Nationwide Reports Hundreds of Millions in Net Losses

Nationwide on Friday announced $852 million in net losses for the third quarter of 2011, down considerably from an $85 million profit for the same period last year, with officials blaming bad investments and catastrophe losses totaling $2.2 billion so far this year.

The Columbus, Ohio-based insurance and financial services provider reported net losses for the first nine months of 2011—which were at least partly offset by gains in financial services and other areas—to $632 million, compared with $569 million in net income for January through September last year.

“There is no denying that record weather claims and an unstable economy have made for a challenging 2011,” Steve Rasmussen, the company’s chief executive officer, said in a news release.  “As a privately held mutual company, Nationwide is able to take a long-term view rather than focus on quarterly results.”

Nationwide reported $1.25 billion in net realized investment losses for the quarter—nearly six times the $214 million lost during the same period last year. For the first three quarters, net realized investment losses were $1.5 billion, up from $427 million last year.

Nationwide’s property and casualty business suffered a net operating loss of $209 million for the year’s first three quarters, down from a profit of $623 million for the same time frame last year. Company officials attributed those losses largely to the impact of natural disasters.

Hurricane Irene—which swept along the East Coast in late August, killing dozens of people and prompting damage claims on policies covering homes and auto insurance in New Jersey and other states—accounted for $290 million on its own.

The company has paid more than $10.1 billion in property and casualty claims, life insurance and other benefits this year.

According to Nationwide, those losses were at least partly reversed by improvements in claims processes and underwriting.

The company’s direct written property and casualty premiums for the quarter totaled more than $3.85 billion, up slightly from $3.81 billion in last year’s third quarter.

Net operating income for the company’s financial services business was $603 million through the year’s first three quarters, up from $400 million last year.

The company reported $21 million in total net operating income for July through September and $431 million for the year’s first three quarters, compared with $225 million and $995 million for those periods in 2010.

“Nationwide is well positioned for future growth,” Rasmussen said. “I’m anticipating a strong finish to 2011, and I’m excited about the promise of growth that 2012 brings to our organization.”

Spate of 2011 Weather Events Hit Insurers Hard

The insurer is the latest in a long line of companies to announce large losses this year, many of them blamed on Irene and other weather-related catastrophes.

Earlier this month, State Auto Financial Group reported a $58.7 million net loss for this year’s third quarter, down from a $200,000 quarterly profit last year. The company suffered $60.8 million in catastrophe losses from July through September, more than double the $23.7 incurred in those months in 2010.

Liberty Mutual Group, which lost nearly $1 billion to catastrophes, reported a $111 quarterly loss. That was way down from the $567 million in profit reported for last year’s third quarter.

The Hartford reported that $134 million in catastrophe losses caused its net income to fall from $666 million for July through September last year to zero for the same time frame this year because of capital markets volatility and sizeable catastrophe claims.

In earlier announcements, Progressive reported a 42 percent drop in quarterly net income and Allstate said its profits for the period fell by more than half, due in large part to $697 million in catastrophe losses.

To read the experiences of current and former Nationwide policyholders, readers can find user-submitted Nationwide auto insurance reviews online.

About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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