Nationwide hit record revenue in 2023 despite storms, lousy drivers

Nationwide's growing financial services business is helping the Columbus-based company withstand everything Mother Nature and lousy drivers have to offer.

The insurance and financial services company on Tuesday reported revenue of $60.3 billion in 2023, the third straight record year.

Nationwide defines sales as a combination of premiums paid by policyholders along with new deposits and assets that come through the company’s financial services arm, which are not considered revenue in the financial industry at large.

Net operating profit − Nationwide's key measure of profitability − was $1.3 billion, down from $1.4 billion in '22, and Nationwide said it paid nearly $23 billion in claims and benefits in a year that was marked by stubbornly-high inflation, natural disasters and rising interest rates.

"I'm really, really proud of the year we had," said Kirt Walker, the company's CEO.

Walker said Nationwide's focus continues to be as a protection company whether it's auto or home insurance or retirement plans, but the year was driven by the financial services side of Nationwide's business that sells products such as annuities, life insurance products and retirement plans.

"For Nationwide, our diverse portfolio of businesses enabled us to thrive while many peers struggled to deliver bottom-line results," Walker said.

Sales of financial services products totaled about $40 billion in '23, said Tim Frommeyer, Nationwide's chief financial officer.

Nationwide has picked up business from competitors that have sold similar lines for financial reasons, he said.

That has allowed Nationwide to deepen relationships with big players in the financial services business where it can offer a portfolio of products for companies and individuals, he said.

At a time when there are fewer traditional pension plans, Nationwide has come up with strategies that produce a guaranteed stream of income for retirees, provide long-term care and help people buy life insurance.

"We're just getting a ton of action," Frommeyer said.

Last year was more of a struggle in the auto and homeowner business where a string of natural disasters battered the country and bottom lines of insurers.

Last year was the costliest insured year on record for the U.S., according to Gallagher Re, a reinsurer broker.

The company identified 31 events with more than $1 billion in economic losses and 24 with more than $1 billion in insured losses.

Hail, tornadoes, severe winds and heavy rainfall pushed up insured losses in 2023 to $60 billion, according to the company.

The losses included wildfires in Hawaii, record-setting rainfall in Fort Lauderdale, Florida, and New York City, and drought in the Southwest, Southern Plains, and Southeast.

Frommeyer said natural disasters consistently exceeded Nationwide's projections for the first three-quarters of 2023 before settling down at the end of the year.

At the same time, Nationwide and other insurers continue to get hit with expensive auto claims resulting from a variety of factors, whether it's distracted drivers or higher costs to fix cars. Big jury verdicts also are becoming an issue for the industry.

"With any kind of property insurer, there was no place to hide in '23," he said.

As a result, Nationwide and other insurers have been aggressively raising rates.

In Ohio, for example, Nationwide raised homeowner rates 10.1% in 2022, according to the Ohio Department of Insurance. Auto rates went up 17.4%.

Other highlights of the annual report:

• In light of the growing threat from weather, Nationwide says it is using its position as one of the biggest insurance companies to push for stronger building codes.
• As part of its move to hybrid work that has reduce demands for office space, Nationwide says it continues to find ways to use buildings for other purposes. For example, last year the United Way of Central Ohio and other nonprofits now lease Nationwide's 9-story, 150,000-square-foot building at 215 N. Front St. Nationwide also sold a building in Des Moines, Iowa, to the city.
• Contributions from Nationwide's foundation last year hit $40.1 million while Nationwide employees contributed an additional $7.3M to nonprofits and donated more than 70,000 hours of volunteer time.

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@BizMarkWilliams

This article originally appeared on The Columbus Dispatch: Nationwide hit record revenue in 2023 despite storms, lousy drivers