion, up from $21.1 billion a year ago. this increase of 5.3 percent was driven primarily by a nearly $1 billion increase in premiums and policy charges, and increases in asset management fees, which was associated with strong investment perform-ance and a more favorable mix of assets under management. the increase in premiums and policy charges over the prior year was fueled by a 2 percent increase in both policies in force and average premium per policy due to a more favorable business mix in the Property and Casualty insurance operations segment and higher variable annuity sales volume in the Life and retirement savings segment. Policy charges were up nearly 6 percent in 2006 over the prior year.
net investment income increased nearly 4 percent as the rising interest rate environment and an inverted yield curve drove short-term interest income higher in 2006. offsetting this increase was greater investment expenses and lower income from real estate and mortgage loans as the prior year exhibited more significant portfolio growth and prepayment income. in 2006, income from the available-for-sale investment portfolio was flat compared to last year. net realized gains on investments, hedging instruments, and hedged items for 2006 declined slightly, down nearly 17 percent over 2005. Lower net gains from sales of available-for-sale securities and greater net losses from derivative transactions were partially offset by higher income on real estate and trading securities transactions and lower other-than-temporary impairment charges. the higher level of other income was primarily due to increased levels of fees earned for the management of pension fund assets, unit trusts, investment trusts and corporate portfolios.
NeT INcOmeCombined net income for 2006 reached a record level of $2.113 billion, an increase of $964 million, or 84 percent, over 2005. during 2006, the company exited certain foreign and domestic based businesses, disposing some and holding others for sale. as a result of the sales in 2006, the company realized net after-tax gains of $313 million. a vast majority of these gains were comprised of tax benefits. more than offsetting these tax benefits was tax expense, the most significant of which was related to the increase in deferred taxes related to the excess in carrying value over the tax basis in nFs. this was the primary contributor to the rise in the company’s effective tax rate, which increased from 20 percent in 2005 to 30 percent in 2006. operating expenses rose modestly in 2006 as the company experienced better loss trends, favorable prior-year loss reserve development, and below-average current-year hurricane losses.
the Property and Casualty insurance operations segment income grew 70 percent, driven by better underwriting results and higher net investment income. in addition to the robust revenue growth, the results show continued declining loss frequency, primarily in standard auto that is partially offsetting a modest increase in severity. Loss results are outperforming the industry and are consistent with the trends of key competitors. Prior-year reserve development, particularly in non-hurricane weather losses, continues to exhibit favorable trends. the impact of hurricane-related losses was higher in 2005. scottsdale’s net income for 2006 was up 56 percent over the prior year as direct written premiums grew nearly 8 percent for the period in a highly competitive market along with better current-year accident results. these favorable factors were partially offset by higher commission expenses, which were in line with revenue growth.
net income from the Life and retirement savings segment, which included 5 percent higher revenues and tax benefits, was up 19 percent in 2006 over the prior year primarily due to significant tax benefits related to the resolution of a tax contingency and the increase in fee income, traditional life insurance and immediate annuity premiums, and policy charges.
asset management’s net income grew substantially in 2006 over the prior year due largely to the realized gains from the sale of certain foreign-based operations. excluding these realized gains and operating results, net income
increased 25 percent in 2006 over 2005, driven by increased management fees associated with strong investment performance and more favorable managed asset mix.
the Corporate segment captures all of the residual operating results of nationwide, including nationwide indemnity. Compared with 2005, loss reserve development in 2006 was favorable. Pre-tax reserve strengthening related to asbestos and environmental exposures was $207 million ($135 million after tax) in 2006 compared with $725 million ($471 million after tax) in 2005. net income attributable to noncontrolling interests increased in 2006 to $232 million, up from $190 million in 2005, which is commensurate with the net income increase in the Life and retirement savings segment.
The cOmPANynationwide is one of the largest insurance and financial services companies in the u.s., with more than $22 billion in revenue and $160 billion in assets (Fortune 100 – 2005). nationwide consists of four core businesses: domestic property and casualty insurance operations, specialty lines underwritten through the scottsdale family of companies, life insurance and retirement savings, and asset management. we are also engaged in various strategic investments (mortgage loan origination and servicing, third-party claims administration, and real estate development). nationwide provides a full range of products and financial services that include 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 a 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 negative outlook by moody’s investor service, inc. (“moody’s”), and “a+” (superior) with a stable 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+” (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.
Comments on 2006 results of operations
your life today. your future tomorrow.Nationwide had an excellent year in 2006, earning
more than $2.1 billion in net income. This level
of performance is a testament to the talent and
commitment of every associate in the company
and reflects our dedication to fulfilling our
On Your Side promise to customers.
Our primary operating units delivered strong
results. In our property and casualty operations,
our performance was driven by premium growth
that outpaced key competitors, favorable weather
conditions and lower-than-expected auto losses.
In our financial services business, Nationwide
Financial’s profitable year was highlighted by strong
variable annuity sales, new sales and relationship
management processes, refined product lineups,
and investments in new businesses such as the
Nationwide Bank.
Nationwide has earned more than $1 billion for
three consecutive years. While this achievement is
certainly worth celebrating, we realize profitability
is a means to an end rather than an end in itself.
We believe profitability allows us to:
• Build the capital strength to back the promises
we’ve made to our customers;
• Grow and extend our On Your Side promise to
more and more consumers; and
• Support the communities where we live and work.
Our profitability varies state by state because
separate rates are determined and approved for
each state based on the expected losses and
expenses within that state. This means that an
increased risk or increased losses in one state
doesn’t lead to increased rates in another. Likewise,
a rate reduction or lower-than-expected losses
in one state doesn’t lead to lower rates in others.
Because of this, profits from one state cannot be
used to subsidize rates in another.
The profitability of the insurance industry, particularly
the property and casualty insurance portion, must
be considered over a longer period than a single year.
That business is influenced by many variables such
as hurricanes, tornados, wildfires and earthquakes.
In some years, our customers may experience high
losses due to these types of events, while other
years may bring fewer losses. We recognize this
unpredictability and must retain earnings from
favorable years so we’re prepared to meet our
customers’ needs in the years when our losses are
higher than anticipated.
Our tradition of helping people protect what matters
to them most extends back to our founding in 1926,
when we began as an auto insurance company
serving the needs of Ohio’s farmers. Today, as one of
the largest diversified financial services companies in
America, we serve millions of customers who count
on us every day. And we still proudly serve the
agricultural community, whose support has helped
us become the largest insurer of farms in the nation.
Our history and heritage form the foundation of
our strength. We’re committed to building on this
strength to achieve great things for our customers
in the years ahead.
W. G. Jurgensen
Chief Executive Officer
2006 annual report 1
NATIONwIde IS cOmmITTed to helping our
customers navigate the complexities of life with
safety and security so they can look to the future
with confidence.
For many people this means we’ll help them get their
vehicle back on the road quickly after an accident, or
handle their claim so they can repair their house after
disaster strikes.
For others, it means we help them manage their finances
so they can reach their goals before and after they retire.
For small-business owners, we provide the peace of
mind they’re looking for as they build their businesses
and look after the well-being of their employees.
Our customers can interact with us in ways that best meet
their needs. Insurance for vehicles, homes and businesses
is available through a vast network of Nationwide agents
and independent agents licensed to offer Nationwide
products. Customers who prefer contacting Nationwide
directly can contact us through the Internet or by phone.
Our financial products — annuities, life insurance, mutual
funds and retirement plans — are provided through
independent investment professionals, regional and
national brokerage firms, Nationwide exclusive agents
and agents of the Nationwide Financial Network.
We’ve also created the Consumer Solutions Center
to help customers who want to rely on Nationwide’s
licensed investment professionals to help manage
their investments.
In 2006, we created another convenient way to help
people manage their finances. Nationwide Bank offers
checking and savings products and consumer loans
directly through the Internet or by phone. By eliminating
the overhead expense of bank branches, we’re able to
provide favorable rates and the flexibility for customers to
do their banking from anywhere, anytime they choose.
While Nationwide is dedicated to helping preserve our
customers’ financial health, we also know that physical
health and well-being is important. That’s why we
brought all our health-related businesses together
under the banner of Nationwide Better Health. This new
company is the first to truly integrate the best collection
of health and productivity services, including health
and wellness programming, disease and disability
management, and absence, maternity and medical case
management. With a focus on total population health
management, we’re lowering health care costs, increasing
productivity and improving the quality of life for Fortune
1000 employers and their employees.
When you get right down to it, we help take the worries
out of life and help our customers prepare for the planned,
and even the unexpected events in their lives.
It’s all a part of showing customers we’re on their side.
on your side:
we’re here to protect what matters most.
2 nationwide 2006 annual report 3
STRONg ReLATIONShIPS ARe BuILT on trust, and
every day our customers place their trust in us. They trust
that we will help them get their lives back to normal as
quickly as possible after trouble strikes. And they trust
that we’ll help provide them with a secure financial future.
When we tell people we’re on their side, that means a
lot more than just a slogan or a jingle. It’s our promise to
customers and it’s the basis of the trust that we’ll protect
what matters to them most.
Our strategy revolves around one focus — the customer.
In 2006, we made changes that helped us deliver on
our promise. We created new ways to fulfill the needs
of our customers, strengthening our relationships with
them by simplifying some of our processes, building
new products and giving them more options for how
they do business with us.
How we fulfill our promise to our customers will evolve
as their needs change. At every stage of their lives, we’ll
be there to help them live comfortably and securely.
Key aCComPLishments:
our strength continues to grow on many fronts.
Property and casualty
Our commitment to our customers is our top priority.
Whether we’re responding to a natural disaster or a
crumpled fender, our philosophy remains the same: to
help our customers get their lives back to normal simply
and easily.
When violent weather causes widespread damage, our
work becomes very visible. And 2006 was filled with wild
weather. We helped thousands of people recover after
everything from wildfires to ice storms.
But we know the smallest, everyday details can make a
big difference for people, too.
From the big things to the little things, we helped make
our customers’ lives easier in 2006. We did everything from
making our policies and bills easier to understand to
providing web-based and telephone service so customers
can make their insurance choices anytime they need to.
We also strengthened our diverse portfolio of product
lines, which includes auto, home, commercial, agriculture
and specialty insurance (like motorcycles and RVs), so
that we can perform well in all economic conditions.
That diversification has paid off in profitable growth.
simplifying service
creating an outstanding customer experience is
an important goal. Two new property and casualty
features deliver improved service:
• One is our new billing plan called the flexible
Payment Plan, developed in response to customer
requests. It gives them the option to pay the
minimum balance, the full amount or any amount
in between.
• Another is our Tow Network, currently available
in 14 states. One call to our claims hotline
dispatches a tow truck for customers who have
been in an accident or whose cars are undriveable
for other reasons.
seeing is believing
Autowatch is a free service we offer in conjunction
with our Blue Ribbon repair shops. customers who
have their vehicles repaired at any of those facilities
can watch through the Internet the progress being
made on their car or truck.
No more wondering how repairs are progressing.
customers can check it out for themselves whenever
they want.
technology in the field
Our agribusiness unit meets the needs of its
commercial customers and farmers in many different
ways, including using technology to make policy
management more convenient.
customers will be able to view their policies and
accounts — and pay their bills — online in 2007.
customers also will be able to easily compare
their current coverage with their changing needs
through the Nationwide Agribusiness’ website.
The site also will allow customers to report claims
online and to transfer funds electronically.
2006 annual report 54 nationwide
Our direct written premium climbed 3.9 percent in 2006
— that’s faster than any of our competitors. And our
policies in force jumped 1.7 percent to reach 11.1 million
by year end.
Our new motorcycle and powersports insurance
coverage helped drive that growth. It’s an example of
how we go the extra mile to protect our customers’
possessions. Instead of offering one-size-fits-all policies
like most companies’ products, we know a custom
motorcycle owner has different needs from someone
insuring a golf cart.
We partnered with the American Motorcyclist Association
to be their exclusive motorcycle insurance provider. That
let’s us reach thousands more motorcycle enthusiasts.
For our agribusiness customers, small farmers now
have more choices when it comes to protecting their
property. In 2006, Nationwide CountryElite® customers
had their coverage options expand as their policies
became part of Nationwide Agribusiness. Under their
new CountryChoice® product, these customers receive
more coverage for farm equipment without having to
list their equipment separately.
We also know that a “cookie-cutter” approach to renewing
large commercial agribusiness accounts doesn’t work for
our customers. That’s why a team of ag-experts in claims,
underwriting and loss control, set prices on a fair and
individualized basis, giving each customer the best price
for the unique services they require and risks they face.
Nationwide financial
To help our customers build a secure financial future,
we needed to look inside and do some things differently.
We developed a strategic plan to strengthen our core
business, build for growth and manage capital effectively.
We followed through on that plan and our success
showed in the financial performance — earnings per
share were $4.74, an increase of 21.5 percent from 2005.
Successes such as strengthening our variable annuity
business — which picked up 36 percent last year — and
the creation of the Nationwide Bank were important
parts of following through on our strategies.
The bank offers a full range of banking services and
products to give customers more flexibility with how they
use their money. It empowers customers to use and grow
their assets to prepare for life’s important events. And it
will allow us to provide a valuable service that enriches
our relationships with new and existing customers.
We help our customers through every event and stage
of their lives. And retirement is one in which financial
discipline and asset management is important. We
partnered with the Boston College Center for Retirement
Research to develop the National Retirement Risk Index,
which gauges how prepared we are as a nation for
retirement. Building on that, we developed the RetirAbility
CheckSM. It’s a fun, interactive web-based tool that helps
people assess how ready they are to live comfortably
in retirement.
But education is only one piece. We also increased our
capability to reach our customers by revamping our
sales process to be consistent across our distribution
channels, and we improved our products with state-
of-the-art features.
Nationwide Better health
Health care makes up a bigger chunk of consumer
expenses every year. So what can anyone do?
We created Nationwide Better Health and broke new
ground in 2006 to help keep people healthy and medical
expenses lower. We did this by becoming the first in
the industry to fully integrate disease and disability
management.
We also formed partnerships around the country with
other health and disability management companies
to enhance Better Health’s offerings. We welcomed in
FutureHealth for their expertise in disease, population
health and medical management. And the addition of
WellCorp gives us even more robust features with on-site
services such as screenings, health fairs and online health
education offerings.
Protecting financial futures
we protect financial futures with our strong financial
products so our customers can build a diverse
portfolio suited to their investment needs.
In response to customers’ desires in 2006, we created
some innovative products that offer a measure of a
guarantee their money will grow.
we also sold the u.K.-based operation of gartmore
group, while retaining the retail asset management
business, now known as Nwd Investment
management. Our retail mutual fund strategy
capitalizes on our extensive distribution channels
within Nationwide financial. In the second quarter
of 2007, we expect that Nationwide financial will
complete its purchase of Nwd Investment
management’s retail mutual funds.
To complement our vast distribution network, we’re
also integrating our exclusive insurance agents into
the Nationwide financial Network so we can better
offer customers our complete range of insurance
and financial products.
increasing financial awareness
helping to increase awareness about finances is
why we do things such as cosponsoring the State
of the Black union. The theme for the 2006 annual
meeting of African American leaders was economic
empowerment. It gave us a venue to talk about the
need to save and build wealth.
Planning for the future and preparing for retirement
is more important than ever before because of
pressures on pensions and government programs.
Knowing those safety nets can’t be relied on entirely
means people have to look to other areas to protect
and help their finances grow.
Focused efforts from our associates helped develop
an industry-leading company that looks to expand its
customer base in 2007.
Life comes at you fast
Our Life Comes at You Fast advertising campaign grew
bigger than ever in 2006. We took Fabio from romance-
novel cover heartthrob to a wrinkled Casanova in the blink
of an eye in one of the most popular ads of the 2006
Super Bowl. In early 2007, our Super Bowl ad featuring
Kevin Federline gained more attention than ever.
The ads are part of an ongoing campaign that illustrates,
in a humorous way, how consumers need to protect
their property and investments, because life has a way
of throwing curves.
And we’ll be there for our customers every step of the
way to make sure they can live comfortably, knowing
that we’ll help protect what matters most to them.
6 nationwide 2006 annual report 7
SAvINg, ReBuILdINg ANd eNRIchINg lives is what
Nationwide’s Corporate Citizenship is all about. Every day,
we turn critical moments into powerful possibilities. It’s
another way we’re helping people when it matters most.
Since 1959, the Nationwide Foundation has worked
to positively impact the quality of life in communities
where our associates, agents and their families live and
work. The highest priority for our grants is investing
in nonprofit organizations whose services provide
emergency and basic needs, or to stabilize a crisis
situation. In 2006, we made our largest gift ever, granting
$50 million to Columbus Children’s Hospital. The
Nationwide Foundation also supports our associates’
passions through matching their contributions to United
Way dollar for dollar. Last year, the Foundation matched
associate contributions totaling more than $8 million.
CorPorate CitizenshiP:
we turn critical moments into powerful possibilities.
Also in 2006, our associates logged more than 30,000
volunteer hours on the On Your Side Volunteer Network.
This network helps connect associates with nonprofit
organizations that best match their interests and talents.
The Nationwide Foundation supports these efforts by
awarding a grant to qualifying organizations where
associates spend at least 25 hours as volunteers.
Throughout the year, associates donate their time, skills
and resources to organizations like United Way, American
Red Cross, local food banks and community organizations
across the country. Through opportunities like these,
everyone has a chance to get involved.
This is how our company is reaching out to people in
communities, turning critical moments into powerful
possibilities, every day.
in 2006, we made our LarGest GiFt ever, GrantinG $50 miLLion to CoLumBus ChiLdren’s hosPitaL.
$50,000,000
2006 annual report 98 nationwide
TheRe’S A LeveL Of TRuST that’s built when we
come to know people for who they really are. Because
our customers look to us to help them protect the things
that are most valuable to them, that trust is crucial. Our
steadfast commitment to diversity and inclusion helps
us better understand the people and markets we serve.
Diversity and inclusion begins with each of us under-
standing ourselves. Then it extends to understanding our
colleagues and partners, and ultimately our customers.
It’s part of our ongoing journey to create a genuine and
authentic environment where all associates and
customers feel valued and respected.
We know diversity reaches beyond what we see on
the surface. It involves everything that makes a person
unique — life experiences, thinking style, religion, family
status and more. With this broader definition in mind,
our associates collaborate and innovate so we can create
the On Your Side experience our customers deserve.
We have a rich history of reaching out to many
communities in different ways. 2006 was no exception.
• We sponsored the State of the Black Union to help
the African American community learn about
economic empowerment.
• We stepped up our efforts to serve customers in their
preferred language with Protecting What Matters,
an educational guide to help customers understand
insurance, financial planning and safety topics. It’s
now available in Spanish and English.
• We’re the first in our industry to offer independent
agents policy-conversion materials in Chinese,
Filipino and Spanish.
diversity & inCLusion:
at nationwide, everyone has a voice.
• We strengthened partnerships with the Tom Joyner
Foundation to sponsor the On Your Side Internship
Program to offer rewarding summer internships
to students from historically black colleges and
universities.
• We grew our producer force with a new recruiting
initiative in cities across the United States through
our partnership with the National Urban League.
For us to deliver on our promise to all markets we also
have to make that promise a reality for our associates,
no matter their walk of life.
Our work to build a company where all associates
feel challenged, appreciated, respected and engaged
continued in 2006. The Human Rights Campaign listed
us as one of the best places to work in the country for the
gay, lesbian, bisexual and transgender (GLBT) community
when we received a perfect score on their Corporate
Equality Index. We were the only major company in our
industry to receive this honor. And Women’s Enterprise®
USA recognized us as one of the best in the country for
their Women Impacting Supplier Diversity.
Giving people choices is important to becoming a great
company. That’s why we give our associates options that
fit their unique lives. Flextime, telecommuting, financial
consulting and the Associate Assistance Program, which
helps associates find child and elder care are just some
of the things we do to help.
Our progress on diversity and inclusion is measured
in many ways. One measure of success is creating an
environment where all of our customers, associates,
community members and business partners feel their
voice is heard and valued. Every day we’re finding new
ways that bring us closer to that goal.
10 nationwide 2006 annual report 11
we’Re IN The BuSINeSS of protecting things. While
our focus is on personal property and investments, we
think it’s important to do what we can to help protect
the environment.
Sure, we take the traditional measures such as recycling
— it’s something we can all do. Our offices have recycling
bins in common areas and at desks. And we stress
conservation efforts to our associates.
Our associates would probably be a little warmer in the
covered walkways from downtown Columbus parking
garages into Home Office if we kept the heaters on all
the time. But the walkway heaters are just there to keep
ice and snow from piling up.
We also do some things people might not think about.
For instance, when birds are migrating through Central
Ohio we turn off the outside building lights of our
485-foot headquarters at night.
TheRe wAS A TIme when Detroit focused more on
horsepower than safety — when seatbelts and airbags
were options and muscle cars ruled. And, when the public
considered seatbelts a nuisance and sober driving only
a suggestion.
Now consumers demand safety, manufacturers brag
about it, the vast majority of people buckle up, and laws
and common sense have cracked down on drunken
driving. For more than 40 years Nationwide has helped
bring about these changes. Why? Because, as former
CEO Dean Jeffers said, “We are in the business of
preventing losses as much as we are in the business
for compensating for losses.”
Today, we’re reaching out more than ever, and educating
people about safety — in their homes, in their cars and
in their businesses.
Nationwide has a proud history of pursuing vehicle safety.
We were recently honored for our role in developing the
Airbag & Seatbelt Safety Campaign, which over the last
10 years helped increase seatbelt usage from 61 to 82
percent, child seat usage from 60 to 90 percent and
helped reduce the airbag-related death rate of children
by 96 percent.
In 2006, we conducted a national survey to help us learn
about people’s driving habits and the extent of a problem
known as DWD, or “Driving While Distracted.” After finding
that more than 80 percent of all drivers multitask behind
the wheel, we launched a media campaign to help the
public understand and avoid the dangers of DWD.
For years, Nationwide has fought for tougher drunken
driving laws and increased drinking ages, while
emphasizing education. While alcohol fatality rates
are down by more than half since 1983, 39 percent
of all traffic fatalities still involve alcohol.
environment:
we protect personal property, investments and the planet.
saFety:
we not only compensate for loss, we help prevent it.
Experts say migrating species use stars to navigate, and
lights from tall buildings are thought to confuse birds.
When a Columbus-area resident called us about dimming
our lights during the migratory seasons in the spring and
fall, we went a step further and turned them off.
And when things thaw out and we are taking care of
our gardens and grounds, we use corn gluten as an
environmentally safe weed control. Corn gluten gives
us a nontoxic, yet effective, alternative to chemical-based
weed-and-feed products.
Just another way we’re demonstrating our On Your
Side promise.
Nationwide continues to fight drunken driving, partnering
with Mothers Against Drunk Driving (MADD) to launch
“THINK,” a friend-to-friend program that educates high
schoolers and encourages them to commit to sober
driving throughout the entire year. It’s a program that
has the same mission as our former Nationwide Prom
Promise program — helping to save the lives of teens.
And we are helping keep young drivers safe through
our Time2Drive new driver program by working with
safety advocates to determine how best to educate
teens, and how best to develop more effective graduated
licensing laws.
Our work with auto manufacturers and safety advocates
to explore ways technology can help reduce drunken
driving has helped us become a leader in advocating
for the use of interlock devices that prevent convicted
drunken drivers with illegal blood alcohol levels from
starting their vehicles, as well as other technologies to
help prevent driving while drunk.
While these efforts support all communities, we have
targeted programs to help educate diverse communities
in the area of safety. Corazon de mi Vida is a program
bringing child seat safety to Latino families, while
Ay Chispas! focuses on fire safety in the home.
As we look ahead, we are excited about our work
with the Institute for Business & Home Safety. We are
committed to building an Insurance Center for Building
Safety Research that will lead to safer homes through
better testing of construction techniques and materials.
Whether it’s at home, in the car, or at work, Nationwide
has made safety an important part of what we do for
our customers.
when Birds are miGratinG throuGh CentraL ohio we turn oFF the outside BuiLdinG LiGhts oF our 485-Foot headquarters at niGht.
485
12 nationwide 2006 annual report 13
Property and casualty
cOmPANIeS PROducTS dISTRIBuTION chANNeLS
Nationwide Insurance insurance for autos, motorcycles, boats, exclusive nationwide agents, rvs, homes and businesses; individual brokers, sponsor organizations, and group health insurance, health employers, banks and internet savings accounts, health reimbursement accounts, special risk coverage
Allied Insurance insurance for autos, motorcycles, boats, independent agents rvs, homes, businesses and farms
Nationwide Agribusiness insurance for farms and direct sales, exclusive nationwide agribusinesses; loss-control services agents, independent agents
Scottsdale Insurance specialty insurance products General agents for business and individuals, commercial and excess liability coverage, pet insurance
Titan Insurance specialty auto insurance exclusive nationwide agents, independent agents
health
cOmPANIeS PROducTS dISTRIBuTION chANNeLS
Nationwide Better health health and wellness programs; direct sales disease, disability, absence, maternity and medical management
Banking and mortgage
cOmPANIeS PROducTS dISTRIBuTION chANNeLS
Nationwide Bank Cds, loans, savings and internet, direct sales, service centers checking accounts and atms
Nationwide Advantage mortgage mortgages, home equity internet, nationwide exclusive lines of credit agents, direct sales
Life insurance and retirement savings
cOmPANIeS PROducTS dISTRIBuTION chANNeLS
Nationwide financial variable and fixed annuities, life Financial planners, brokerages, insurance, private-sector retirement financial institutions, pension plans, immediate annuities plan administrators, nationwide Financial network agents, exclusive nationwide agents
Nationwide Retirement Solutions Public-sector retirement plans direct sales
TBg mullin deferred compensation plans, direct sales corporate-owned life insurance
asset management
cOmPANIeS PROducTS dISTRIBuTION chANNeLS
Nwd Investment management mutual funds, investment services Financial planners, internet for individuals and institutions
ProduCts & serviCes:
more options. more flexibility.
14 nationwide 2006 annual report 15
Board of directors
Lewis J. Alphin
James B. Bachmann
A. I. Bell
Timothy J. corcoran
yvonne m. curl
Kenneth d. davis
Keith w. eckel
fred c. finney
w. g. Jurgensen
daniel T. Kelley
Lydia m. marshall
Terry w. mcclure
Barry J. Nalebuff
Ralph m. Paige
James f. Patterson
Arden L. Shisler
office of the Ceo
w. g. Jurgensen
Chief executive officer
nationwide
Patricia R. hatler
executive vice President
Chief Legal officer
nationwide
Terri L. hill
executive vice President
Chief administrative officer
nationwide
michael c. Keller
executive vice President
Chief information officer
nationwide
James R. Lyski
executive vice President
Chief marketing officer
nationwide
michael d. miller
President and Chief operating officer
Scottsdale insurance
Steve S. Rasmussen
President and Chief operating officer
Property and Casualty insurance
nationwide
Robert A. Rosholt
executive vice President
Chief Financial officer,
Finance, investments and strategy
nationwide
mark R. Thresher
President and Chief operating officer
nationwide Financial
16 nationwide
Key facts about nationwide
• approximately 36,000 employees
• more than 16 million policies in force
significant u.s. rankings
PROPeRTy ANd cASuALTy RANKINgS*
• 4th-largest homeowner insurer
• 6th-largest auto insurer
• 10th-largest commercial insurer
• 6th-largest total property and casualty insurer
* Source: A.M. Best, 2005 DWP
LIfe ANd ReTIRemeNT SAvINgS RANKINgS
• #1 provider of defined contribution plans
• #6 provider of variable life insurance1
• #13 writer of individual variable annuities2
• #18 u.s. life insurer based on premium3
• #15 u.s. life insurer based on admitted assets3
1 VARDS Q3 2006 YTD2 Tillinghast Q3 2006 YTD3 AM Best Q3 2006 YTD
nationwideOne Nationwide PlazaColumbus, OH 43215 G-9536A
Nationwide, the Nationwide Framemark and On Your Side are federally registered service marks of Nationwide Mutual Insurance Company.
Key facts about nationwide
• approximately 36,000 employees
• more than 16 million policies in force
significant u.s. rankings
PROPeRTy ANd cASuALTy RANKINgS*
• 4th-largest homeowner insurer
• 6th-largest auto insurer
• 10th-largest commercial insurer
• 6th-largest total property and casualty insurer
* Source: A.M. Best, 2005 DWP
LIfe ANd ReTIRemeNT SAvINgS RANKINgS
• #1 provider of defined contribution plans
• #6 provider of variable life insurance1
• #13 writer of individual variable annuities2
• #18 u.s. life insurer based on premium3
• #15 u.s. life insurer based on admitted assets3
1 VARDS Q3 2006 YTD2 Tillinghast Q3 2006 YTD3 AM Best Q3 2006 YTD