nationwide 3Q06 Statistical Supplement

2006 Nationwide Financial® Statistical Supplement

Third Quarter2006

Nationwide Financial Services, Inc.Statistical SupplementSeptember 30, 2006

This Page Intentionally Left Blank.

Nationwide Financial Services, Inc.Statistical Supplement

Table of Contents

Page

Quarterly Financial Highlights 1-2

NFS Financial Reporting Structure 2

Quarterly Consolidated Income Statements 4

Combining Income StatementsFor the three months ended September 30, 2006 5For the three months ended September 30, 2005 6

Quarterly Consolidated Balance Sheets 8

Individual Investments SegmentQuarterly earnings trends 9Account value activity 9Account values by product 10Sales by product 10Sales by channel 10

Retirement Plans SegmentQuarterly earnings trends 11Account value activity 11Account values by product 12Sales by product 12Sales by channel 12

Individual Protection SegmentQuarterly earnings trends 13Policy reserves 13Insurance in force 13Sales by product 14Sales by channel 14Investment life quarterly earnings trends 15Investment life policy reserve activity 15Fixed life quarterly earnings trends 16Fixed life policy reserve activity 16

Corporate and Other SegmentQuarterly earnings trends 17Medium term notes account value activity 17

Other DataCustomer funds managed and administered 18Separate account assets by segment and fund type 18Securities available-for-sale 19Aging of gross unrealized losses on securities available-for-sale 19Credit quality of fixed maturity securities available-for-sale 20Mortgage loans by region and property type 20Deferred policy acquisition costs 21Individual variable annuity deferred acquisition costs 22Value of business acquired 23Individual variable annuity guaranteed minimum death benefits 24Individual variable annuity guaranteed minimum accumulation benefits 25Individual variable annuity guaranteed minimum income benefits 25Individual variable annuity guaranteed minimum withdrawal benefits 25Individual variable annuity guaranteed minimum death benefit reserve activity 26Individual variable annuity guaranteed minimum accumulation benefit embedded derivative activity 26Individual fixed annuity and fixed option of variable annuity summary of crediting rate detail 26

Historical Data 27-40

Glossary 41-44

Shareholder Information 45

September 30, 2006


Quarterly Financial Highlights

($ in millions except for per share data) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Operating Revenues

Individual investments 385.3$ 380.1$ 382.6$ 373.2$ 382.3$ Retirement plans 271.4 276.0 278.6 294.9 286.5 Individual protection 331.4 339.7 338.4 333.7 338.6 Corporate and other 97.4 103.5 100.1 111.5 108.8

Total operating revenues 1,085.5$ 1,099.3$ 1,099.7$ 1,113.3$ 1,116.2$

Net realized gains (losses) on investments, hedging instruments and hedged items (1) (14.5) 3.7 (8.1) (11.0) 5.5

Total revenues 1,071.0$ 1,103.0$ 1,091.6$ 1,102.3$ 1,121.7$

Pre-tax Operating EarningsIndividual investments 56.2$ 53.4$ 56.4$ 52.5$ 60.4$ Retirement plans 45.4 49.7 53.6 64.4 53.6 Individual protection 63.8 59.6 64.9 60.5 71.0 Corporate and other (1.1) 22.6 11.6 16.6 21.7

Pre-tax operating earnings 164.3$ 185.3$ 186.5$ 194.0$ 206.7$ Federal income tax expense (8.0) 33.1 42.2 (70.0) 52.0

Net operating earnings 172.3$ 152.2$ 144.3$ 264.0$ 154.7$

Net realized gains (losses) on investments, hedging instruments and hedged items, net of taxes (1) (9.4) 2.4 (5.3) (7.2) 3.6

Adjustment to amortization related to net realized gains (losses), net of taxes 2.9 0.1 3.3 1.0 1.2

Discontinued operations, net of taxes 0.9 (24.4) - - - Net income 166.7$ 130.3$ 142.3$ 257.8$ 159.5$

Per Diluted ShareNet operating earnings 1.12$ 0.99$ 0.94$ 1.76$ 1.03$

Net realized gains (losses) on investments, hedging instruments and hedged items, net of taxes (1) (0.07) 0.02 (0.03) (0.05) 0.02

Adjustment to amortization related to net realized gains (losses), net of taxes 0.02 - 0.02 0.01 0.01

Discontinued operations, net of taxes 0.01 (0.16) - - - Net income 1.08$ 0.85$ 0.93$ 1.72$ 1.06$

Sales by ChannelNon-affiliated Independent broker/dealers 1,280.4$ 1,207.9$ 1,487.8$ 1,380.7$ 1,363.9$ Wirehouse and regional firms 449.1 482.3 590.1 555.6 596.4 Financial institutions 398.8 424.3 523.7 580.7 570.1 Pension plan administrators 108.2 104.9 135.9 139.6 124.8 Life specialists 82.5 69.0 172.6 84.0 46.3 Affiliated Nationwide Retirement Solutions 1,012.7 948.8 1,028.5 1,001.2 1,031.3 Nationwide agents 188.8 207.2 196.4 203.1 186.6 Nationwide Financial Network 160.2 181.6 185.7 171.0 168.3 The 401(k) Company 303.5 288.3 535.9 422.3 365.2 TBG Financial 92.3 36.0 110.4 62.7 21.4

Total 4,076.5$ 3,950.3$ 4,967.0$ 4,600.9$ 4,474.3$

(1) Excluding operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses, trading portfolio valuation changes, and net realized gains and losses related to securitizations).

Note: All prior periods have been reclassified to reflect NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.

1


Quarterly Financial Highlights

($ in millions except for per share data) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Balance Sheet Data

Total assets 117,421.3$ 116,159.9$ 116,558.7$ 113,083.0$ 114,880.0$

Customer funds managed and administered 155,650.6$ 155,612.9$ 162,451.7$ 160,051.6$ 163,240.5$

Shareholders' equity Including accumulated other comprehensive income (AOCI) (1) 5,375.6$ 5,350.4$ 5,126.2$ 5,236.8$ 5,630.0$ AOCI 196.1 100.7 (77.9) (202.0) 47.8 Excluding AOCI 5,179.5$ 5,249.7$ 5,204.1$ 5,438.8$ 5,582.2$

Net operating return on average equity excluding AOCI 13.5% 11.7% 11.0% 19.8% 11.2%

Adjusted net operating return on average equity excluding AOCI (2) 11.2% 11.7% 11.0% 11.4% 11.2%

Statutory capital and surplus 3,305.9$ 3,262.1$ 3,279.3$ 3,437.4$ 3,504.2$

Stock DataClosing Price 40.05$ 44.00$ 43.02$ 44.08$ 48.10$

Weighted average shares outstanding Basic 153.1 152.9 152.3 149.2 149.5 Diluted 153.9 153.6 152.9 149.9 150.3

Book value per share Including AOCI 35.09$ 35.08$ 34.40$ 35.08$ 37.61$ Excluding AOCI 33.81$ 34.42$ 34.93$ 36.43$ 37.29$

(1) Includes changes in fair value of certain investments and derivatives under SFAS 115 and SFAS 133.

(2) 3Q 2005 return adjusted for $42.6 million impact of one-time tax adjustments associated with separate account dividend received deductions and $14.1 million charge related to calling of trust preferred securities. 2Q 2006 return adjusted for $113.1 million of released tax reserves and associated tax-related adjustments relating to prior tax years.


NFS Operating Segment Reporting Structure

NATIONWIDE FINANCIAL SERVICES, INC.

IndividualInvestments

RetirementPlans

IndividualProtection

Corporate& Other

Variable Annuities

Fixed Annuities

Income Products

Advisory Services

Public Sector - 457

Private Sector – 401(k)

Fixed Life

Investment Life Corporate Other

Medium Term Notes

Structured Products

Universal

Whole

Term

Variable Universal

COLI

2



3


Quarterly Consolidated Income Statements

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Operating Revenues

Asset fees 163.1$ 163.0$ 168.9$ 170.0$ 169.2$ Cost of insurance charges 97.8 97.5 98.9 100.2 100.6 Administrative fees 29.6 27.7 30.2 47.2 36.2 Surrender fees 24.1 22.6 23.0 20.2 21.6

Total policy charges 314.6 310.8 321.0 337.6 327.6

Traditional life and immediate annuity premiums 97.2 107.1 107.8 109.7 110.5 Net investment income 592.8 587.9 577.3 572.1 577.9 Operating realized gains (losses) 0.5 1.1 1.3 1.1 4.1 Other income 80.4 92.4 92.3 92.8 96.1

Total operating revenues 1,085.5 1,099.3 1,099.7 1,113.3 1,116.2

BenefitsInterest credited 350.6 347.7 342.1 345.7 348.2 Life insurance and annuity benefits 142.9 149.9 156.1 156.4 163.8 Policyholder dividends 27.1 27.0 20.2 24.5 24.6

Total benefits 520.6 524.6 518.4 526.6 536.6

ExpensesCommissions 130.2 140.1 153.1 160.4 160.7 General operating expenses 198.9 209.3 213.4 214.6 201.0 Debt extinguishment costs 21.7 - - - - Deferral of policy acquisition costs (112.4) (120.8) (135.1) (147.4) (138.8)

Subtotal 238.4 228.6 231.4 227.6 222.9

Amortization of policy acquisition costs 122.9 123.7 125.7 127.5 109.8 Amortization of value of business acquired 11.3 10.0 11.6 12.5 14.9 Interest expense on debt 28.0 27.1 26.1 25.1 25.3

Total expenses 400.6 389.4 394.8 392.7 372.9

Pre-tax operating earnings 164.3$ 185.3$ 186.5$ 194.0$ 206.7$ Federal income tax expense (8.0) 33.1 42.2 (70.0) 52.0


Net realized gains (losses) on investments, hedging

instruments and hedged items, net of taxes (1)

Realized gains on sales, net of hedging 8.4 20.5 7.3 11.0 10.2 Realized losses on sales, net of hedging (3.3) (7.9) (12.9) (19.1) (4.4) Other-than-temporary impairments, including mortgage loan valuation allowance adjustment (12.6) (7.5) (0.6) (2.5) (2.9) Credit default swaps (2.8) (0.4) (0.1) (0.1) (0.1) Derivatives, excluding hedging gains and losses on sales and credit default swaps 1.4 (1.9) 0.5 3.4 0.3 Amounts credited to policyholder dividend obligation (2.1) 0.3 0.1 (0.7) 0.5 Adjustment to VOBA amortization 1.6 (0.7) 0.4 0.8 -

Subtotal (9.4) 2.4 (5.3) (7.2) 3.6

Adjustment to amortization related to net realized gains (losses), net of taxes 2.9 0.1 3.3 1.0 1.2

Discontinued operations, net of taxes 0.9 (24.4) - - -

Net income 166.7$ 130.3$ 142.3$ 257.8$ 159.5$



4


Combining Income StatementFor the three months ended September 30, 2006

Individual Retirement Individual Corporate($ in millions) Investments Plans Protection and Other TotalOperating Revenues

Asset fees 125.2$ 32.9$ 11.1$ -$ 169.2$ Cost of insurance charges - - 100.6 - 100.6 Administrative fees 5.5 7.9 22.8 - 36.2 Surrender fees 14.7 0.8 6.1 - 21.6

Total policy charges 145.4 41.6 140.6 - 327.6

Traditional life and immediate annuity premiums 37.3 - 73.2 - 110.5 Net investment income 199.1 164.7 118.6 95.5 577.9 Operating realized gains (losses) - - - 4.1 4.1 Other income 0.5 80.2 6.2 9.2 96.1

Total operating revenues 382.3 286.5 338.6 108.8 1,116.2

BenefitsInterest credited 131.5 112.2 49.5 55.0 348.2 Life insurance and annuity benefits 55.5 - 108.3 - 163.8 Policyholder dividends - - 24.6 - 24.6

Total benefits 187.0 112.2 182.4 55.0 536.6

ExpensesCommissions 86.0 37.4 29.9 7.4 160.7 General operating expenses 54.5 78.2 68.8 (0.5) 201.0 Deferral of policy acquisition costs (86.9) (8.8) (43.1) - (138.8)

Subtotal 53.6 106.8 55.6 6.9 222.9

Amortization of policy acquisition costs 79.5 9.7 20.6 - 109.8 Amortization of value of business acquired 1.8 4.2 8.9 - 14.9 Interest expense on debt - - 0.1 25.2 25.3

Total expenses 134.9 120.7 85.2 32.1 372.9

Pre-tax operating earnings 60.4$ 53.6$ 71.0$ 21.7$ 206.7$

Federal income tax expense 52.0 Net operating earnings 154.7$



Realized gains on sales, net of hedging 10.2 Realized losses on sales, net of hedging (4.4) Other-than-temporary impairments, including mortgage loan valuation allowance adjustment (2.9) Credit default swaps (0.1) Derivatives, excluding hedging gains and losses on sales and credit default swaps 0.3 Amounts credited to policyholder dividend obligation 0.5 Adjustment to VOBA amortization -

Subtotal 3.6

Adjustment to amortization related to net realized gains (losses), net of taxes 1.2

Discontinued operations, net of taxes -

Net income 159.5$


5


Combining Income StatementFor the three months ended September 30, 2005

Individual Retirement Individual Corporate($ in millions) Investments Plans Protection and Other TotalOperating Revenues

Asset fees 118.5$ 34.2$ 10.4$ -$ 163.1$ Cost of insurance charges - - 97.8 - 97.8 Administrative fees 4.1 1.8 23.7 - 29.6 Surrender fees 16.0 1.7 6.4 - 24.1

Total policy charges 138.6 37.7 138.3 - 314.6

Traditional life and immediate annuity premiums 26.4 - 70.8 - 97.2 Net investment income 219.9 165.7 117.1 90.1 592.8 Operating realized gains (losses) - - - 0.5 0.5 Other income 0.4 68.0 5.2 6.8 80.4

Total operating revenues 385.3 271.4 331.4 97.4 1,085.5

BenefitsInterest credited 148.2 115.4 48.0 39.0 350.6 Life insurance and annuity benefits 37.3 - 105.6 - 142.9 Policyholder dividends - - 27.1 - 27.1

Total benefits 185.5 115.4 180.7 39.0 520.6

ExpensesCommissions 62.4 33.7 27.9 6.2 130.2 General operating expenses 47.3 72.6 75.3 3.7 198.9 Debt extinguishment costs - - - 21.7 21.7 Deferral of policy acquisition costs (59.9) (9.1) (43.4) - (112.4)

Subtotal 49.8 97.2 59.8 31.6 238.4

Amortization of policy acquisition costs 92.2 12.1 18.6 - 122.9 Amortization of value of business acquired 1.6 1.3 8.4 - 11.3 Interest expense on debt - - 0.1 27.9 28.0

Total expenses 143.6 110.6 86.9 59.5 400.6

Pre-tax operating earnings 56.2$ 45.4$ 63.8$ (1.1)$ 164.3$

Federal income tax expense (8.0) Net operating earnings 172.3$



Realized gains on sales, net of hedging 8.4 Realized losses on sales, net of hedging (3.3) Other-than-temporary impairments, including mortgage loan valuation allowance adjustment (12.6) Credit default swaps (2.8) Derivatives, excluding hedging gains and losses on sales and credit default swaps 1.4 Amounts credited to policyholder dividend obligation (2.1) Adjustment to VOBA amortization 1.6

Subtotal (9.4)

Adjustment to amortization related to net realized gains (losses), net of taxes 2.9

Discontinued operations, net of taxes 0.9

Net income 166.7$



6



7


Quarterly Consolidated Balance Sheets

($ in millions, except per share data) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Assets

InvestmentsSecurities available-for-sale: Fixed maturity securities 31,092.2$ 30,106.0$ 28,645.0$ 27,980.9$ 28,579.0$ Equity securities 78.6 75.6 76.5 63.2 65.2 Trading assets 34.7 34.4 27.8 21.0 22.8 Mortgage loans 9,332.5 9,148.6 9,048.3 9,060.7 8,981.2 Real estate 107.7 108.7 108.6 108.4 104.8 Policy loans 935.6 930.6 933.9 948.3 957.7 Other long-term investments 617.6 691.9 688.9 687.4 680.6 Short-term investments 2,104.2 2,073.2 2,830.5 2,169.7 1,917.4

Total investments 44,303.1 43,169.0 42,359.5 41,039.6 41,308.7

Cash 47.6 16.4 23.9 23.6 12.9 Accrued investment income 436.8 396.3 398.9 388.7 412.6 Deferred policy acquisition costs 3,710.4 3,685.4 3,794.7 3,875.6 3,783.5 Value of business acquired 457.7 449.7 443.3 405.2 399.1 Other intangible assets 46.1 45.6 45.4 44.9 44.2 Goodwill 389.6 364.5 359.0 359.0 359.0 Other assets 2,227.5 2,069.2 2,200.3 2,117.3 2,433.2 Assets held in separate accounts 65,802.5 65,963.8 66,933.7 64,829.1 66,126.8

Total assets 117,421.3$ 116,159.9$ 116,558.7$ 113,083.0$ 114,880.0$

Liabilities and shareholders' equityFuture policy benefits and claims 40,787.4$ 39,748.1$ 39,519.4$ 38,451.3$ 38,131.9$ Short-term debt 391.2 252.3 147.4 189.8 88.6 Long-term debt 1,406.0 1,398.0 1,398.3 1,398.4 1,398.1 Other liabilities 3,658.6 3,447.3 3,433.7 2,977.6 3,504.6 Liabilities related to separate accounts 65,802.5 65,963.8 66,933.7 64,829.1 66,126.8

112,045.7 110,809.5 111,432.5 107,846.2 109,250.0

Shareholders' equity 5,375.6 5,350.4 5,126.2 5,236.8 5,630.0 Total liabilities and shareholders' equity 117,421.3$ 116,159.9$ 116,558.7$ 113,083.0$ 114,880.0$

Capital Structure

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06

Total capital, including AOCI 6,781.6$ 6,748.4$ 6,524.5$ 6,635.2$ 7,028.1$ Less AOCI 196.1 100.7 (77.9) (202.0) 47.8 Total capital, excluding AOCI 6,585.5$ 6,647.7$ 6,602.4$ 6,837.2$ 6,980.3$

Leverage, including AOCI Long-term debt--to--total capital 20.7% 20.7% 21.4% 21.1% 19.9%

Leverage, excluding AOCI Long-term debt--to--total capital 21.3% 21.0% 21.2% 20.5% 20.0%

Ratio of pre-tax operating earnings before interest expense to interest expense 6.9X 7.8X 8.1X 8.7X 9.2X

8


Individual InvestmentsQuarterly Earnings Trends


Asset fees 118.5$ 118.1$ 124.0$ 125.0$ 125.2$ Administrative fees 4.1 4.3 4.6 4.9 5.5 Surrender fees 16.0 14.2 15.2 14.2 14.7


Net Investment Income General account assets 226.4 220.3 212.7 200.0 205.9 Charge for invested capital (6.5) (6.9) (6.3) (6.1) (6.8)

Total net investment income 219.9 213.4 206.4 193.9 199.1

Premiums on income products 26.4 29.7 31.9 34.6 37.3 Other income 0.4 0.4 0.5 0.6 0.5

Total operating revenues 385.3 380.1 382.6 373.2 382.3

Benefits Interest credited 148.2 144.5 137.7 132.7 131.5 Immediate annuity benefits 22.7 25.7 28.5 30.4 31.7 Policy benefits 14.6 16.3 12.5 19.2 23.8

Total benefits 185.5 186.5 178.7 182.3 187.0

ExpensesCommissions 62.4 65.7 73.6 86.2 86.0 General operating expenses 47.3 50.7 48.4 56.0 54.5 Deferral of policy acquisition costs (59.9) (62.0) (74.4) (90.8) (86.9)

Subtotal 49.8 54.4 47.6 51.4 53.6

Amortization of policy acquisition costs 92.2 83.7 97.6 84.8 79.5 Amortization of value of business acquired 1.6 2.1 2.3 2.2 1.8

Total expenses 143.6 140.2 147.5 138.4 134.9


Key Ratios/StatisticsAverage Account Values: General account 16,110.5$ 15,515.1$ 14,825.4$ 14,374.0$ 13,824.3$ Separate account 35,669.0 35,975.9 36,504.3 36,815.8 36,824.2 Advisory services program 345.3 393.7 443.3 491.6 528.7

Total average individual investments account values 52,124.8$ 51,884.7$ 51,773.0$ 51,681.4$ 51,177.2$

Earned rate 5.62% 5.68% 5.74% 5.56% 5.95%Credited rate 3.68% 3.73% 3.72% 3.69% 3.80%

Interest spread on average general account values 1.94% 1.95% 2.02% 1.87% 2.15%

Prepayment penalties and bond call premium income 0.30% 0.19% 0.11% 0.09% 0.24%Base interest spread on average general account values 1.64% 1.76% 1.91% 1.78% 1.91%

Asset fees to average separate account values 1.33% 1.31% 1.36% 1.36% 1.36%

General operating expenses to average account values 0.36% 0.39% 0.37% 0.43% 0.43%

Pre-tax operating earnings to average account values 0.43% 0.41% 0.44% 0.41% 0.47%

Pre-tax operating earnings to operating revenues 14.6% 14.0% 14.7% 14.1% 15.8%

Average allocated capital 1,689.8$ 1,649.3$ 1,563.0$ 1,504.3$ 1,467.4$

Return on average allocated capital 16.7% 12.1% 11.9% 11.8% 13.1%

Adjusted return on average allocated capital (1) 10.9% 12.1% 11.9% 11.8% 13.1%

(1) 3Q 2005 return adjusted for $24.3 million impact of one-time tax adjustments associated with separate account dividend received deductions.

Note: All prior periods have been reclassified to reflect NFS Bermuda as discontinued operations.

Individual InvestmentsAccount Value Activity

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Individual Variable Annuities

Balance, beginning of period 40,726.4$ 41,651.8$ 40,796.0$ 42,071.5$ 41,140.7$

Deposits 870.2 903.5 1,045.0 1,279.9 1,263.4 Withdrawals and surrenders (1,429.5) (1,456.8) (1,535.4) (1,479.4) (1,554.2)

Net flows (559.3) (553.3) (490.4) (199.5) (290.8)

Investment performance/interest credited 1,615.9 971.1 1,903.4 (605.1) 1,070.8 Policy charges (138.9) (137.6) (140.6) (141.3) (141.2) Benefits and other 7.7 24.6 3.1 15.1 (8.4) Acquisitions/(terminations), net - (1,160.6) - - - Balance, end of period 41,651.8$ 40,796.0$ 42,071.5$ 41,140.7$ 41,771.1$

Individual Fixed AnnuitiesBalance, beginning of period 8,731.8$ 8,559.3$ 8,041.8$ 7,746.6$ 7,425.0$

Deposits 27.4 31.0 38.6 42.7 53.3 Withdrawals and surrenders (274.0) (330.0) (400.9) (437.5) (534.1)

Net flows (246.6) (299.0) (362.3) (394.8) (480.8)

Policyholder interest credited 82.8 77.6 73.4 79.2 68.2 Policy charges (3.2) (2.6) (2.8) (2.5) (3.1) Benefits and other (5.5) (3.9) (3.5) (3.5) (13.7) Acquisitions/(terminations), net - (289.6) - - - Balance, end of period 8,559.3$ 8,041.8$ 7,746.6$ 7,425.0$ 6,995.6$

Income Products 1,954.7$ 1,978.3$ 2,025.1$ 1,970.6$ 1,994.0$ Advisory services program 375.9$ 411.5$ 475.0$ 508.1$ 549.2$

Total individual investment account values 52,541.7$ 51,227.6$ 52,318.2$ 51,044.4$ 51,309.9$

9


Individual InvestmentsAccount Values by Product


BEST of AMERICA products 33,989.0$ 32,937.0$ 34,117.5$ 33,495.1$ 34,215.3$ Private label annuities 7,178.4 7,398.9 7,505.5 7,243.9 7,171.5 Nationwide Financial Network and other 484.4 460.1 448.5 401.7 384.3

Total individual variable annuities 41,651.8$ 40,796.0$ 42,071.5$ 41,140.7$ 41,771.1$

Individual Fixed Annuities 8,559.3$ 8,041.8$ 7,746.6$ 7,425.0$ 6,995.6$ Income Products 1,954.7$ 1,978.3$ 2,025.1$ 1,970.6$ 1,994.0$ Advisory Services Program 375.9$ 411.5$ 475.0$ 508.1$ 549.2$


Individual InvestmentsSales by Product


BEST of AMERICA products 720.1$ 767.6$ 912.5$ 1,116.3$ 1,096.6$ Private label annuities 79.8 82.3 73.0 96.7 94.8 Nationwide Financial Network and other 1.1 1.1 0.9 1.0 1.0

Total individual variable annuities 801.0$ 851.0$ 986.4$ 1,214.0$ 1,192.4$

Individual Fixed Annuities 31.5$ 32.6$ 39.5$ 45.8$ 57.2$ Income Products 49.3$ 54.8$ 58.5$ 55.9$ 57.1$ Advisory Services Program 65.1$ 49.2$ 62.6$ 70.1$ 47.7$

Total individual investment sales 946.9$ 987.6$ 1,147.0$ 1,385.8$ 1,354.4$

Individual InvestmentsSales by Channel


Non-affiliated Independent broker/dealers 309.4$ 311.5$ 347.7$ 412.6$ 403.1$ Wirehouse and regional firms 198.3 197.8 220.8 274.4 312.7 Financial institutions 224.8 250.3 318.2 410.6 383.3 Life specialists - - 0.8 - - Affiliated Nationwide agents 48.1 60.5 63.6 71.3 51.0 Nationwide Financial Network 20.4 30.9 35.3 45.1 42.3

Total individual variable annuities 801.0$ 851.0$ 986.4$ 1,214.0$ 1,192.4$

Individual Fixed AnnuitiesNon-affiliated Independent broker/dealers 1.9$ 1.6$ 2.6$ 2.5$ 5.4$ Wirehouse and regional firms 1.2 1.9 1.0 3.0 3.1 Financial institutions 16.3 8.8 14.7 19.0 20.5 Affiliated Nationwide agents 11.0 17.9 17.4 19.8 24.7 Nationwide Financial Network 1.1 2.4 3.8 1.5 3.5

Total individual fixed annuities 31.5$ 32.6$ 39.5$ 45.8$ 57.2$

Income ProductsNon-affiliated Independent broker/dealers 17.6$ 20.4$ 28.1$ 28.5$ 19.5$ Wirehouse and regional firms 19.0 18.2 17.0 15.5 25.8 Financial institutions 4.8 8.6 6.1 9.4 7.9 Affiliated Nationwide agents 3.7 3.9 3.6 3.1 2.9 Nationwide Financial Network 4.2 3.7 3.7 (0.6) 1.0

Total income products 49.3$ 54.8$ 58.5$ 55.9$ 57.1$

Advisory Services ProgramNon-affiliated Independent broker/dealers 57.7$ 44.4$ 48.0$ 60.2$ 41.3$ Financial institutions 1.5 3.2 4.0 5.7 2.3 Affiliated Nationwide Financial Network 5.9 1.6 10.6 4.2 4.1

Total advisory services program 65.1$ 49.2$ 62.6$ 70.1$ 47.7$

Total individual investment sales 946.9$ 987.6$ 1,147.0$ 1,385.8$ 1,354.4$

10





Net investment income 165.7 167.1 164.2 159.8 164.7 Other income 68.0 70.2 76.3 77.8 80.2


Benefits Interest credited 115.4 115.6 113.2 113.0 112.2


Subtotal 97.2 98.2 100.6 105.4 106.8

Amortization of policy acquisition costs 12.1 11.9 10.1 10.9 9.7 Amortization of value of business acquired 1.3 0.6 1.1 1.2 4.2

Total expenses 110.6 110.7 111.8 117.5 120.7


Key Ratios/StatisticsAverage Account Values: General account 11,010.1$ 11,151.0$ 11,241.2$ 11,050.0$ 10,909.6$ Separate account 19,342.2 19,737.8 19,298.8 18,155.5 17,668.4 Non insurance assets 13,023.6 14,056.6 15,258.6 16,085.7 16,611.8 Administration only 36,725.4 37,508.5 39,690.3 42,162.9 43,048.9

Total average retirement plan account values 80,101.3$ 82,453.9$ 85,488.9$ 87,454.1$ 88,238.7$


Interest spread on average general account values 1.83% 1.84% 1.81% 1.69% 1.92%

Prepayment penalties and bond call premium income 0.18% 0.19% 0.09% 0.06% 0.12%Base interest spread on average general account values 1.65% 1.65% 1.72% 1.63% 1.80%

Asset fees to average separate account values 0.71% 0.70% 0.70% 0.74% 0.74%



Pre-tax operating earnings to operating revenue 16.7% 18.0% 19.2% 21.8% 18.7%

Average allocated capital 784.1$ 806.5$ 816.2$ 817.1$ 806.7$




($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Private Sector Pension Plans


New deposits/sales 1,833.3 1,676.4 2,327.7 1,873.8 1,828.3 Participant withdrawals and surrenders (1,464.6) (1,601.7) (1,855.7) (1,624.0) (1,632.6)

Net flows 368.7 74.7 472.0 249.8 195.7

Investment performance/interest credited 1,591.8 1,027.6 2,112.0 (37.3) 1,310.4 Policy charges and other (53.5) (57.8) (25.2) (73.1) (66.8) Case acquisitions/(terminations), net 3.8 626.3 784.6 260.8 (82.3)

Balance, end of period 41,235.7$ 42,906.5$ 46,249.9$ 46,650.1$ 48,007.1$

Public Sector Pension PlansBalance, beginning of period 38,968.6$ 40,673.4$ 40,092.0$ 41,729.2$ 40,278.9$

New deposits/sales 1,004.2 940.3 1,020.0 993.2 1,023.4 Participant withdrawals and surrenders (634.2) (625.0) (694.2) (654.2) (567.9)

Net flows 370.0 315.3 325.8 339.0 455.5

Investment performance/interest credited 1,359.3 850.3 1,376.2 (370.1) 914.6 Policy charges and other (17.5) (17.4) (18.0) (38.1) (19.0) Case acquisitions/(terminations), net (7.0) (1,729.6) (46.8) (1,381.1) (88.8)


Total retirement plan account values 81,909.1$ 82,998.5$ 87,979.1$ 86,929.0$ 89,548.3$

Account Value Activity

Retirement PlansQuarterly Earnings Trends

Retirement Plans

11


Retirement PlansAccount Values by Product


Private Sector Pension PlansBEST of AMERICA annuity products 7,969.2$ 7,791.9$ 7,738.8$ 7,399.3$ 7,360.4$ BEST of AMERICA trust products 13,633.7 14,479.5 16,037.7 16,133.6 17,089.9

Subtotal BEST of AMERICA 21,602.9 22,271.4 23,776.5 23,532.9 24,450.3

The 401(k) Company 12,215.3 13,147.7 16,349.9 17,024.0 17,405.2 Nationwide Financial Network products 1,372.3 1,378.4 1,316.5 1,304.8 1,256.1 Nationwide employee and agent benefit plans 5,426.4 5,504.2 4,207.1 4,204.7 4,322.0 Other 618.8 604.8 599.9 583.7 573.5

Total private sector pension plans 41,235.7$ 42,906.5$ 46,249.9$ 46,650.1$ 48,007.1$

Public Sector Pension PlansIRC Section 457 annuities 15,321.2$ 15,790.2$ 16,148.1$ 14,908.2$ 15,243.4$ Administration only agreements 25,352.2 24,301.8 25,581.1 25,370.7 26,297.8

Total public sector pension plans 40,673.4$ 40,092.0$ 41,729.2$ 40,278.9$ 41,541.2$


Retirement PlansSales by Product


BEST of AMERICA annuity products 335.3$ 285.8$ 351.0$ 327.8$ 291.0$ BEST of AMERICA trust products 947.9 971.2 1,277.5 976.9 1,024.5


The 401(k) Company 303.5 288.3 535.9 422.3 365.2 Nationwide Financial Network products 52.6 58.4 56.5 40.6 42.9 Other 25.8 10.9 12.6 20.8 15.0

Total private sector pension plan 1,665.1$ 1,614.6$ 2,233.5$ 1,788.4$ 1,738.6$

Public Sector Pension PlansIRC Section 457 annuities 397.6$ 379.0$ 407.3$ 389.0$ 381.6$ Administration only agreements 606.7 561.3 612.6 604.2 641.8

Total public sector pension plans 1,004.3$ 940.3$ 1,019.9$ 993.2$ 1,023.4$

Total retirement plan sales 2,669.4$ 2,554.9$ 3,253.4$ 2,781.6$ 2,762.0$

Retirement PlansSales by Channel


Non-affiliated Independent broker/dealers 828.6$ 770.3$ 994.7$ 810.4$ 824.6$ Wirehouse and regional firms 215.3 248.4 337.0 245.8 239.7 Financial institutions 133.8 137.2 167.7 120.4 141.2 Pension plan administrators 108.2 104.9 135.9 139.6 124.8 Affiliated Nationwide Retirement Solutions 8.4 8.5 8.6 8.0 7.9 Nationwide agents 39.0 19.2 24.0 20.2 16.2 Nationwide Financial Network 28.3 37.8 29.7 21.7 19.0 The 401(k) Company 303.5 288.3 535.9 422.3 365.2


Public Sector Pension Plans Nationwide Retirement Solutions 1,004.3$ 940.3$ 1,019.9$ 993.2$ 1,023.4$


12



Asset fees 10.4$ 10.5$ 11.0$ 11.4$ 11.1$ Administrative fees 23.7 21.0 22.9 19.7 22.8 Surrender fees 6.4 6.5 6.3 4.9 6.1 Cost of insurance 97.8 97.5 98.9 100.2 100.6




Traditional life premiums 70.8 77.4 75.9 75.1 73.2 Other income 5.2 9.2 7.2 5.9 6.2


BenefitsInterest credited 48.0 47.5 45.6 49.5 49.5 Life benefits 105.6 107.9 115.1 106.8 108.3 Policyholder dividends 27.1 27.0 20.2 24.5 24.6

Total benefits 180.7 182.4 180.9 180.8 182.4


Subtotal 59.8 62.3 66.3 51.4 55.6


Total expenses 86.9 97.7 92.6 92.4 85.2


Key Ratios/StatisticsGeneral operating expenses to operating revenues 22.7% 23.1% 24.2% 19.9% 20.3%Pre-tax operating earnings to operating revenues 19.3% 17.5% 19.2% 18.1% 21.0%Average allocated capital 1,798.5$ 1,817.9$ 1,829.6$ 1,845.5$ 1,852.3$ Return on average allocated capital 10.9% 9.5% 9.8% 9.2% 10.4%




Individual ProtectionPolicy Reserves

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Individual investment life 5,209.5$ 5,329.5$ 5,573.1$ 5,435.3$ 5,545.3$ Corporate investment life - excluding experience rated BOLI 5,499.4 5,613.8 5,997.2 6,030.6 6,235.8 Corporate investment life - experience rated BOLI 1,143.6 1,130.8 1,143.6 1,134.2 1,189.8

Subtotal investment life 11,852.5 12,074.1 12,713.9 12,600.1 12,970.9

Traditional life 4,229.8 4,225.2 4,210.3 4,301.0 4,282.9 Universal life 1,067.7 1,089.3 1,108.1 1,129.7 1,158.6

Subtotal fixed life 5,297.5 5,314.5 5,318.4 5,430.7 5,441.5

Total individual protection policy reserves 17,150.0$ 17,388.6$ 18,032.3$ 18,030.8$ 18,412.4$

Individual ProtectionInsurance In Force

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Individual investment life 56,739.3$ 57,021.7$ 57,164.1$ 57,336.8$ 57,189.7$ Corporate investment life - excluding experience rated BOLI 10,310.4 10,305.0 10,633.5 10,730.7 10,904.1 Corporate investment life - experience rated BOLI 13,336.2 13,330.5 13,330.5 13,330.5 13,320.3




Total individual protection insurance in force 124,773.1$ 126,361.1$ 127,999.3$ 129,914.1$ 131,460.3$

Individual Protection Quarterly Earnings Trends

13


Individual ProtectionSales by Product

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06BEST of AMERICA Variable Life Series

First year sales 30.3$ 35.0$ 34.2$ 37.8$ 34.3$ Renewal sales 74.8 73.1 75.9 72.3 72.9

Total BEST of AMERICA variable life series 105.1 108.1 110.1 110.1 107.2

Nationwide Financial Network Variable Life ProductsFirst year sales 4.4 5.8 5.0 9.8 4.5 Renewal sales 53.1 49.5 51.2 41.6 42.7 Total Nationwide Financial Network variable life products 57.5 55.3 56.2 51.4 47.2

Corporate Owned Life Insurance (COLI)First year sales 79.7 35.7 83.5 54.6 10.2 Renewal sales 95.1 69.3 198.7 92.1 57.5

Total COLI 174.8 105.0 282.2 146.7 67.7

Traditional/Universal lifeFirst year sales 26.4 30.1 21.6 23.0 32.5 Renewal sales 96.4 109.3 96.5 102.3 103.3

Total traditional/universal life 122.8 139.4 118.1 125.3 135.8

Total individual protection sales 460.2$ 407.8$ 566.6$ 433.5$ 357.9$

Individual ProtectionSales by Channel

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Non-affiliated Independent broker/dealers 65.2$ 59.7$ 66.7$ 66.5$ 70.0$ Wirehouse and regional firms 15.3 16.0 14.3 16.9 15.1 Financial institutions 17.6 16.2 13.0 15.6 14.9 Life specialists 82.5 69.0 171.8 84.0 46.3 Affiliated Nationwide agents 87.0 105.7 87.8 88.7 91.8 Nationwide Financial Network 100.3 105.2 102.6 99.1 98.4 TBG Financial 92.3 36.0 110.4 62.7 21.4

Total individual protection sales 460.2$ 407.8$ 566.6$ 433.5$ 357.9$

14


Investment LifeQuarterly Earnings Trends






Other income 5.2 9.2 7.2 5.9 6.2 Total operating revenues 161.0 160.9 161.6 157.9 161.4

BenefitsInterest credited 29.3 28.5 26.8 28.8 29.2 Life benefits 31.5 34.1 39.1 32.1 34.7

Total benefits 60.8 62.6 65.9 60.9 63.9


Subtotal 34.5 34.5 41.2 26.5 30.4


Total expenses 60.2 60.8 59.9 57.7 56.1


Key Ratios/Statistics

Cost of insurance per $1,000 of average net amount at risk (1) 6.05$ 6.00$ 6.07$ 6.11$ 6.08$ Life benefits per $1,000 of average net amount at risk (1) 2.23$ 2.42$ 2.78$ 2.28$ 2.46$ General operating expenses to operating revenues 27.1% 26.7% 31.4% 22.0% 23.0%Pre-tax operating earnings to operating revenues 24.8% 23.3% 22.2% 24.9% 25.7%Average allocated capital 1,255.2$ 1,259.5$ 1,262.2$ 1,271.9$ 1,275.7$ Return on average allocated capital 10.6% 9.1% 8.3% 9.0% 9.1%


(1) Excludes experience rated BOLI corporate investment life.(2) 3Q 2005 return adjusted for $3.7 million impact of one-time tax adjustments associated with separate account dividend received deductions.Note: All prior periods have been reclassified to reflect NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.

Investment LifePolicy Reserve Activity

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Balance, beginning of period 11,333.0$ 11,852.5$ 12,074.1$ 12,713.9$ 12,600.1$


Net flows 257.4 92.6 273.7 122.6 192.1

Investment performance/interest credited 361.6 227.3 470.8 (126.7) 326.7 Policy charges (122.0) (118.6) (121.8) (118.1) (121.3) Benefits and other 22.5 21.8 17.1 8.4 (26.7) Acquired business - (1.5) - - - Balance, end of period 11,852.5$ 12,074.1$ 12,713.9$ 12,600.1$ 12,970.9$

15


Fixed LifeQuarterly Earnings Trends


Administrative fees 3.5$ 3.7$ 3.4$ 3.2$ 4.1$ Surrender fees 0.4 0.4 0.7 0.5 0.4 Cost of insurance 12.5 12.9 13.5 14.0 14.8


Net investment income 83.2 84.4 83.3 83.0 84.7 Traditional life premiums 70.8 77.4 75.9 75.1 73.2



Total benefits 119.9 119.8 115.0 119.9 118.5


Subtotal 25.3 27.8 25.1 24.9 25.2

Amortization of policy acquisition costs (0.8) 7.5 5.4 7.5 1.2 Amortization of value of business acquired 2.2 1.6 2.2 2.3 2.7

Total expenses 26.7 36.9 32.7 34.7 29.1


Key Ratios/StatisticsLife benefits per $1,000 of average life insurance in force 6.75$ 6.55$ 6.57$ 6.26$ 5.97$ General operating expenses to operating revenues 18.5% 19.8% 17.6% 18.0% 17.8%Pre-tax operating earnings to operating revenues 14.0% 12.4% 16.5% 12.1% 16.7%Average allocated capital 543.4$ 558.4$ 567.4$ 573.6$ 576.6$ Return on average allocated capital 11.4% 10.3% 13.3% 9.6% 13.3%

Fixed LifePolicy Reserve Activity

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Traditional/Universal Life

Balance, beginning of period 5,271.3$ 5,297.5$ 5,314.5$ 5,318.4$ 5,430.7$ Deposits 104.9 121.4 106.0 112.3 116.7 Withdrawals and surrenders (51.7) (51.9) (51.2) (57.2) (50.7)

Net flows 53.2 69.5 54.8 55.1 66.0

Interest credited 18.7 19.0 22.7 20.7 20.6 Policy charges (16.4) (17.0) (17.6) (17.7) (19.3) Benefits and other (29.3) (54.5) (56.0) 54.2 (56.5) Balance, end of period 5,297.5$ 5,314.5$ 5,318.4$ 5,430.7$ 5,441.5$

16


Corporate and OtherQuarterly Earnings Trends


Operating RevenuesNet Investment Income General account assets 90.1$ 90.9$ 90.8$ 102.2$ 95.8$ Periodic net coupon settlements on non-qualifying derivatives - (1.1) (0.3) (0.3) (0.3)


Operating realized gains (losses) 0.5 1.1 1.3 1.1 4.1 Other income 6.8 12.6 8.3 8.5 9.2


BenefitsInterest Credited Products 38.8 39.9 45.4 50.4 55.0 Periodic net coupon settlements on non-qualifying derivatives 0.2 0.2 0.2 0.1 -

Total benefits 39.0 40.1 45.6 50.5 55.0

ExpensesCommissions 6.2 6.3 6.1 5.3 7.4 General operating expenses 3.7 7.4 10.8 14.1 (0.5) Amortization of value of business acquired - 0.1 0.1 - - Debt extinguishment costs 21.7 - - - - Interest expense on debt 27.9 27.0 25.9 25.0 25.2

Total expenses 59.5 40.8 42.9 44.4 32.1

Pre-tax operating earnings (1.1)$ 22.6$ 11.6$ 16.6$ 21.7$


Medium Term Notes

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Key Ratios/Statistics

Average Account Values: General account 4,029.5$ 4,024.0$ 4,060.1$ 4,084.7$ 4,008.6$


Interest spread on average general account values 1.09% 1.28% 1.20% 1.00% 1.20%Prepayment penalties and bond call premium income 0.06% 0.09% 0.12% 0.00% 0.05%

Base interest spread on average general account values 1.03% 1.19% 1.08% 1.00% 1.15%

Account Value ActivityBalance, beginning of period 4,009.1$ 4,049.8$ 3,998.2$ 4,122.1$ 4,047.4$ Deposits 400.0 300.0 250.0 300.0 - Maturities (370.5) (340.0) (125.0) (379.4) (73.8)

Net flows 29.5 (40.0) 125.0 (79.4) (73.8)

Interest credited and amortization 52.8 31.0 44.7 52.5 56.6 Other benefits - interest payments (41.6) (42.6) (45.8) (47.8) (60.3)


17


Customer Funds Managed and Administered

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Individual variable annuities 41,651.8$ 40,796.0$ 42,071.5$ 41,140.7$ 41,771.1$ Individual fixed annuities 8,559.3 8,041.8 7,746.6 7,425.0 6,995.6 Income products 1,954.7 1,978.3 2,025.1 1,970.6 1,994.0 Advisory services program 375.9 411.5 475.0 508.1 549.2

Subtotal individual investments 52,541.7 51,227.6 52,318.2 51,044.4 51,309.9

Private sector pension plans 41,235.7 42,906.5 46,249.9 46,650.1 48,007.1 Public sector pension plans 40,673.4 40,092.0 41,729.2 40,278.9 41,541.2

Subtotal retirement plans 81,909.1 82,998.5 87,979.1 86,929.0 89,548.3

Individual protection investment life 11,852.5 12,074.1 12,713.9 12,600.1 12,970.9 Individual protection fixed life 5,297.5 5,314.5 5,318.4 5,430.7 5,441.5

Subtotal individual protection 17,150.0 17,388.6 18,032.3 18,030.8 18,412.4

Medium term notes 4,049.8 3,998.2 4,122.1 4,047.4 3,969.9 Customer funds managed and administered 155,650.6$ 155,612.9$ 162,451.7$ 160,051.6$ 163,240.5$

Separate Account Assets by Segment and Fund Type

Q3'05 Q4'05 Q1'06 Q2'06 Q3'06($ in millions)Individual Investments

Equity 30,464.2$ 30,533.0$ 32,002.5$ 30,490.7$ 31,275.7$ Bond 4,095.9 3,899.8 3,809.9 4,134.1 4,355.0 Money market 1,587.5 1,371.4 1,392.0 1,802.4 1,590.5

Subtotal individual investments 36,147.6 35,804.2 37,204.4 36,427.2 37,221.2

Retirement PlansEquity 16,565.1$ 16,826.1$ 15,873.7$ 14,709.4$ 14,794.1$ Bond 2,069.3 1,993.0 1,851.0 1,782.8 1,830.4 Money market 529.4 513.3 468.2 508.8 514.3 Other 448.4 530.9 541.4 575.7 621.3

Subtotal retirement plans 19,612.2 19,863.3 18,734.3 17,576.7 17,760.1

Individual ProtectionEquity 6,617.6$ 7,073.6$ 7,653.4$ 7,397.0$ 7,744.9$ Bond 2,060.0 2,059.4 2,081.8 2,174.1 2,040.9 Money market 782.1 580.5 600.8 628.1 768.2

Subtotal individual protection 9,459.7 9,713.5 10,336.0 10,199.2 10,554.0

Corporate and OtherEquity 525.4$ 525.0$ 597.2$ 561.7$ 534.0$ Bond 51.3 50.8 55.3 57.4 50.1 Money market 6.3 7.0 6.5 6.9 7.4

Subtotal corporate and other 583.0 582.8 659.0 626.0 591.5

TotalEquity 54,172.3$ 54,957.7$ 56,126.8$ 53,158.8$ 54,348.7$ Bond 8,276.5 8,003.0 7,798.0 8,148.4 8,276.4 Money market 2,905.3 2,472.2 2,467.5 2,946.2 2,880.4 Other 448.4 530.9 541.4 575.7 621.3

Total separate account assets by fund type 65,802.5$ 65,963.8$ 66,933.7$ 64,829.1$ 66,126.8$

18


Securities Available-For-Sale

Gross GrossAmortized Unrealized Unrealized Estimated

($ in millions) Cost Gains Losses Fair ValueSeptember 30, 2006Fixed maturity securities:

U.S. Treasury securities and obligations of U.S. Government corporations 186.9$ 12.8$ 1.9$ 197.8$ Agencies not backed by the full faith and credit of the U.S. Government 610.1 48.5 3.0 655.6 Obligations of states and political subdivisions 283.2 0.8 6.8 277.2 Debt securities issued by foreign governments 42.5 1.9 0.5 43.9 Corporate securities Public 9,848.9 239.4 131.3 9,957.0 Private 6,728.7 143.6 85.7 6,786.6 Mortgage-backed securities--U.S. Government backed 6,840.7 27.8 113.1 6,755.4 Asset-backed securities 3,903.0 47.1 44.6 3,905.5

Total fixed maturities 28,444.0 521.9 386.9 28,579.0 Equity securities 55.5 10.2 0.5 65.2

Total 28,499.5$ 532.1$ 387.4$ 28,644.2$

December 31, 2005Fixed maturity securities:

U.S. Treasury securities and obligations of U.S. Government corporations 197.1$ 14.4$ 1.2$ 210.3$ Agencies not backed by the full faith and credit of the U.S. Government 882.3 61.2 6.7 936.8 Obligations of states and political subdivisions 314.5 2.4 3.9 313.0 Debt securities issued by foreign governments 42.7 2.7 0.1 45.3 Corporate securities Public 10,728.5 302.0 122.0 10,908.5 Private 7,199.3 200.7 77.5 7,322.5 Mortgage-backed securities--U.S. Government backed 6,824.7 21.3 117.0 6,729.0 Asset-backed securities 3,641.7 44.2 45.3 3,640.6

Total fixed maturities 29,830.8 648.9 373.7 30,106.0 Equity securities 64.8 11.2 0.4 75.6

Total 29,895.6$ 660.1$ 374.1$ 30,181.6$

Aging of Gross Unrealized Losses on Securities Available-For-Sale

Than One Year TotalGross Gross Gross

Estimated Unrealized Estimated Unrealized Estimated Unrealized($ in millions) Fair Value Losses Fair Value Losses Fair Value LossesSeptember 30, 2006Fixed maturity securities:

U.S. Treasury securities & obligations of U.S. Government corporations 74.5$ 0.8$ 28.5$ 1.1$ 103.0$ 1.9$ Agencies not backed by the full faith and credit of the U.S. Government 51.6 0.6 142.5 2.4 194.1 3.0 Obligations of states and political subdivisions 86.4 0.8 165.8 6.0 252.2 6.8 Debt securities issued by foreign governments 12.9 0.1 8.5 0.4 21.4 0.5 Corporate securities Public 2,903.0 33.6 3,270.2 97.7 6,173.2 131.3 Private 1,518.4 18.3 1,909.4 67.4 3,427.8 85.7 Mortgage-backed securities--U.S.. Government backed 1,134.3 10.3 3,818.1 102.8 4,952.4 113.1 Asset-backed securities 957.4 15.4 1,128.4 29.2 2,085.8 44.6

Total fixed maturities 6,738.5 79.9 10,471.4 307.0 17,209.9 386.9 Equity securities 20.7 0.5 - - 20.7 0.5

Total 6,759.2$ 80.4$ 10,471.4$ 307.0$ 17,230.6$ 387.4$

Percentage of gross unrealized losses 21% 79%

December 31, 2005Fixed maturity securities:

U.S. Treasury securities & obligations of U.S. Government corporations 37.4$ 0.8$ 11.6$ 0.4$ 49.0$ 1.2$ Agencies not backed by the full faith and credit of the U.S. Government 329.2 5.4 42.2 1.3 371.4 6.7 Obligations of states and political subdivisions 157.8 3.1 29.7 0.8 187.5 3.9 Debt securities issued by foreign governments 8.6 0.1 - - 8.6 0.1 Corporate securities Public 3,731.0 73.4 1,247.0 48.6 4,978.0 122.0 Private 1,957.3 46.5 767.7 31.0 2,725.0 77.5 Mortgage-backed securities--U.S.. Government backed 4,526.2 96.0 702.9 21.0 5,229.1 117.0 Asset-backed securities 1,516.4 28.2 490.2 17.1 2,006.6 45.3

Total fixed maturities 12,263.9 253.5 3,291.3 120.2 15,555.2 373.7 Equity securities 20.8 0.4 20.8 0.4

Total 12,284.7$ 253.9$ 3,291.3$ 120.2$ 15,576.0$ 374.1$

Percentage of gross unrealized losses 68% 32%

or Equal to One YearUnrealized Losses MoreUnrealized Losses Less Than

19


Amortized Fair Amortized Fair($ in millions) Cost Value Cost Value

NAIC Designation Rating Agency Equivalent Designation19,945.0$ 20,053.4$ 19,522.1$ 19,549.3$ 8,105.1 8,247.9 7,172.0 7,257.3 1,090.0 1,096.7 1,053.7 1,059.5

546.1 549.2 653.8 659.2 53.3 60.5 20.3 29.2 91.3 98.3 22.1 24.5

29,830.8$ 30,106.0$ 28,444.0$ 28,579.0$

($ in millions) Apartment September 30, 2006 Office Warehouse Retail & Other TotalNew England 189.1$ 15.4$ 100.7$ 84.3$ 389.5$ Middle Atlantic 197.5 337.6 361.4 202.2 1,098.7 East North Central 170.3 251.0 622.6 516.2 1,560.1 West North Central 43.5 90.8 66.5 99.8 300.6 South Atlantic 207.9 502.7 886.9 661.5 2,259.0 East South Central 35.0 79.7 122.2 136.2 373.1 West South Central 104.6 133.1 160.9 231.1 629.7 Mountain 116.7 137.6 195.9 355.7 805.9 Pacific 347.1 462.8 446.5 320.0 1,576.4

Subtotal - Principal 1,411.7$ 2,010.7$ 2,963.6$ 2,607.0$ 8,993.0$ Valuation allowance (33.5) Unamortized premium 21.6 Change in fair value of hedged mortgage loans and commitments 0.1

Total mortgage loans on real estate, net 8,981.2$

Apartment December 31, 2005 Office Warehouse Retail & Other TotalNew England 230.0$ 15.7$ 112.0$ 53.7$ 411.4$ Middle Atlantic 211.0 370.2 395.6 119.8 1,096.6 East North Central 316.5 271.2 583.4 493.4 1,664.5 West North Central 75.0 87.4 68.2 81.3 311.9 South Atlantic 211.0 404.5 842.4 690.1 2,148.0 East South Central 39.3 79.7 123.4 121.0 363.4 West South Central 199.4 155.0 149.8 232.0 736.2 Mountain 189.7 120.0 222.3 258.8 790.8 Pacific 404.5 486.0 409.6 324.0 1,624.1

Subtotal - Principal 1,876.4$ 1,989.7$ 2,906.7$ 2,374.1$ 9,146.9$ Valuation allowance (34.0) Unamortized premium 35.9 Change in fair value of hedged mortgage loans and commitments (0.2)

Total mortgage loans on real estate, net 9,148.6$

Mortgage Loans by Region and Property Type

6 In or near defaultTotal fixed maturities

September 30, 2006

1 Aaa/Aa/A 2 Baa 3 Ba

Credit Quality of Fixed Maturity Securities Available-For-Sale

4 B 5 Caa and lower

December 31, 2005

20


Deferred Policy Acquisition Costs

Individual Retirement Individual Corporate($ in millions) Investments Plans Protection and Other TotalNine Months Ended September 30, 2006Balance, beginning of period 1,997.7$ 294.8$ 1,410.9$ (18.0)$ 3,685.4$

Capitalization 252.1 27.6 141.6 - 421.3 Amortization (261.9) (30.7) (70.4) - (363.0) Adjustments to unrealized gains and losses on securities available-for-sale and other - - - 39.8 39.8

Balance, end of period 1,987.9$ 291.7$ 1,482.1$ 21.8$ 3,783.5$

Year Ended December 31, 2005Balance, beginning of period 2,080.6$ 305.0$ 1,312.6$ (137.1)$ 3,561.1$

Capitalization 250.7 37.2 201.1 - 489.0 Amortization (329.3) (47.4) (102.7) - (479.4) Adjustments to unrealized gains and losses on - securities available-for-sale and other (4.3) - (0.1) 119.1 114.7

Balance, end of period 1,997.7$ 294.8$ 1,410.9$ (18.0)$ 3,685.4$


Capitalization 293.6 41.5 204.1 - 539.2 Amortization (276.1) (39.9) (114.4) - (430.4) Adjustments to unrealized gains and losses on securities available-for-sale and other 11.0 - - 111.4 122.4



Capitalization 376.8 43.8 199.5 - 620.1 Amortization (228.3) (45.7) (120.6) - (394.6) Adjustments to unrealized gains and losses on securities available-for-sale and other 18.0 - - 59.5 77.5



Capitalization 414.7 49.2 204.7 - 668.6 Amortization (528.2) (53.7) (92.7) - (674.6) Adjustments to unrealized gains and losses on securities available-for-sale and other 22.5 - 9.8 (213.1) (180.8)


Year Ended December 31, 2001Balance, beginning of period 1,723.8$ 295.8$ 874.8$ (21.7)$ 2,872.7$

Capitalization 453.4 61.6 227.7 - 742.7 Amortization (220.0) (47.6) (80.3) - (347.9) Adjustments to unrealized gains and losses on securities available-for-sale and other 19.4 - - (73.2) (53.8)


21


($ in millions)

Account DAC Annualized Account DAC AnnualizedYear Values Balance Lapse Rate Values Balance Lapse Rate

1 3,168.9$ 206.9$ 3,000.3$ 200.6$ 2 3,082.8 180.4 3,521.0 212.8 3 3,522.5 192.4 4,361.5 224.6 4 4,317.2 199.9 4,519.7 199.0 5 4,473.8 175.0 4,752.0 210.0 6 4,601.4 179.9 4,662.3 189.1 7 4,478.6 164.8 3,569.7 128.5 8 3,003.0 104.5 3,006.1 96.8 9 2,540.6 87.9 2,169.5 84.9 10 1,926.7 81.3 2,029.1 75.5

11-15 5,580.4 225.8 4,386.3 168.0 16-20 771.4 29.8 512.5 19.4 21-27 303.8 2.5 306.0 2.2

Total: 41,771.1$ 1,831.1$ 14.7% 40,796.0$ 1,811.4$ 13.5%


1 3,748.9$ 253.1$ 4,500.3$ 310.6$ 2 4,649.3 259.9 4,638.5 284.0 3 4,844.1 239.2 5,014.8 283.3 4 5,106.3 243.4 4,864.6 275.1 5 4,917.0 206.2 3,886.5 170.6 6 3,813.5 148.0 3,833.3 140.9 7 3,708.0 121.0 3,114.6 116.5 8 2,624.7 101.5 2,685.2 72.8 9 2,315.0 84.8 1,877.4 52.3 10 1,690.1 62.5 1,415.8 35.7

11-15 3,427.8 132.6 2,493.5 61.0 16-20 316.6 13.6 186.4 3.5 21-27 320.6 2.3 325.0 1.2

Total: 41,481.9$ 1,868.1$ 12.5% 38,835.9$ 1,807.5$ 12.5%


1 3,922.1$ 310.3$ 5,322.0$ 322.4$ 2 4,442.5 312.6 5,585.8 371.5 3 4,327.7 303.1 4,473.6 260.9 4 3,564.3 190.1 4,473.6 235.5 5 3,579.4 158.0 3,836.3 215.1 6 2,996.5 132.1 3,678.8 136.2 7 2,817.0 83.2 2,845.0 100.7 8 1,956.2 59.9 2,030.2 69.8 9 1,410.6 40.9 1,330.4 47.5 10 937.1 27.5 977.7 33.7

11-15 1,590.1 43.9 1,292.4 44.5 16-20 143.9 3.0 184.8 5.5 21-25 194.5 1.7 315.1 0.5

Total: 31,881.9$ 1,666.3$ 14.4% 36,345.7$ 1,843.8$ 12.6%

December 31, 2001

Individual Variable Annuity Deferred Acquisition Costs

September 30, 2006 December 31, 2005

December 31, 2003

December 31, 2002

December 31, 2004

22


Individual Retirement Individual Corporate($ in millions) Investments Plans Protection and Other TotalNine Months Ended September 30, 2006Balance, beginning of period 29.4$ 15.7$ 398.2$ 6.4$ 449.7$

Amortization (6.3) (6.5) (26.1) (0.1) (39.0) Adjustments to realized and unrealized gains and losses on securities available-for-sale (9.1) (4.1) 1.6 - (11.6)

Balance, end of period 14.0$ 5.1$ 373.7$ 6.3$ 399.1$

Year Ended December 31, 2005Balance, beginning of period 27.1$ 16.5$ 430.4$ 6.4$ 480.4$

Amortization (7.2) (3.5) (34.2) (0.1) (45.0) Adjustments to realized and unrealized gains and losses on securities available-for-sale 9.5 2.7 2.0 0.1 14.3



Amortization (7.5) (4.7) (40.1) - (52.3) Adjustments to realized and unrealized gains and losses on securities available-for-sale 1.6 1.6 6.9 (0.4) 9.7



Amortization (6.3) (2.0) (38.0) (0.1) (46.4) Adjustments to realized and unrealized gains and losses on securities available-for-sale and other (2.6) (1.5) 3.9 0.3 0.1


Value of Business Acquired

23


($ in millions)

Account AccountGMDB Benefit Type Values Gross Net Values Gross Net

Return of premium 9,004.2$ 58.3$ 22.7$ 9,272.7$ 83.3$ 32.5$ Reset 17,104.0 256.8 36.6 17,130.4 388.0 61.8 Ratchet 12,575.2 300.4 33.4 11,233.2 410.3 31.6 Roll-up 564.7 122.0 7.3 629.1 143.8 8.4 Combo 2,523.0 55.0 27.4 2,530.6 45.7 22.3

Subtotal 41,771.1$ 792.5 127.4 40,796.0$ 1,071.1 156.6

Earnings enhancement 452.8$ 33.1$ 33.1$ 418.5$ 27.6$ 27.6$ Total 825.6$ 160.5$ 1,098.7$ 184.2$

GAAP GMDB reserves 31.8$ 27.2$ Statutory GMDB reserves 34.4$ 38.4$


Return of premium 9,848.6$ 136.8$ 54.1$ 9,713.8$ 247.8$ 199.8$ Reset 18,084.1 751.7 158.1 17,834.0 1,313.4 579.6 Ratchet 10,322.1 644.5 46.3 8,433.7 1,008.3 147.8 Roll-up 707.2 167.5 9.7 725.7 195.8 22.3 Combo 2,519.9 39.8 19.2 2,128.7 42.0 39.6

Subtotal 41,481.9$ 1,740.3 287.4 38,835.9$ 2,807.3 989.1

Earnings enhancement 310.1$ 18.0$ 18.0$ 314.1$ 10.9$ 10.9$ Total 1,758.3$ 305.4$ 2,818.2$ 1,000.0$


Return of premium 8,743.2$ 832.0$ 736.7$ 11,410.6$ 471.9$ 407.2$ Reset 15,272.2 3,532.5 1,842.1 17,377.3 1,601.2 700.1 Ratchet 6,087.5 1,977.1 411.2 6,245.9 1,150.3 153.7 Roll-up 675.0 290.9 34.3 817.7 148.0 17.3 Combo 1,104.0 114.8 111.6 494.2 17.0 15.5

Subtotal 31,881.9$ 6,747.3 3,135.9 36,345.7$ 3,388.4 1,293.8

Earnings enhancement 213.1$ 1.7$ 1.7$ 88.6$ 2.1$ 2.1$ Total 6,749.0$ 3,137.6$ 3,390.5$ 1,295.9$

Wghtd. Avg.GMDB Benefit Type 0 to 50 51 to 60 61 to 70 71 to 80 Over 81 Total Attained Age

Return of premium 5.8$ 8.1$ 6.1$ 1.9$ 0.8$ 22.7$ 60 Reset 4.0 9.3 12.1 9.0 2.2 36.6 63 Ratchet 4.1 8.4 11.0 6.6 3.3 33.4 65 Roll-up 0.5 1.3 2.0 2.0 1.5 7.3 70 Combo 1.9 5.8 8.2 7.8 3.7 27.4 68

Subtotal 16.3 32.9 39.4 27.3 11.5 127.4 65

Earnings enhancement 3.7 9.9 13.6 5.9 - 33.1 62Total 20.0$ 42.8$ 53.0$ 33.2$ 11.5$ 160.5$ 64

Definition of GMDB Benefit TypesReturn of premium: provides the greater of account value or total deposits made to the contract less any partial withdrawals and assessments, which is referred to as "net premiums." In general, there is no lock in age for this benefit, however for some contracts, the GMDB reverts to the account value at a specified age, typically age 75.Reset: provides the greater of a return of premium death benefit or the most recent five-year anniversary (prior to lock in age) account value adjusted for withdrawals. For most contracts, this GMDB locks in at age 86 or 90 and for others the GMDB reverts to the account value at age 75, 85, 86 or 90.Ratchet: provides the greater of a return of premium death benefit or the highest "anniversary" account value (prior to age 86) adjusted for withdrawals. Currently, there are three versions of ratchet, with the difference being based on the definition of anniversary: monthaversary - evaluated monthly, annual - evaluated annually, and five-year - evaluated every fifth year. The majority of the business is an annual ratchet.Rollup: provides the greater of a return of premium death benefit or premiums adjusted for withdrawals accumulated at generally 5% simple interest up to the earlier of age 86 or 200% of adjusted premiums. There are two variations of this benefit. For certain contracts, this GMDB locks in at age 86 and for others the GMDB reverts to the account value at age 75.Combo: provides the greater of annual ratchet death benefit or the rollup death benefit. This benefit locks in at either age 81 or 86.Earnings enhancement: provides an enhancement to the death benefit that is a specified percentage of the adjusted earnings accumulated on the contract at the date of death. There are two versions of this benefit, one where the benefit expires at age 86 and a credit of 4% of account value is deposited into the contract and the second where the benefit doesn't have an end age, but has a cap on the payout and is paid upon the first death in a spousal situation. Both benefits have age limitations. This benefit is paid in addition to any other death benefits paid under the contract.

Individual Variable Annuity Guaranteed Minimum Death Benefits

December 31, 2001Net Amount at RiskNet Amount at Risk

December 31, 2003Net Amount at Risk

December 31, 2005

Net Amount at Risk, Net of Reinsurance by Benefit Type and Age at September 30, 2006

September 30, 2006Net Amount at Risk Net Amount at Risk


December 31, 2002

24


($ in millions)

Account AccountGMAB Benefit Type Values Gross Net Values Gross Net

5 Year 1,816.4$ 0.3$ 0.3$ 1,041.8$ 0.5$ 0.5$ 7 Year 1,641.3 0.5 0.5 1,103.5 0.2 0.2 10 Year 722.7 0.2 0.2 595.5 0.1 0.1

Total 4,180.4$ 1.0$ 1.0$ 2,740.8$ 0.8$ 0.8$

CPPLI included in totals 2,390.7$ 0.9$ 0.9$ 939.1$ 0.6$ 0.6$

AccountGMAB Benefit Type Values Gross Net

5 Year 512.2$ 0.1$ 0.1$ 7 Year 647.5 - - 10 Year 332.4 - -

Total 1,492.1$ 0.1$ 0.1$

($ in millions)

Account AccountGMIB Benefit Type Values Gross Net Values Gross Net

Ratchet 440.1$ 0.2$ -$ 444.7$ 0.3$ -$ Roll-up 1,155.9 5.0 - 1,189.3 5.0 - Combo 0.5 - - 0.5 - -

Total 1,596.5$ 5.2$ -$ 1,634.5$ 5.3$ -$


Ratchet 439.7$ 0.7$ -$ 418.0$ 1.0$ -$ Roll-up 1,188.7 7.2 - 1,132.2 8.6 - Combo 1.0 - - 1.1 - -

Total 1,629.4$ 7.9$ -$ 1,551.3$ 9.6$ -$


Ratchet 307.8$ 4.6$ -$ 151.1$ 0.8$ -$ Roll-up 664.4 20.4 - 329.2 1.5 - Combo 0.1 - - - - -

Total 972.3$ 25.0$ -$ 480.3$ 2.3$ -$

($ in millions)

AccountGMWB Benefit Type Values Gross Net

L.Inc 540.9$ -$ -$ Total 540.9$ -$ -$

Definition of Benefit Types5 Year, 7 Year, 10 Year: the waiting period required to receive the guaranteed accumulation benefit.Ratchet: provides an annuitization value equal to the greater of account value, net premiums paid or the highest one-year anniversary account value (prior to age 86) adjusted for withdrawals.Rollup: provides an annuitization value equal to the greater of account value and premiums adjusted for withdrawals accumulated at 5% compound interest up to the earlier of age 86 or 200% of adjusted premiums.Combo: provides an annuitization value equal to the greater of account value, ratchet GMIB benefit or rollup GMIB benefit.CPPLI: Capital Preservation Plus Lifetime Income is a living benefit rider that combines a GMAB feature in its first five to 10 years with a lifetime withdrawal benefit which begins upon the maturity of the GMAB and extends for the duration of the insured's life.L.Inc: Lifetime Income is a living benefit rider that provides a lifetime withdrawal benefit to the insured. The withdrawal percent is based on the insured's age at the time of the first withdrawal.

Individual Variable Annuity Guaranteed Minimum Withdrawal Benefits

September 30, 2006Net Amount at Risk






Individual Variable Annuity Guaranteed Minimum Income Benefits

September 30, 2006 December 31, 2005Net Amount at Risk Net Amount at Risk

Individual Variable Annuity Guaranteed Minimum Accumulation Benefits

September 30, 2006 December 31, 2005Net Amount at Risk Net Amount at Risk

25


Individual Variable Annuity Guaranteed Minimum Death Benefit Reserve Activity

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Balance, beginning of period 25.3$ 24.7$ 27.2$ 26.9$ 30.2$

Expense provision 8.4 8.2 8.3 8.3 8.4 Net claims paid (9.0) (5.7) (8.6) (5.0) (6.8)


Individual Variable Annuity Guaranteed Minimum Accumulation Benefit Embedded Derivative Activity

($ in millions) Q3'05 Q4'05 Q1'06 Q2'06 Q3'06Balance, beginning of period 45.8$ 53.4$ 67.9$ 77.6$ 102.4$

Value of new business sold 14.3 20.7 26.8 26.0 18.2 Change in fair value (6.7) (6.2) (17.1) (1.2) (10.9)


CPPLI included in end of period balance 6.8$ 12.0$ 16.3$ 20.7$ 15.2$

Individual Fixed Annuity and Fixed Option of Variable Annuity Summary of Crediting Rate Detail as of September 30, 2006

Account Wtd. Avg. Account Wtd. Avg.($ in millions) Value Crediting Rate Value Crediting RateMinimum interest rate of 3.50% or greater 24.7$ - 1,043.7$ 4.26%Minimum interest rate of 3.0% to 3.49% 2,378.0 4.65% 5,007.4 3.13%Minimum interest rate lower than 3.00% 857.5 3.31% 618.1 3.55%MVA with no minimum interest rate guarantee - - - -

Total 3,260.2$ 4.26% 6,669.2$ 3.35%

Account Wtd. Avg. Account Wtd. Avg.Value Crediting Rate Value Crediting Rate

Minimum interest rate of 3.50% or greater -$ - 1,068.4 4.17%Minimum interest rate of 3.0% to 3.49% - - 7,385.4 3.62%Minimum interest rate lower than 3.00% 28.7 3.86% 1,504.3 3.42%MVA with no minimum interest rate guarantee 1,644.0 2.89% 1,644.0 2.89%

Total 1,672.7$ 2.91% 11,602.1$ 3.54%

MVA & Other

ResetRatchet

Total

26


Historical Financial Highlights

($ in millions except for per share data) 2001 2002 2003 2004 2005Operating Revenues

Individual investments 1,090.5$ 1,210.4$ 1,392.8$ 1,477.4$ 1,514.5$ Retirement plans 983.0 919.3 953.3 1,007.9 1,073.7 Individual protection 834.8 1,001.9 1,348.7 1,350.1 1,348.5 Corporate and other 164.4 220.4 278.1 310.0 385.0

Total operating revenues 3,072.7$ 3,352.0$ 3,972.9$ 4,145.4$ 4,321.7$

Net realized gains (losses) on investments, hedging instruments and hedged items (1) (16.1) (88.1) (86.3) (40.9) 18.2

Total revenues 3,056.6$ 3,263.9$ 3,886.6$ 4,104.5$ 4,339.9$

Pre-tax Operating Earnings (Loss)Individual investments 231.3$ (120.5)$ 182.9$ 234.4$ 237.0$ Retirement plans 179.1 139.6 148.8 178.6 187.5 Individual protection 189.8 188.1 215.5 242.7 258.2 Corporate and other (11.5) 18.2 54.8 58.6 55.7

Pre-tax operating earnings 588.7$ 225.4$ 602.0$ 714.3$ 738.4$ Federal income tax expense 151.1 24.6 148.7 181.2 126.6


Net realized gains (losses) on investments, hedging instruments and hedged items, net of taxes (1) (10.4) (57.4) (56.2) (26.6) 11.9

Adjustment to amortization related to net realized gains (losses), net of taxes - - - - (0.5)

Discontinued operations, net of taxes (7.3) 0.8 1.3 (1.1) (24.5)

Cumulative effect of adoption of accounting principles, net of taxes (7.1) - (0.6) (3.4) -

Net income 412.8$ 144.2$ 397.8$ 502.0$ 598.7$

Per Diluted ShareNet operating earnings 3.39$ 1.51$ 2.98$ 3.49$ 3.98$

Net realized gains (losses) on investments, hedging instruments and hedged items, net of taxes (1) (0.08) (0.43) (0.38) (0.18) 0.08

Adjustment to amortization related to net realized gains (losses), net of taxes - - - - -


Cumulative effect of adoption of accounting principles, net of taxes (0.05) - - (0.02) -

Net income 3.20$ 1.09$ 2.61$ 3.28$ 3.90$

Sales by ChannelNon-affiliated Independent broker/dealers 4,547.7$ 4,391.2$ 4,615.1$ 5,223.2$ 5,266.0$ Wirehouse and regional firms 2,454.7 2,204.8 1,995.0 1,992.1 1,912.5 Financial institutions 3,577.1 4,180.6 3,758.2 2,618.5 1,808.0 Pension plan administrators 1,018.3 747.4 574.8 476.1 469.0 Life specialists 508.6 510.6 387.5 382.8 382.4 Affiliated Nationwide Retirement Solutions 2,693.2 2,633.1 3,209.9 3,665.9 3,914.7 Nationwide agents 714.8 736.7 686.3 714.3 757.8 Nationwide Financial Network - 274.5 793.6 760.9 658.0 The 401(k) Company 403.7 472.5 680.9 893.1 1,342.3 TBG Financial 233.8 146.9 160.9 184.2 275.4

Total 16,151.9$ 16,298.3$ 16,862.2$ 16,911.1$ 16,786.1$


Note: All prior periods have been reclassified to reflect Cap Pro Holding, Inc., NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.

27


($ in millions except for per share data) 2001 2002 2003 2004 2005Balance Sheet Data

Total assets 91,960.9$ 95,560.3$ 111,088.2$ 116,950.6$ 116,159.9$

Total customer funds managed and administered 100,703.2$ 102,853.8$ 132,061.6$ 149,227.7$ 155,612.9$

Shareholder's equity Including AOCI 3,443.3$ 4,443.3$ 4,875.4$ 5,215.1$ 5,350.4$ AOCI 202.5 400.3 504.9 432.2 100.7 Excluding AOCI 3,240.8$ 4,043.0$ 4,370.5$ 4,782.9$ 5,249.7$

Net operating return on average equity excluding AOCI 14.2% 5.9% 10.8% 11.7% 12.2%

Adjusted net operating return on average equity excluding AOCI (1) 14.2% 5.9% 10.8% 11.7% 11.3%

Statutory capital and surplus 1,759.8$ 2,015.7$ 2,730.0$ 2,967.5$ 3,262.1$

Stock DataClosing Price 41.46$ 28.65$ 33.06$ 38.23$ 44.00$

Weighted average shares outstanding Basic 128.9 132.4 151.8 152.1 152.9 Diluted 129.2 132.6 152.3 152.9 153.6

Book value per share Including AOCI 26.71$ 29.25$ 32.10$ 34.20$ 35.08$ Excluding AOCI 25.14$ 26.62$ 28.77$ 31.36$ 34.42$

(1) 2005 return adjusted for $42.6 million impact of one-time tax adjustments associated with separate account dividend received deductions and $14.1 million charge related to calling of trust preferred securities.


Historical Financial Highlights

28


($ in millions) 2001 2002 2003 2004 2005Operating Revenues Asset fees 613.9$ 547.6$ 547.2$ 620.7$ 639.9$ Cost of insurance charges 201.9 266.5 371.3 379.7 388.5 Administrative fees 128.5 125.5 107.7 117.9 114.9 Surrender fees 72.8 85.3 94.2 104.3 98.2

Total policy charges 1,017.1 1,024.9 1,120.4 1,222.6 1,241.5

Traditional life premiums 251.1 302.3 426.2 402.7 399.9 Net investment income 1,727.2 1,892.5 2,198.0 2,231.7 2,343.9 Realized gain on securitizations 1.9 - - - - Operating realized gains and (losses) (1.2) 8.9 15.7 8.7 2.6 Other income 76.6 123.4 212.6 279.7 333.8


Benefits Interest credited 1,235.7 1,260.7 1,367.6 1,328.3 1,380.9 Life insurance and annuity benefits 296.6 392.0 581.7 548.6 574.9 Policyholder dividends 41.7 63.5 105.7 101.4 107.3

Total benefits 1,574.0 1,716.2 2,055.0 1,978.3 2,063.1

Expenses Commissions 688.4 629.0 594.9 565.4 546.7 General operating expenses 561.5 683.5 804.3 841.5 808.4 Debt extinguishment costs - - - - 21.7 Deferral of policy acquisition costs (742.7) (668.6) (620.1) (539.2) (489.0)

Subtotal 507.2 643.9 779.1 867.7 887.8

Amortization of policy acquisition costs 347.9 674.6 394.6 430.4 479.4 Amortization of value of business acquired - 15.2 46.4 52.3 45.0 Interest expense on debt 54.9 76.7 95.8 102.4 108.0

Total expenses 910.0 1,410.4 1,315.9 1,452.8 1,520.2


Federal income tax expense 151.1 24.6 148.7 181.2 126.6




Realized gains on sales, net of hedging 27.7 14.4 69.0 64.8 63.0 Realized losses on sales, net of hedging (14.7) (10.3) (20.8) (19.5) (18.4) Other-than-temporary impairments, including mortgage loan valuation allowance adjustment (52.5) (78.6) (110.7) (67.1) (26.9) Credit default swaps (0.3) (4.2) 8.6 0.3 (4.8) Derivatives, excluding hedging gains and losses on sales and credit default swaps 0.5 6.2 0.8 (3.4) 0.8 Amounts credited to policyholder dividend obligation - - (3.5) (4.7) (3.3) Adjustment to VOBA amortization 28.9 15.1 0.4 3.0 1.5

Subtotal (10.4) (57.4) (56.2) (26.6) 11.9

Adjustment to amortization related to net realized gains (losses), net of taxes - - - - (0.5)


Cumulative effect of adoption of accounting principles, net of taxes (7.1) - (0.6) (3.4) -

Net income 412.8$ 144.2$ 397.8$ 502.0$ 598.7$



Historical Consolidated Earnings Trends

29


Historical Consolidated Balance Sheet

($ in millions, except per share data) 2001 2002 2003 2004 2005Assets

InvestmentsSecurities available-for-sale: Fixed maturity securities 18,548.3$ 27,754.2$ 30,787.1$ 31,516.8$ 30,106.0$ Equity securities 150.5 134.7 128.7 87.0 75.6 Trading assets - - 4.9 15.9 34.4 Mortgage loans 7,113.1 8,486.5 8,964.7 9,267.5 9,148.6 Real estate 172.0 145.6 123.4 108.3 108.7 Policy loans 592.7 986.4 963.2 987.2 930.6 Other long-term investments 125.0 205.0 194.6 604.2 691.9 Short-term investments 1,112.8 1,420.1 1,970.3 2,009.9 2,073.2

Total investments 27,814.4 39,132.5 43,136.9 44,596.8 43,169.0

Cash 65.0 21.7 11.5 52.4 16.4 Accrued investment income 309.7 402.4 439.6 428.7 396.3 Deferred policy acquisition costs 3,213.7 3,026.9 3,329.9 3,561.1 3,685.4 Value of business acquired - 569.3 523.0 480.4 449.7 Other intangible assets - 58.7 52.3 48.7 45.6 Goodwill 130.0 399.4 406.7 382.3 364.5 Other assets 781.4 1,601.1 2,250.7 2,497.0 2,069.2 Assets held in separate accounts 59,646.7 50,348.3 60,937.6 64,903.2 65,963.8

Total assets 91,960.9$ 95,560.3$ 111,088.2$ 116,950.6$ 116,159.9$

Liabilities and shareholders' equityFuture policy benefits and claims 25,491.6$ 36,274.3$ 40,049.3$ 41,077.2$ 39,748.1$ Short-term debt 100.0 2.7 205.3 230.8 252.3 Long term debt 897.0 1,197.6 1,405.6 1,406.0 1,398.0 Other liabilities 2,382.3 3,294.1 3,615.0 4,118.3 3,447.3 Liabilities related to separate accounts 59,646.7 50,348.3 60,937.6 64,903.2 65,963.8

88,517.6 91,117.0 106,212.8 111,735.5 110,809.5

Shareholders' equity 3,443.3 4,443.3 4,875.4 5,215.1 5,350.4 Total liabilities and shareholders' equity 91,960.9$ 95,560.3$ 111,088.2$ 116,950.6$ 116,159.9$

Capital Structure

2001 2002 2003 2004 2005

Total capital, including AOCI 4,340.3$ 5,640.9$ 6,281.0$ 6,621.1$ 6,748.4$ Less AOCI 202.5 400.3 504.9 432.2 100.7 Total capital, excluding AOCI 4,137.8$ 5,240.6$ 5,776.1$ 6,188.9$ 6,647.7$

Leverage including AOCI Long-term debt--to--total capital 20.7% 21.2% 22.4% 21.2% 20.7%

Leverage excluding AOCI Long-term debt--to--total capital 21.7% 22.9% 24.3% 22.7% 21.0%

Ratio of pre-tax operating earnings before interestexpense to interest expense 11.7X 3.9X 7.3X 8.0X 7.8X

30


Individual Investments

($ in millions) 2001 2002 2003 2004 2005Operating Revenues



Net Investment IncomeGeneral account assets 577.9 717.4 886.5 895.3 895.9 Charge for invested capital (43.2) (36.4) (26.1) (22.5) (26.0)


Premiums on income products 60.9 69.4 93.4 90.8 102.9 Other income - - - 0.4 1.5


Benefits Interest credited 433.1 513.2 637.5 606.1 589.1 Immediate annuity benefits 53.4 55.1 82.0 76.1 89.2 Policy benefits 31.5 61.6 78.5 63.1 66.2

Total benefits 518.0 629.9 798.0 745.3 744.5


Subtotal 121.2 169.5 177.3 214.1 196.5

Amortization of policy acquisition costs 220.0 528.2 228.3 276.1 329.3 Amortization of value of business acquired - 3.3 6.3 7.5 7.2

Total expenses 341.2 701.0 411.9 497.7 533.0

Pre-tax operating earnings (loss) 231.3$ (120.5)$ 182.9$ 234.4$ 237.0$

Key Ratios/StatisticsAverage Account Values:

General account 7,709.7$ 10,793.7$ 15,340.9$ 16,211.1$ 15,966.7$ Separate account 33,560.7 30,091.0 29,170.6 34,198.8 35,600.5 Advisory services program - - 7.8 99.1 309.3

Total average individual investment account values 41,270.3$ 40,884.7$ 44,519.3$ 50,509.0$ 51,876.5$




Total asset fees to average separate account values 1.25% 1.25% 1.27% 1.27% 1.30%


Pre-tax operating earnings (loss) to average account values 0.56% (0.29%) 0.41% 0.46% 0.46%

Pre-tax operating earnings (loss) to operating revenues 21.2% (10.0%) 13.1% 15.9% 15.6%

Average allocated capital 1,335.5$ 1,658.8$ 1,805.6$ 1,747.0$ 1,671.0$

Return on average allocated capital 13.4% (2.9%) 8.2% 10.4% 13.0%

Adjusted return on average allocated capital (1) 13.4% (2.9%) 8.2% 10.4% 11.5%

(1)2005 return adjusted for $24.3 million impact of one-time tax adjustments associated with separate account dividend received deductions.


Individual InvestmentsAccount Value Activity

($ in millions) 2001 2002 2003 2004 2005Individual Variable Annuities


Deposits 6,232.8 5,038.1 5,023.8 4,409.2 3,661.2 Withdrawals and surrenders (4,579.4) (4,852.1) (4,347.8) (4,964.4) (5,574.2)

Net flows 1,653.4 186.0 676.0 (555.2) (1,913.0)

Investment performance/interest credited (4,516.5) (4,852.6) 6,757.7 3,681.9 2,922.1 Policy charges (494.8) (459.7) (437.2) (515.0) (543.4) Benefits and other (49.5) (0.6) (42.5) 34.3 9.0 Acquisitions/(terminations), net - 663.1 - - (1,160.6)


Individual Fixed AnnuitiesBalance, beginning of period 2,422.0$ 4,250.2$ 7,338.1$ 8,630.7$ 8,902.5$

Deposits 1,927.0 2,392.3 1,553.4 672.9 160.9 Withdrawals and surrenders (331.1) (474.4) (605.1) (753.6) (1,044.0)

Net flows 1,595.9 1,917.9 948.3 (80.7) (883.1)

Policyholder interest credited 178.7 298.6 364.8 362.7 327.7 Policy charges (2.1) (3.6) (8.1) (9.9) (11.4) Benefits and other 55.7 (2.8) (12.4) (0.3) (4.3) Acquisitions/(terminations), net - 877.8 - - (289.6)


Income Products 1,590.8$ 1,676.5$ 1,840.7$ 1,901.6$ 1,978.3$ Advisory services program -$ -$ 26.6$ 195.9$ 411.5$


Historical Earnings Trends

31


Individual Investments


BEST of AMERICA products 30,779.3$ 25,880.2$ 31,058.5$ 33,573.0$ 32,937.0$ Private label annuities 5,558.8 5,339.5 7,123.4 7,350.9 7,398.9 Nationwide Financial Network and other 7.6 662.2 654.0 558.0 460.1


Individual Fixed Annuities 4,250.2$ 7,338.1$ 8,630.7$ 8,902.5$ 8,041.8$ Income Products 1,590.8$ 1,676.5$ 1,840.7$ 1,901.6$ 1,978.3$ Advisory Services Program -$ -$ 26.6$ 195.9$ 411.5$


Individual InvestmentsSales by Product


BEST of AMERICA products 4,190.3$ 3,824.7$ 4,066.8$ 3,674.3$ 3,135.5$ Private label annuities 1,398.3 795.3 659.3 449.0 346.6 Nationwide Financial Network and other 2.8 2.5 9.3 7.0 4.7


Individual Fixed Annuities 1,906.4$ 2,564.6$ 1,824.5$ 858.8$ 194.4$ Income Products 127.8$ 143.2$ 153.2$ 168.4$ 196.7$ Advisory Services Program -$ -$ 25.7$ 181.0$ 231.3$

Total individual investment sales 7,625.6$ 7,330.3$ 6,738.8$ 5,338.5$ 4,109.2$

Individual InvestmentsSales by Channel


Non-affiliated Independent broker/dealers 2,235.2$ 1,750.1$ 1,683.7$ 1,534.6$ 1,304.3$ Wirehouse and regional firms 1,581.1 1,264.1 1,086.4 991.6 821.9 Financial institutions 1,548.6 1,313.9 1,657.0 1,270.8 1,031.5 Life specialists - - 3.4 2.3 0.3 Affiliated Nationwide Retirement Solutions - - - - - Nationwide agents 226.5 214.8 185.3 224.6 230.3 Nationwide Financial Network - 79.6 119.6 106.4 98.5


Individual Fixed AnnuitiesNon-affiliated Independent broker/dealers 17.8$ 47.3$ 48.7$ 17.1$ 7.0$ Wirehouse and regional firms 64.0 133.0 58.0 20.6 8.2 Financial institutions 1,758.3 2,224.0 1,628.7 774.3 129.4 Pension plan administrators - 3.4 - - - Affiliated Nationwide Retirement Solutions - 13.2 - - - Nationwide agents 66.3 126.0 60.7 38.6 44.3 Nationwide Financial Network - 17.7 28.4 8.2 5.5

Total individual fixed annuities 1,906.4$ 2,564.6$ 1,824.5$ 858.8$ 194.4$

Income ProductsNon-affiliated Independent broker/dealers 42.3$ 61.9$ 75.6$ 70.8$ 76.9$ Wirehouse and regional firms 7.5 14.2 44.9 52.2 63.4 Financial institutions 14.7 65.4 15.5 23.4 29.2 Pension plan administrators 4.9 - - - - Affiliated Nationwide Retirement Solutions 44.3 - - - - Nationwide agents 14.1 1.7 7.5 8.7 12.7 Nationwide Financial Network - - 9.7 13.3 14.5

Total income products 127.8$ 143.2$ 153.2$ 168.4$ 196.7$

Advisory Services ProgramNon-affiliated Independent broker/dealers -$ -$ 21.2$ 160.0$ 205.3$ Wirehouse and regional firms - - - - - Financial institutions - - 3.0 8.9 8.1 Pension plan administrators - - - - - Affiliated Nationwide Financial Network - - 1.5 12.1 17.9

Total advisory services program -$ -$ 25.7$ 181.0$ 231.3$

Total individual investment sales 7,625.6$ 7,330.3$ 6,738.8$ 5,338.5$ 4,109.2$

Account Values by Product

32


Retirement Plans




Net investment income 708.5 655.3 662.9 647.6 661.4 Other income 68.5 89.9 129.0 188.5 257.6

Total operating revenues 983.0 919.3 953.3 1,007.9 1,073.7

Benefits Interest credited 518.3 467.8 458.9 446.1 455.0


Subtotal 238.0 258.5 297.9 338.6 380.3

Amortization of policy acquisition costs 47.6 53.7 45.7 39.9 47.4 Amortization of value of business acquired - (0.3) 2.0 4.7 3.5

Total expenses 285.6 311.9 345.6 383.2 431.2


Key Ratios/StatisticsAverage Account Values:

General account 9,088.3$ 8,888.5$ 9,786.0$ 10,175.6$ 10,881.2$ Separate account 23,149.9 19,505.3 18,743.7 20,287.9 19,792.0 Non insurance assets 952.5 2,142.2 4,312.4 8,315.6 12,500.3 Administration only 13,303.5 14,833.4 22,590.3 30,078.1 36,217.3

Total average retirement plan account values 46,494.2$ 45,369.4$ 55,432.4$ 68,857.2$ 79,390.8$




Total asset fees to average separate account values 0.76% 0.78% 0.78% 0.74% 0.70%



Pre-tax operating earnings to operating revenues 18.2% 15.2% 15.6% 17.7% 17.5%

Average allocated capital 627.6$ 611.7$ 689.2$ 724.4$ 773.9$



(1) 2005 return adjusted for $14.6 million impact of one-time tax adjustments associated with separate account dividend received deductions.

Retirement PlansAccount Value Activity

($ in millions) 2001 2002 2003 2004 2005Private Sector Pension Plans



Net flows 943.4 931.9 1,103.9 1,303.6 1,574.9

Investment performance/interest credited (1,525.4) (2,244.4) 4,837.0 3,688.5 3,070.0 Policy charges and other (151.6) (150.9) (196.6) (198.0) (216.5) Net, case acquisitions/(terminations) 785.2 706.4 1,947.4 3,263.0 742.1 Acquired business - 1,531.2 - - -


Public Sector Pension PlansBalance, beginning of period 24,364.9$ 26,076.2$ 23,537.6$ 34,545.4$ 38,925.2$


Net flows 815.1 499.8 1,300.6 1,394.6 1,242.7

Investment performance/interest credited (1,795.2) (2,205.4) 4,781.0 2,869.6 2,577.1 Policy charges and other (77.0) (62.3) (57.6) (65.8) (69.4) Net, case acquisitions/(terminations) 2,768.4 (770.7) 4,983.8 181.4 (2,583.6)




33



BEST of AMERICA annuity products 11,583.3$ 9,229.3$ 9,818.1$ 8,845.8$ 7,791.9$ BEST of AMERICA trust products 1,364.2 2,878.3 6,212.3 10,558.4 14,479.5


The 401(k) Company 3,443.3 3,817.2 6,889.7 11,232.9 13,147.7 Nationwide Financial Network products - 1,494.5 1,584.1 1,483.7 1,378.4 Nationwide employee and agent benefit plans 4,225.7 3,954.2 4,530.2 4,985.3 5,504.2 Other 596.5 613.7 644.5 629.9 604.8





Retirement PlansSales by Product


BEST of AMERICA annuity products 3,067.6$ 2,611.2$ 2,034.9$ 1,679.7$ 1,407.8$ BEST of AMERICA trust products 834.9 1,617.0 2,110.2 3,232.0 3,974.9


The 401(k) Company 403.7 472.5 681.0 893.1 1,342.3 Nationwide Financial Network products - 95.4 366.4 335.8 205.9 Other 56.9 46.8 31.0 28.1 39.1





Retirement PlansSales by Channel


Non-affiliated Independent broker/dealers 1,899.9$ 2,243.0$ 2,534.7$ 3,154.4$ 3,412.0$ Wirehouse and regional firms 753.2 726.5 742.2 863.7 953.7 Financial institutions 210.6 519.0 411.4 493.3 551.2 Pension plan administrators 1,013.4 744.0 574.8 476.1 469.0 Affiliated Nationwide Retirement Solutions 26.3 38.1 32.5 28.8 33.0 Nationwide agents 56.0 45.6 58.1 71.2 95.5 Nationwide Financial Network - 54.2 188.9 188.1 113.3 The 401(k) Company 403.7 472.5 680.9 893.1 1,342.3


Public Sector Pension Plans Nationwide Retirement Solutions 2,622.6$ 2,581.8$ 3,177.4$ 3,637.1$ 3,881.7$


Account Values by ProductRetirement Plans

34


Individual Protection






Traditional life premiums 190.2 232.9 332.8 311.9 297.0 Other income 5.1 16.5 33.3 32.9 29.8

Total operating revenues 834.8 1,001.9 1,348.7 1,350.1 1,348.5


Total benefits 431.1 527.0 720.2 700.2 717.5


Subtotal 133.6 182.0 254.4 252.8 235.6

Amortization of policy acquisition costs 80.3 92.7 120.6 114.4 102.7 Amortization of value of business acquired - 12.2 38.0 40.1 34.2 Interest expense on debt - (0.1) - (0.1) 0.3

Total expenses 213.9 286.8 413.0 407.2 372.8


Key Ratios/StatisticsGeneral operating expenses to operating revenues 20.8% 23.2% 23.6% 23.3% 22.7%Pre-tax operating earnings to operating revenues 22.7% 18.8% 16.0% 18.0% 19.1%Average allocated capital 1,088.7$ 1,224.2$ 1,722.4$ 1,731.1$ 1,788.9$ Return on average allocated capital 11.7% 10.4% 8.4% 9.5% 10.2%Adjusted return on average allocated capital (1) 11.7% 10.4% 8.4% 9.5% 10.0%

(1) 2005 return adjusted for $3.7 million impact of one-time tax adjustments associated with separate account dividend received deductions.


Individual ProtectionPolicy Reserves

($ in millions) 2001 2002 2003 2004 2005Individual investment life 2,203.7$ 3,514.8$ 4,443.8$ 4,962.1$ 5,329.5$ Corporate investment life - excluding experience rated BOLI 3,236.8 3,652.8 4,401.5 5,063.0 5,613.8 Corporate investment life - experience rated BOLI - - - 381.1 1,130.8


Traditional life 1,873.4 4,154.9 4,155.0 4,278.9 4,225.2 Universal life 785.3 836.4 896.8 997.9 1,089.3


Total individual protection policy reserves 8,099.2$ 12,158.9$ 13,897.1$ 15,683.0$ 17,388.6$

Individual ProtectionInsurance In Force

($ in millions) 2001 2002 2003 2004 2005Individual investment life 30,641.0$ 55,581.0$ 56,478.4$ 56,836.7$ 57,021.7$ Corporate investment life - excluding experience rated BOLI 7,727.6 8,387.1 9,263.3 9,774.3 10,305.0 Corporate investment life - experience rated BOLI - - - 1,129.8 13,330.5




Total individual protection insurance in force 70,451.6$ 106,849.0$ 107,820.3$ 109,225.7$ 126,361.1$


35


Individual Protection

($ in millions) 2001 2002 2003 2004 2005BEST of AMERICA Variable Life Series

First year sales -$ 229.7$ 131.1$ 131.7$ 121.9$ Renewal sales * 552.4 288.5 304.3 307.9 304.1

Total BEST of AMERICA variable life series 552.4 518.2 435.4 439.6 426.0

Nationwide Financial Network Variable Life ProductsFirst year sales - 13.6 35.1 32.0 24.0 Renewal sales * - 55.0 229.1 223.8 205.0

Total Nationwide Financial Network variable life products - 68.6 264.2 255.8 229.0

Corporate Owned Life Insurance (COLI)First year sales - 247.6 173.2 157.0 227.8 Renewal sales * 742.3 409.9 371.8 407.5 429.7

Total COLI 742.3 657.5 545.0 564.5 657.5

Traditional/Universal lifeFirst year sales - 40.1 77.6 114.6 111.4 Renewal sales * 245.9 258.9 400.3 392.3 401.3

Total traditional/universal life 245.9 299.0 477.9 506.9 512.7

Total individual protection sales 1,540.6$ 1,543.3$ 1,722.5$ 1,766.8$ 1,825.2$

* First year and renewal sales split is not available prior to 2002

Individual ProtectionSales by Channel

($ in millions) 2001 2002 2003 2004 2005Non-affiliated Independent broker/dealers 352.5$ 288.9$ 251.2$ 286.3$ 260.5$ Wirehouse and regional firms 48.9 67.0 63.5 64.0 65.3 Financial institutions 44.9 58.3 42.6 47.8 58.6 Life specialists 508.6 510.6 384.1 380.5 382.1 Affiliated Nationwide agents 351.9 348.6 374.7 371.2 375.0 Nationwide Financial Network - 123.0 445.5 432.8 408.3 TBG Financial 233.8 146.9 160.9 184.2 275.4

Total individual protection sales 1,540.6$ 1,543.3$ 1,722.5$ 1,766.8$ 1,825.2$

Sales by Product

36


Investment Life




Net Investment Income

General account assets 143.3 147.3 152.7 150.2 157.2 Charge for invested capital (13.9) (17.2) (23.5) (19.3) (17.6)


Other income 5.1 16.5 33.3 32.9 29.8 Total operating revenues 404.9 489.9 630.4 641.7 650.6

BenefitsInterest credited 106.9 115.0 120.7 117.0 116.3 Life benefits 54.0 82.2 118.2 128.1 128.4

Total benefits 160.9 197.2 238.9 245.1 244.7


Subtotal 81.3 106.7 149.6 144.3 131.6

Amortization of policy acquisition costs 49.6 67.0 91.7 85.1 85.7 Amortization of value of business acquired - 12.5 27.4 22.5 25.1 Interest expense on debt - (0.1) - (0.1) 0.3

Total expenses 130.9 186.1 268.7 251.8 242.7


Key Ratios/Statistics

Cost of insurance per $1,000 of average net amount at risk (1) 5.42$ 5.86$ 5.84$ 5.88$ 5.11$

Life benefits per $1,000 of average net amount at risk (1) 1.76$ 2.10$ 2.08$ 2.25$ 1.93$ General operating expenses to operating revenues 28.0% 30.6% 32.4% 30.2% 27.5%Pre-tax operating earnings to operating revenues 27.9% 21.8% 19.5% 22.6% 25.1%Average allocated capital 732.8$ 819.0$ 1,143.4$ 1,191.5$ 1,246.1$ Return on average allocated capital 10.5% 9.0% 7.5% 8.5% 9.7%Adjusted return on average allocated capital (2) 10.5% 9.0% 7.5% 8.5% 9.4%

(1) Excludes experience rated BOLI corporate investment life.(2) 2005 return adjusted for $3.7 million impact of one-time tax adjustments associated with separate account dividend received deductions.Note: All prior periods have been reclassified to reflect NFS Bermuda and TBG Lynch (a subsidiary of TBG Financial) as discontinued operations.

Investment LifePolicy Reserve Activity

($ in millions) 2001 2002 2003 2004 2005Balance, beginning of period 4,644.3$ 5,440.5$ 7,167.6$ 8,845.3$ 10,406.2$

Deposits 1,363.5 1,303.5 1,242.4 1,642.7 2,153.8 Withdrawals and surrenders (97.7) (198.5) (464.4) (467.4) (780.8)

Net flows 1,265.8 1,105.0 778.0 1,175.3 1,373.0

Investment performance/interest credited (185.1) (405.2) 1,357.0 842.8 731.6 Policy charges (270.4) (343.5) (468.0) (478.0) (481.4) Benefits and other (14.1) 20.0 10.7 20.8 46.2 Acquired business - 1,350.8 - - (1.5) Balance, end of period 5,440.5$ 7,167.6$ 8,845.3$ 10,406.2$ 12,074.1$


37


Fixed Life

($ in millions) 2001 2002 2003 2004 2005

Operating RevenuesAdministrative fees 9.2$ 9.1$ 11.2$ 13.9$ 14.3$ Surrender fees 1.3 1.0 0.8 0.8 1.6 Cost of insurance 35.3 37.4 40.1 44.8 49.5


Net investment income 193.9 231.6 333.4 337.0 335.5 Traditional life premiums 190.2 232.9 332.8 311.9 297.0



Total benefits 270.2 329.8 481.3 455.1 472.8


Subtotal 52.3 75.3 104.8 108.5 104.0

Amortization of policy acquisition costs 30.7 25.7 28.9 29.3 17.0 Amortization of value of business acquired - (0.3) 10.6 17.6 9.1

Total expenses 83.0 100.7 144.3 155.4 130.1


Key Ratios/StatisticsLife benefits per $1,000 of average life insurance in force 4.94$ 5.56$ 7.15$ 6.77$ 6.70$ General operating expenses to operating revenues 14.0% 16.2% 15.9% 17.1% 18.3%Pre-tax operating earnings to operating revenues 17.8% 15.9% 12.9% 13.8% 13.6%Average allocated capital 355.9$ 405.3$ 579.0$ 539.6$ 542.9$ Return on average allocated capital 14.0% 13.0% 10.4% 11.8% 11.4%

Fixed LifePolicy Reserve Activity

($ in millions) 2001 2002 2003 2004 2005Traditional/Universal Life



Net flows 143.7 166.0 252.1 260.7 234.6

Interest credited 70.8 73.2 72.6 72.4 74.4 Policy charges (45.8) (47.5) (52.1) (59.5) (65.4) Benefits and other (91.2) (99.4) (212.1) (48.6) (205.9) Acquired business - 2,240.3 - - -



38



39


Corporate and Other


Net investment income General account assets 162.4$ 200.1$ 219.0$ 247.6$ 337.6$ Periodic net coupon settlements on non-qualifying derivatives (1.7) (5.6) (6.9) (4.2) (0.1)


Realized gain on securitizations 1.9 - - - - Operating realized gains (losses) (1.2) 8.9 15.7 8.7 2.6 Other income 3.0 17.0 50.3 57.9 44.9


BenefitsInterest credited Products 109.5 88.2 69.1 84.2 144.9 Periodic net coupon settlements on non-qualifying derivatives (2.9) 3.3 8.8 2.5 1.2

Total benefits 106.6 91.5 77.9 86.7 146.1

ExpensesCommissions 1.4 7.7 21.0 23.8 25.6 General operating expenses 13.0 26.2 28.5 38.4 28.1 Amortization of value of business acquired - - 0.1 - 0.1 Debt extinguishment costs - - - - 21.7 Interest expense on debt 54.9 76.8 95.8 102.5 107.7

Total expenses 69.3 110.7 145.4 164.7 183.2

Pre-tax operating earnings (loss) (11.5)$ 18.2$ 54.8$ 58.6$ 55.7$

Note: All prior periods have been reclassified to reflect Cap Pro Holding, Inc. and NFS Bermuda as discontinued operations.

Medium Term Notes

($ in millions) 2001 2002 2003 2004 2005Key Ratios/Statistics

Average Account Values: General account 2,427.5$ 3,903.0$ 4,442.8$ 4,647.6$ 4,124.0$




Account Value ActivityBalance, beginning of period 1,627.7$ 3,128.1$ 4,273.6$ 4,606.3$ 4,401.6$

Deposits 1,475.8 1,175.0 725.0 900.0 900.0 Maturities - - (389.7) (1,115.2) (1,305.4)

Net flows 1,475.8 1,175.0 335.3 (215.2) (405.4)

Interest credited and amortization 109.4 88.8 69.6 88.4 151.2 Other benefits - interest payments (84.8) (118.3) (72.2) (77.9) (149.2) Balance, end of period 3,128.1$ 4,273.6$ 4,606.3$ 4,401.6$ 3,998.2$


40


Glossary

Advisory services program - Investment products, including mutual funds, separately managed accounts and variable annuities, provided with advice services, such as asset allocation profiling, through an asset-based fee compensation model.

Allocated capital - A non-GAAP financial measure that is calculated by adding target surplus (calculated as 225% of NAIC defined risk based capital), to the following after-tax amounts: unamortized DAC, the difference between statutory benefit reserves and GAAP benefit reserves, the difference between GAAP invested assets and statutory invested assets, unamortized VOBA, unamortized deferred software costs, unamortized intangible assets, unamortized goodwill, unamortized debt issue costs, unamortized deferred revenue, less deferred premiums.

Annuity - A contract that provides a periodic stream of cash flows at regular intervals for a specified period of time, such as number of years or for life.

Asset fees to average separate account values - A financial measure that is calculated by dividing asset fees by average separate account values.

Average allocated capital - A non-GAAP financial measure that is calculated by taking the mean average of the beginning and ending allocated capital amounts of a quarter for a quarterly average, or the mean average of the beginning of the year allocated capital amount and the ending allocated capital amounts for each of the four quarters for a yearly average.

Average equity - A non-GAAP financial measure that is calculated by taking the mean average of the beginning and ending shareholder’s equity, excluding accumulated other comprehensive income for a quarterly average, or the mean average of the beginning of the year shareholder’s equity excluding accumulated other comprehensive income and the ending shareholder’s equity, excluding accumulated other comprehensive income for each of the four quarters for a yearly average.

Average in force - A metric that is calculated by taking the mean average of the beginning and ending in force amounts of a quarter for a quarterly average, or the mean average of the beginning of the year in force amount and the ending in force amounts for each of the four quarters for a yearly average.

BOLI (Bank Owned Life Insurance) - Generally refers to a large single premium purchase of a Modified Endowment Contract to informally fund a block of employee benefit liabilities.

Book value per share excluding accumulated other comprehensive income - A non-GAAP financial measure that is calculated by adjusting book value to exclude accumulated other comprehensive income and then dividing the result by the number of shares outstanding on the date indicated.

COLI (Corporate Owned Life Insurance) - Broadly describes the use of life insurance to informally fund a block of employee benefits. In its truest form refers to corporate owned life insurance but could also refer to other ownership arrangements such as split-dollar.

Cost of Insurance per $1,000 of average net amount at risk - A non-GAAP financial measure that is calculated by annualizing the cost of insurance and dividing by the net amount at risk divided by one thousand.

Credited Rate - A financial measure that is calculated by dividing interest credited by average general account values.

Deferred Annuity - An annuity that can be paid either with a single premium or a series of installments, providing for the income payments to begin at some future date.

Deferred Compensation Plan - A benefit plan that allows an employee to save pre-tax dollars. Many are set up similar to a 401(k) plan, including multiple investment options, but without regulated limits on the amount that can be deposited.

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Glossary

Deferred Policy Acquisition Costs - The unamortized policy acquisition costs which are capitalized and charged to expense in proportion to premiums or estimated gross profits depending on the type of underlying contract. See Policy Acquisition Costs.

Defined Benefit Plan - A qualified pension plan under Section 401 of the Internal Revenue code which defines the retirement benefit to plan participants. The definition of the retirement benefit may include such variables as age, length of service, and compensation, but it would not reflect the investment experience of the assets held to fund these benefits.

Defined Contribution Plan - A benefit plan under which contributions are fixed in advance by formula, and benefits to retiring employees may vary.

Deposits - Premiums received for interest sensitive life insurance, annuities or life insurance products.

Dollar Cost Averaging - Paying a fixed amount of premium at regular intervals regardless of the unit values of the selected variable accounts or the current interest rate on new premiums paid into the guaranteed account.

Earned Rate - A financial measure that is calculated by dividing net investment income by average general account values.

Fixed Annuity - An annuity contract in which premiums paid are credited with a fixed rate of return by the life insurance company.

GAAP - Refers to accounting principles generally accepted in the United States of America.

General Account - An undivided account in which all investments are held that are not held in the separate account.

General operating expenses to average account values - A GAAP financial measure that is calculated by dividing general operating expenses by average account values.

Group Annuity - A pension plan providing annuities at retirement to a group of people under a master contract. It usually is issued to an employer for the benefit of employees.

Immediate Annuity - An annuity providing for payment to begin immediately after a single premium is paid.

Internal Replacement - Transaction whereby a policyholder's existing insurance product or investment contract is replaced with a similar product issued by the same entity.

Interest spread on average general account assets - A financial measure that is calculated by subtracting the credited rate from the earned rate.

Lapse - Termination of a policy because of failure to pay the premium.

Leverage, excluding AOCI - A non-GAAP financial measure that is calculated by dividing long-term debt by total capital, excluding accumulated other comprehensive income (AOCI).

Leverage, including AOCI - A financial measure that is calculated by dividing long-term debt by total capital.

Life benefits per $1,000 of average net amount at risk - A metric that is calculated by annualizing the life insurance benefit amount and dividing by the average net amount at risk divided by one thousand, excluding separate account corporate investment life business.

Life benefits per $1,000 of average in force - A metric that is calculated by annualizing the life insurance benefit amount and dividing by the average in force amount divided by one thousand, excluding separate account corporate investment life business.

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Glossary

Life Insurance In Force - The sum of the face amounts, plus dividend additions, of life insurance policies outstanding at a given time.

Nationwide Financial Network - Refers to the affiliated distribution channel that was formerly referred to as Nationwide Provident Producers.

Net Amount at Risk - Insurance in force less accumulated account value. Pertains to investment life products and is the amount for which cost of life insurance is assessed.

Net operating earnings - A non-GAAP financial measure that is calculated by adjusting net income to exclude net realized gains and losses on investments not related to operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses, trading portfolio valuation changes, and net realized gains and losses related to securitizations), hedging instruments and hedged items, adjustment to amortization related to net realized gains and losses, discontinued operations and cumulative effect of adoption of accounting principles, if any, all net of tax.

Net operating earnings per diluted share - A non-GAAP financial measure that is calculated by dividing net operating earnings by the number of weighted average diluted shares outstanding for the period indicated.

Non-GAAP financial measures - Key performance indicators used by management that have not been calculated in accordance with GAAP. None of these non-GAAP financial measures should be viewed as substitutes for any GAAP financial measures.

Operating realized gains (losses) - A non-GAAP financial measure that represents net realized gains (losses) on investments related to operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses, trading portfolio valuation changes, and net realized gains and losses related to securitizations).

Operating return on average equity - A non-GAAP financial measure that is calculated by annualizing the net operating earnings and dividing by the average equity amount.

Operating revenues - A non-GAAP financial measure that is calculated by adjusting total revenues to exclude net realized gains and losses on investments not related to operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses, trading portfolio valuation changes, and net realized gains and losses related to securitizations), hedging instruments and hedged items.

Persistency - Percentage of life insurance policies or annuity contracts remaining in force from one period to another.

Policy Acquisition Costs - Expenses that vary with and are primarily related to the acquisition of new and renewal insurance contracts.

Pre-tax operating earnings - A non-GAAP financial measure that is calculated by adjusting earnings from continuing operations before federal income taxes and cumulative effect of adoption of accounting principles, if any, to exclude adjustment to amortization related to net realized gains and losses, and net realized gains and losses on investments, hedging instruments and hedged items, except for operating items (periodic net coupon settlements on non-qualifying derivatives, trading portfolio realized gains and losses, trading portfolio valuation changes, and net realized gains and losses related to securitizations).

Pre-tax operating earnings to average account values - A non-GAAP financial measure that is calculated by dividing pre-tax operating earnings by average account values.

Pre-tax operating earnings to operating revenues - A non-GAAP financial measure that is calculated by dividing pre-tax operating earnings by operating revenues.

Qualified Plan - A plan purchased with pre-tax dollars, generally under a pension plan, specially sponsored program, or individual retirement account that the Internal Revenue Service approves as meeting the requirements of Section 401(a) of the 1986 Internal Revenue Code, as amended. Such plans receive tax advantages.

Ratio of pre-tax operating earnings before interest to interest expense - A non-GAAP financial measure that is calculated by subtracting interest expense from pre-tax operating earnings and dividing the product by interest expense.

Return on average allocated capital - A non-GAAP financial measure that is calculated by dividing annualized after-tax operating earnings by average allocated capital.

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Glossary

Sales - Represents a production volume metric that is primarily comprised of statutory premiums and deposits on individual and group annuities and life insurance products sold to a diverse customer base. Statutory premiums and deposits are calculated in accordance with accounting practices prescribed or permitted by regulatory authorities and then adjusted to arrive at sales. Sales also include deposits on administration-only group pension plans.

Sales are stated net of internal replacements, which in Nationwide Financial’s opinion provides a more meaningful disclosure of sales. In addition, sales exclude: funding agreements issued under Nationwide Financial’s medium-term note program; large case bank-owned life insurance (BOLI); large case pension plan acquisitions; and deposits into Nationwide employee and agent benefit plans. Although these products contribute to asset and earnings growth, they do not produce steady production flow that lends itself to meaningful comparisons and are therefore excluded from sales.

Separate Account - A separate investment account established and maintained by an insurance enterprise used primarily for variable products. This arrangement permits wider latitude in the choice of investments for contract holders.

Surrender Charges - Charges made against withdrawals from the contract value of most variable annuities for a period of time, typically four to seven years.

Statutory capital and surplus - A financial measure that is calculated based on accounting practices prescribed or permitted by the department of insurance of the state of domicile. Each of the states in which the Company’s insurance companies are domiciled has adopted the National Association of Insurance Commissioners (NAIC) statutory accounting practices (NAIC SAP) as the basis of its statutory accounting practices. The Company’s insurance subsidiaries have no statutory accounting practices that differ from NAIC SAP.

Universal Life Insurance - A flexible premium, adjustable benefit life insurance contract that accumulates cash values through the receipt of contractually determined interest credited.

Variable Annuity - An annuity contract in which the funds are invested in investments for which the underlying values can fluctuate.

Variable Life Insurance - A securities-based whole life insurance policy that employs a fixed premium and provides variable cash values and death benefit, dependent upon the performance of the separate account investment election.

Variable Universal Life Insurance - A type of variable life insurance that has flexible premiums.

Value of Business Acquired (VOBA) - Reflects the estimated fair value of the Nationwide Provident business in-force and represents the portion of the purchase price that is allocated to the value of the right to receive future cash flows from the life insurance and annuity contracts existing as of the closing date of the Nationwide Financial Network Merger.

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Shareholder Information

Corporate OfficesNationwide FinancialOne Nationwide PlazaColumbus, OH 43215

InquiriesMark BarnettVice President, Investor Relations(614) [email protected]

Roger W. GreenOfficer, Investor Relations(614) [email protected]

Financial Strength RatingsA.M. Best . A+Moody's Aa3Standard & Poors AA-

Stock SymbolNationwide Financial's common stock is traded on the New York Stock Exchange under the symbol "NFS"

Nationwide Financial's trust-preferred securities are traded on the New York Stock Exchange under the symbol "NFS A"

Upcoming Events

4th Quarter 2006 EarningsQuiet Period - January 19th to February 8thEarnings Release - February 8thConference Call - February 9th

Credit SuisseCredit Suisse Insurance ConferenceNew York, New YorkNovember 16thJohn Carter

CitigroupCitigroup Financial Services ConferenceNew York, New YorkJanuary 30th -31stMark Thresher

This report is for information purposes only. It should be read in conjuction with documents filed by Nationwide Financial Services, Inc. with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

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Notes

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nationwide 3Q06 Statistical Supplement

Economy & Finance

Transcript of nationwide 3Q06 Statistical Supplement