Nationwide Reports Sales Drop In 2020, Ending Growth Streak
NBC - 4 WCMH (Columbus, OH)
Nationwide dealt with falling sales and another challenging year in disaster claims during 2020, but the company says it's prepared for 2021.
In its annual report released Wednesday, the Columbus-based giant reported total sales of $46.6 billion for 2020, a drop from the $49.3 billion reported in 2019 and the end a streak of several years of sales growth. Net operating income likewise fell from $1.9 billion in 2019 to $797 million in 2020.
CFO Mark Thresher said the drop in sales stemmed in part from a decision to pull some annuity products off of the market thanks to very low 10-year treasury yield curve rates.
"The financial services segment performed well even with low interest rates in the market, and they're close to what we anticipated," Thresher said. "That we were able to pull a profit speaks to the strengths of two diversified businesses. Hopefully, we'll get to a point when they are profitable at the same time."
On the insurance side of things, the company paid out $16.9 billion in claims for the year, including a record number in the third quarter amid wildfires and hurricanes around the country. That was essentially equal to the $17 billion paid out the previous year.
Nationwide also paid out $1.2 billion in emergency Covid-19 loans and distributions payments from retirement savings products. It waived fees for these transactions.
CEO Kirt Walker said in a statement the good 2019 numbers helped Nationwide weather 2020. The company has for several years been shifting its focus to financial services products and growth markets in property and casualty insurance, like pet coverage.
Policyholders' equity a measure of Nationwide's capital position bumped up to $28.6 billion in 2020 from $26 billion in 2019.
"Through the year we continued to grow and achieved a profit in an incredibly challenging business environment," Walker said in the statement. "This allowed us to serve our members and communities, and effectively manage the impacts of the pandemic and historic weather-related claims in the third quarter."
The pandemic also changed the way the company works. Last fall Nationwide announced it was closing some of its smaller offices except for four major hubs around the country, sending 30% of its 28,000 employees to work from home permanently. Its 14,000 Central Ohio employees remain mostly work-from-home, with tenant
The company also announced plans to outsource, while making additional staffing reductions attributed to the pandemic.