AM Best Downgrades Credit Ratings of Nationwide Mutual Insurance Company and Its Property/Casualty Subsidiaries; Affirms Credit Ratings of Life Affiliates

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has downgraded the Financial Strength Rating (FSR) to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a+” (Excellent) from “aa-” (Superior) of the members of Nationwide Property & Casualty Group (Nationwide P&C Group). In addition, AM Best has downgraded the Long-Term Issue Credit Ratings (Long-Term IR) to “a-” (Excellent) from “a” (Excellent) of the surplus notes issued by Nationwide Mutual Insurance Company. At the same time, AM Best has affirmed the Long-Term IR of “a-” (Excellent) on the $1 billion, 3.9% 30-year senior unsecured notes guaranteed by Nationwide Mutual Insurance Company.

Concurrently, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) of Nationwide Life Insurance Company and its subsidiaries, Nationwide Life and Annuity Insurance Company and Jefferson National Life Insurance Company. These companies are the key life/annuity subsidiaries of Nationwide Financial Services Inc. (NFS), and collectively known as Nationwide Life Group. Additionally, AM Best has affirmed the Long-Term ICR of “a-” (Excellent) of NFS and its existing Long-Term IRs. Finally, AM Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb” (Good) of Titan Insurance Company (Titan). The outlook of all these Credit Ratings (ratings) is stable. All companies are headquartered in Columbus, OH, unless otherwise specified. (See the link below for a detailed listing of all companies and ratings.)

The ratings of Nationwide reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM). The downgrading of Nationwide P&C Group’s ratings reflects the revision of its business profile assessment to neutral from favorable. These rating actions were driven by operating results, which have been persistently below its peers and benchmarks, as well as Nationwide P&C Group’s strategy to de-emphasize its less profitable personal and commercial lines of business and focus on more specialized products. While this strategy will reduce Nationwide’s footprint and weaken its market share, the brand recognition remains strong, and the organization intends to achieve profitable business growth in specialty lines. Additionally, the organization has outlined certain expense saving and pricing actions to restore profitability within the next 18 months. The balance sheet assessment reflects Nationwide P&C Group’s very strong risk-adjusted capital position as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its well managed, diverse investment portfolio. AM Best notes that the group’s overall liquidity and financial flexibility remains more than adequate, despite pressures within certain property/casualty lines of business that have led to a moderate deterioration in capital over the last 12 months.

The ratings of Nationwide Life Group reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate ERM. The group’s balance sheet assessment remains anchored by its risk-adjusted capitalization at the strongest level, as measured by BCAR. AM Best notes that Nationwide Life Group’s quality of surplus is somewhat lower given the usage of affiliated surplus notes, as well as captive insurers, which provide support of certain redundant reserving needs within the capital structure. However, the assessment acknowledges that the group has grown surplus at a rate well above the life industry average over the last five-year period. Nationwide Life Group’s operating performance continues to reflect its diverse product portfolio and geographic reach. Through the first three quarters of 2023, top line growth across core products has been favorable primarily driven by fixed products and operating results, which are expected to be strong through the end of 2023. The organization continues to benefit from its favorable market position among the leading providers of retirement plans, as well as being the top 10 carrier in its core life and annuity markets.

The ratings of Titan reflect its balance sheet strength, which AM Best assesses as adequate, as well as its marginal operating performance, limited business profile and appropriate ERM. Titan serves a focused target market with distinct dynamics for the benefit of the Nationwide enterprise.

A complete listing of Nationwide’s FSRs, Long-Term ICRs and Long-Term IRs also is available.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Kate Steffanelli
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Source: AM Best