A.M. Best Affirms Ratings of Nationwide Group, Its Members and Affiliates

A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of Nationwide Group (Nationwide) and its four property/casualty pooled members and 23 reinsured affiliates. Concurrently, A.M. Best has affirmed the debt ratings of “a” of the five surplus notes totaling $2.2 billion issued by Nationwide Mutual Insurance Company (Columbus, OH). The outlook for all ratings is negative. (See below for a detailed list of the companies and ratings.)

Nationwide’s ratings reflect its adequate level of risk-adjusted capitalization that supports the ratings; however, the group reported several years of volatile underwriting performance in its core lines of business due to weather related losses. Nationwide benefits from diversified product offerings that include standard and specialty personal, commercial and surplus lines of business. The ratings further recognize Nationwide’s market presence, multiple distribution channels and decentralized operational structure, which is designed to provide superior service to its agents and policyholders.

The negative outlook reflects the challenges that management will face to improve underwriting profitability and continue to organically rebuild surplus with a potentially lower level of investment income. Nationwide’s surplus and risk-adjusted capitalization significantly declined with the January 1, 2009 privatization of Nationwide Financial Services, Inc., although both measures improved throughout the year from issuance of a surplus note, the generation of statutory income and unrealized investment gains.

A.M. Best also has affirmed the FSR of B+ (Good) and ICR of “bbb-” of Nationwide Indemnity Company (NIC). The outlook for the ratings is stable. NIC is the group’s run-off entity, primarily for asbestos and environmental claims.

The FSR of A+ (Superior) and ICRs of “aa-” have been affirmed for Nationwide Group, its following property/casualty pooled members and reinsured affiliates:

-- Farmland Mutual Insurance Company

-- Nationwide Mutual Insurance Company

-- Nationwide Mutual Fire Insurance Company

-- Scottsdale Insurance Company

-- ALLIED Property and Casualty Insurance Company

-- AMCO Insurance Company

-- Colonial County Mutual Insurance Company

-- Crestbrook Insurance Company

-- Depositors Insurance Company

-- National Casualty Company

-- Nationwide Affinity Insurance Company of America

-- Nationwide Agribusiness Insurance Company

-- Nationwide Assurance Company

-- Nationwide General Insurance Company

-- Nationwide Insurance Company of America

-- Nationwide Lloyds

-- Nationwide Property and Casualty Insurance Company

-- Scottsdale Indemnity Company

-- Scottsdale Surplus Lines Insurance Company

-- Titan Indemnity Company

-- Titan Insurance Company

-- Victoria Automobile Insurance Company

-- Victoria Fire & Casualty Company

-- Victoria National Insurance Company

-- Victoria Select Insurance Company

-- Victoria Specialty Insurance Company

-- Western Heritage Insurance Company

The following debt ratings have been affirmed:

Nationwide Mutual Insurance Company—

-- “a” on $400 million variable rate surplus notes, due 2024

-- “a” on $400 million 8.25% surplus notes, due 2031

-- “a” on $300 million 7.875% surplus notes, due 2033

-- “a” on $400 million 6.6% surplus notes, due 2034

-- “a” on $700 million 9.375% surplus notes, due 2039

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at http://www.ambest.com/ratings/methodology.