Nationwide is on your side.

               for our Customers

               for our Partners

               for ...
“Nationwide is on your side.”
It’s short and simple. It even rhymes. Perhaps that’s why our slogan has become one of the b...
Nationwide is one of the largest insurance and financial services companies in the world, with more than
“Nationwide is on your side.”

                           for our Customers
“Nationwide is on your side.”

                           for our Partners
“Nationwide is on your side.”

                           for our Stakeholders
                            An insurance a...
“Nationwide is on your side.”

                           for our Future
                            In a time of economi...
Nationwide At-A-Glance
Combined Income Statement
Combined Financial Statement

Nationwide Board of Directors

Lewis J. Alphin          Keith W. Eckel      David O. Miller
Galen R. Barnes          Will...
International Headquarters
                               One Nationwide Plaza
                               Columbus, Oh...
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2002 Nationwide Annual Report


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2002 Nationwide Annual Report

  1. 1. Nationwide is on your side. for our Customers for our Partners for our Stakeholders for our Future 2002 Annual Report
  2. 2. “Nationwide is on your side.” It’s short and simple. It even rhymes. Perhaps that’s why our slogan has become one of the best known in corporate America. Message More importantly, being on your side is what we do. It is an attitude that defines our businesses and guides our every action. from the We are on the side of our customers, providing them with products and services that make it possible to own homes, drive cars, start businesses, protect families, and plan for the future. The breadth of our Chief offerings is designed to meet life’s most important needs, from auto insurance to retirement savings plans. Executive We are on the side of the professionals who sell our products and services, and provide the advice our Officer customers need to make educated choices. For Nationwide to earn distinction as their preferred partner, our companies must provide the most valuable solutions and the highest level of support possible. And so every day we strive to be the best partner for the more than 31,000 agents who work with us, as well as thousands of additional partners in our vast financial services distribution network. We are also on the side of our stakeholders who rely on Nationwide to deliver on its promises. Nationwide’s more than 30,000 associates take our heritage as a strong customer advocate and a responsible corporate citizen very seriously. We understand that building our financial strength allows us to deliver on our promises to our customers and to continue our philanthropic commitments to those members of our communities who are in need. In 2002, we strengthened Nationwide’s financial foundation. Statutory net income improved from a net loss of $295 million in 2001 to a net gain of $252 million in 2002. The fundamentals underlying our property and casualty units – Nationwide Insurance, Allied, Scottsdale, and Farmland – improved markedly. Pricing actions, profitability initiatives, and favorable prior- year reserve development drove significant improvements in underwriting results. Each unit posted a trade combined ratio – the amount of losses and expenses paid for each dollar earned – that was significantly better than the prior year and the industry average. Our largest business unit, Nationwide Insurance, achieved a combined ratio of 97.3 percent. Challenging economic conditions, both in the United States and abroad, hampered the performance of Nationwide Financial, Nationwide Global and Gartmore, as well as our Strategic Investments. It would be easy to use negative market conditions as an excuse for our performance, but we won’t. Our pledge to you is that we will improve the performance in these business units. We also realize that beneficial growth opportunities often reveal themselves during tough times. During 2002, we seized several such opportunities in our retirement savings businesses, positioning Nationwide to achieve better sustainable performance going forward. We improved our market reach and competitive standing in 2002, positioning Nationwide to continue its legacy of being on your side for the future. We expanded consumer finance offerings to include a new, 10-minute mortgage program through Nationwide Advantage Mortgage Company. With the addition of Provident Mutual Life Insurance Company, now called Nationwide Provident, our life and retirement savings franchise is now the country’s third-largest provider of variable life insurance. We are a family of companies linked by consistent values and a common heritage of working together with customers, business partners and stakeholders. “On your side” may have originated as an insurance company tagline, but it has evolved into a commitment on which our entire enterprise stakes its reputation. We thank you for your commitment to Nationwide, and we pledge to remain on your side as you manage a lifetime of milestone events and changing needs. W. G. Jurgensen, Chief Executive Officer
  3. 3. Nationwide is one of the largest insurance and financial services companies in the world, with more than $117 billion in statutory assets. Nationwide consists of three core businesses — domestic property and casualty insurance, life insurance and retirement savings, and asset management. We also are engaged in strategic investments. By focusing on these core businesses, we remain committed to increasing the value our customers have come to expect from us. The Nationwide family includes: Property and Casualty Nationwide Insurance Allied Insurance Farmland Insurance Scottsdale Insurance Life Insurance and Retirement Savings Nationwide Financial • Nationwide Retirement Solutions • Nationwide Provident • TBG Financial • The 401(k) Company Asset Management Gartmore • Gartmore Investment Management • Gartmore Global Investments Strategic Investments GatesMcDonald Nationwide Advantage Mortgage Company Nationwide Global Holdings • PanEuroLife • Nationwide Maritima Vida Previdencia SA • Nationwide Towarzystwo Ubezpieczen na Zycie SA • Nationwide Life Assurance Company, Ltd. Nationwide Realty Investors Financial Highlights (Statutory) For the Year 2002 2001 Direct Written Premiums Property/Casualty Companies $12.0 billion $10.9 billion Life Companies $15.0 billion $15.1 billion Direct Written Premiums Total $27.1 billion $26.0 billion Net Income (Loss) $252.3 million $(294.9) million Assets Property/Casualty Companies $26.9 billion $24.5 billion Life Companies and other $91.0 billion $89.0 billion Assets Total $117.9 billion $113.5 billion Ongoing Property/Casualty Operations Combined Ratio 98.4% 106.5% Property/Casualty Premium-to-Surplus Ratio 1.72 to 1 1.41 to 1 Customer Funds Managed and Administered $159.6 billion $170.1 billion
  4. 4. “Nationwide is on your side.” for our Customers With saving and investing, the risk is less conspicuous than storms and flames. But, managing that risk is For more than 75 years, consumers seeking financial peace of mind have just as crucial, especially when markets are soft and attractive returns are uncommon. Nationwide asked Nationwide to be on their side. What began as a small auto Financial’s commitment to keeping promises made it possible to protect policyholder investments insurance company for Ohio farmers has grown into a global provider at guaranteed levels and make promised annuity payouts in 2002, even though original investment of insurance, retirement and investment solutions. Regardless of our amounts decreased. size, Nationwide’s commitment to building individual relationships, one at a time, has never wavered. Investors also found dependability in conservative Gartmore products, including its stable value and asset allocation funds. Of Gartmore’s U.S.-managed funds, more than 70 percent surpassed their We are there when customers need us most. During 2002, our Nationwide benchmark’s performance. And in Europe, Gartmore U.K.’s industry-leading hedge funds – an Insurance unit alone handled more than 2 million claims and attractive investment alternative to equity markets – once again were recognized with awards for answered more than 4 million service inquiries. Some consider their outstanding performance and management expertise. the majority of reported losses as routine – fender benders, water damage to homes, and hail damage to property. To our customers, Being on the side of customers means being accessible, anytime, from anywhere, in any way customers though, no loss is routine. It’s during those times when Nationwide’s desire. In most of Nationwide Insurance’s markets, customers can purchase coverage and receive associates shine most brightly. service in person at an agency location, over the phone, toll-free at any hour of the day or night, and via the Internet at a site recognized in 2002 by Gomez Associates as one of the Web’s top two When fires charred nearly a half-million acres in Arizona last summer, insurance destinations. information gathered and posted on the Web by Scottsdale’s catastrophe team became the official resource for other insurers Our decision to migrate related farmowners businesses into a single platform makes us more accessible to in the region. When tornadoes swept through eight states on a our longest-standing customer segment. By leveraging Farmland’s personnel, Allied’s processing Sunday evening in November, Nationwide Insurance representatives system, Nationwide Insurance’s distribution channel and the best coverage features from each unit, were writing claim checks as the sun rose on Monday. And when a we can present a superior program and solidify our position as the leading writer of farm insurance in firestorm consumed a small California farming community in February, the country. Allied’s claim team provided the high-quality service customers expected and a heartfelt gesture many didn’t expect. In more diverse markets, Nationwide now also operates 49 Urban Sales and Service Centers. Sixteen exclusive agents have taken advantage of corporate loan programs to open offices in urban areas, Every family that lost its farm received flowers and personal and 10 other agents were awarded grants to establish satellite offices in Latino communities. condolences – simple, caring deeds that spoke volumes to their Spanish-speaking customers in those areas and elsewhere can receive bilingual claims support from recipients. the recently created San Antonio Spanish Unit. The center also extends translation services to field operations and home office. The expansion of a broad, diversified distribution network continues to be the cornerstone of Nationwide Financial’s success. The addition of Nationwide Provident gives its parent company something it never has had – a network of career life agents. Nationwide Financial also built new sales relationships with top regional CPA firms, through which it plans to market retirement plans, life insurance and advisory services to small businesses and affluent consumers. A constantly expanding product portfolio also is critical to building and maintaining customer relationships. Among the innovations we introduced in 2002 is a distinctive loan service marketed by Nationwide Advantage Mortgage Company. Emphasizing speed, simplicity and savings, the mortgage service features competitive rates, vastly reduced fees and paperwork, and free approval decisions in as little as 10 minutes. Within a month of its July introduction, the company extended nearly 1,000 new loans worth more than $72 million. Building on the strength of its U.K. hedge funds, Gartmore launched four U.S.–managed hedge funds in 2002. In addition, the Nationwide Family of Funds was realigned, expanded and renamed Gartmore Funds. As a result, our investment solutions now have even greater depth and diversity to better serve our clients’ changing needs. Nationwide Financial is breaking new ground in the fee-based investment business with The BEST of AMERICA® Advisory Services Programsm, which includes mutual funds, separately managed accounts and a no-load variable annuity. Through this program, we serve the need many wealthier consumers have for professional money management and multiple products packaged into a fee-based managed account structure. Whether protecting personal property or planning for long-term financial security, our commitment to be on the side of our customers remains our guiding force, as we continue to meet their changing financial and insurance needs.
  5. 5. “Nationwide is on your side.” for our Partners Nationwide Financial touches customers through a wide variety of distribution points. In addition Nationwide’s ability to serve customers depends almost entirely on the to Nationwide Provident and its association with CPA firms, our life and retirement savings relationships we build and nurture with our business partners. business is served by independent broker-dealers, wirehouse and regional firms, more than The people we trust to recommend and represent our various 350 financial institutions, and exclusive Nationwide agents. Nationwide Financial helps its companies must have confidence in us to provide them with partner firms and producers grow their businesses by focusing on sales support, relationship the products, services, sales tools, technology, strategies and management, innovative solutions and stellar service. support they need to succeed. The company’s private sector retirement plan business, guided by the Nationwide Financial Partner In property and casualty during 2002, we provided agencies with a of Choice Initiative, will expand the choices offered to Preferred Pension Administrators, broader array of consumer insurance and financial solutions. By investment professionals and clients. It will include an additional level of product and service helping agents cross-sell new products to existing customers, support. Nationwide will strengthen relationships with those clients and improve retention. Several new Gartmore products equipped existing partners with more options to offer their individual clients. Also, the company expanded its market presence with the addition of Gartmore Expanding Nationwide’s market reach and helping business partners Emerging Managers in March 2002. This new channel is attracting institutional-quality tap into new revenue sources are other key company growth investment management expertise that is broadening Gartmore’s product capabilities. strategies. We offer a number of financial incentives to assist our exclusive agents in opening new locations and hiring Within our Strategic Investments area, Nationwide Advantage Mortgage has partnered with America licensed sales associates. Bringing independent agencies into West Airlines to launch a mortgage incentive marketing relationship through the carrier’s the Nationwide family is a key part of our strategy. frequent flyer program. Our mortgage company continues to reach out to employers and financial institutions around the country to extend its high-quality service. Nationwide Insurance also is establishing a presence west of the Mississippi River, opening exclusive agencies in Portland, Ore., and Phoenix, Ariz. Concurrently, Allied is expanding Our business relationships are as varied as the products and services we provide. As we evolve to meet eastward, establishing relationships with independent agencies the changing needs of our customers and those of our business partners, one element remains in Ohio, Georgia and Texas. Some consumers prefer dealing steadfast, and that is our commitment to being on the side of all our business partners. with independent agents; some prefer exclusive agents. Being represented by both in the same market allows us to effectively reach each customer segment.
  6. 6. “Nationwide is on your side.” for our Stakeholders An insurance and financial services company is only as good as the promises it keeps In 2002, Gartmore added value for stakeholders through a series of organizational and operational changes. – to make customers whole after a loss, to protect investors’ hard-earned The sale of Gartmore U.S. from Nationwide Financial to Nationwide Mutual in June helped accelerate money and to help them achieve above-average returns. Those promises the integration of Gartmore’s U.S. and U.K. asset-management organizations, resulting in a more are backed by financial stability. Nationwide must grow profitably to ensure efficient corporate structure and advancing the relationship between Gartmore’s global investment that we will continue to be here, not only for our customers, but also for teams and marketing operations. The company also began taking full advantage of a unified, global the associates, policyholders, shareholders and communities that benefit trading platform, ensuring clients’ investments can be monitored around the clock. from our stability. Nationwide Global continued to enhance operations in 2002 to place a greater focus on European In 2002, Nationwide continued to make progress to enhance profitability. markets for life insurance, pensions and long-term savings. As part of this decision, the company headquarters moved to Luxembourg, and we are actively seeking distributors for products in Three of the company’s four property and casualty business units realized trade countries throughout the continent. combined ratios of less than 100 percent. A year earlier, all four had combined ratios exceeding that level. Farmland showed the most dramatic Our financial strength enables us to do more in our communities. In recent years, through its Community turnaround, dropping from 123.6 percent to 98.9 percent. The improved Investment Initiative, Nationwide has dedicated more than $250 million toward revitalizing urban underwriting performance in property and casualty was particularly valuable neighborhoods. These investments foster homeownership opportunities and create safe, affordable during another year when depressed markets curbed investment earnings and housing for residents living in areas that show promise in establishing stable communities. depreciated our equity portfolio. Additionally, a $20 million investment with the Local Initiative Support Corporation will encourage commercial and retail development in more than a dozen U.S. cities. This money offers new Effective claim management and proactive loss-control efforts through onsite home opportunities to minority developers, as well as experienced nonprofit organizations. assessments also contributed to the improvement in property and casualty results. Company representatives completed nearly 1.8 million Home Care We also are strong believers in the work of the United Way. In spite of a weakened economy, Nationwide reviews during the past two years, benefiting customers with premium associates, agents and retirees pledged to donate $6.4 million to the United Way in 2002. adjustments of about $20 million and helping Nationwide avoid an estimated A dollar-for-dollar match by the Nationwide Foundation brought our total company contribution $160 million in losses. Every remaining home covered by Nationwide to nearly $13 million, the most we’ve ever raised in our 32-year relationship with United Way. Insurance will be visited by early 2004. All new homeowner insurance This money will be distributed to 615 local United Way agencies across the country. customers receive a Home Care review, while existing customers will receive follow-up surveys at five-year intervals. Our company has a long-standing tradition of enhancing the quality of life where we live and where we Weak market conditions had a negative impact on our retirement savings and work. Not only do we consider this a moral obligation, we have seen firsthand how our contributions investment businesses last year. Nationwide Financial and Gartmore did make good business sense and strengthen all of our relationships within the community. not reach their financial goals. Given the current economic environment, each company took strategic actions in 2002 to provide clients with greater security, with more promising long-term prospects, and with enhanced service. Nationwide Financial issued notes to ensure we would have appropriate resources to fulfill our obligations to our customers. In addition, we took steps to reduce our reliance on equity markets by introducing fee-based products such as The BEST of AMERICA® Advisory Services Programsm. This tailored solution for affluent customers incorporates separately managed accounts, mutual funds and variable annuities. Nationwide is the first large insurer to offer a product in this market. Also last year, Nationwide Retirement Solutions (NRS) – a subsidiary of Nationwide Financial that provides retirement plans in the public sector – was selected to provide New York State’s supplemental employee retirement program. NRS now serves more than 1.6 million public employees across the country, including the three largest state plans.
  7. 7. “Nationwide is on your side.” for our Future In a time of economic uncertainty, Nationwide’s operational improvements As one of America’s leading insurers, we will continue to drive product performance with pricing, and reliable relationships place our company in an enviable position. underwriting, claims, billing and service center excellence. We will continue to strengthen our Nationwide is strong, diversified and able to stand on the side of its distribution capacity, making it easier for customers to do business with us, while making it customers throughout a lifetime of evolving financial needs. possible for Nationwide agencies to differentiate themselves from the competition. And, we will continue to focus on existing opportunities in diverse markets. In 2003, we intend to promote and leverage our advantages. Nationwide is significantly increasing its investment in advertising, at both the As one of America’s leading providers of retirement solutions, Nationwide Financial will continue to business unit and enterprise levels. Raising awareness of our brand provide a broad spectrum of variable and fixed products that will help the nation’s 78 million identity to consumers across the map is a top priority. Baby Boomers, and soon-to-be retirees, fulfill their long-term financial goals. Our private and public sector retirement plan businesses are strong, and we’re committed to investing in their One of the company’s most visible branding efforts is our sponsorship growth. of the Nationwide Tour presented by the Professional Golfers’ Association (PGA). The Nationwide Tour, an extension of the PGA Finally, as a respected international asset management firm, Gartmore will continue to pursue TOUR, has served as a proving ground for many of the game’s top diversification through asset allocation. Gartmore Investor Destinations Series Funds, for golfers since its inception as the Ben Hogan Tour in 1991. Nearly 60 example, offer U.S. clients five portfolio options, based on their risk tolerance. Alternative percent of current PGA professionals are alumni of the Nationwide investments, particularly hedge funds, continue to be popular around the globe. And, the Tour. acquisitions of Riverview International Group Inc., an alternative investment manager, and Coda Capital, a convertible bond manager, broaden the range of high-value-added products We also will continue to focus on the priorities that have brought success to and services Gartmore can offer. At year end, Gartmore also received approval to market 13 our customers, business partners, stakeholders and our company. funds in Chile. A challenging world economic and political climate will continue to affect the financial services “Chasing the dream” industry in 2003. However, our commitment to customers, business partners, and stakeholders The Nationwide Tour 30-Second TV Commercial – and our focus to take care of their needs – positions Nationwide for continued success, this year and beyond. Living out of a golf bag, chasing down your tour card, no red carpet, no black limo. Just an endless sea of green... and free cable. Tomorrow’s stars today on the Nationwide Tour. Nationwide Is On Your Side.®
  8. 8. Nationwide At-A-Glance Products Distribution Property and Casualty Personal auto coverage: • Exclusive Nationwide agents Nationwide continues to devise quality insurance • Preferred, standard and nonstandard auto • Direct response products and services for millions of policyholders. • Motorcycle • Independent agents Our dedication to providing the best protection products • Recreational vehicle • Partnerships and membership organizations goes hand-in-hand with our commitment to providing Rankings • Employers and banks excellent customer service. Property coverage: • Internet In the U.S. • Homes • Sponsor organizations • Farms • #1 provider of bundled retirement plans1 • Rental dwellings • Condominiums • #1 defined contribution recordkeeper2 • Mobile homes • #2 provider of variable annuities through Mainstreet commercial: • Property and liability financial institutions3 • Commercial auto, workers compensation and commercial umbrella • #3 provider of variable universal life4 Life and Retirement Savings • #8 writer of individual variable annuities5 • Variable and fixed annuities • NASD-member firms Nationwide Financial is a diverse retirement savings • #11 U.S. life insurer based on assets • Deferred compensation programs • Financial planners, regional and national franchise focused on developing personalized solutions as of 9/30/02 • Private and public retirement plans wirehouses for retirement living and giving customers more choice • Term, whole, universal and variable life insurance • Financial institutions and control over their retirement security. Our dedication • #4 homeowner insurer6 • Corporate- and bank-owned life insurance • Pension plan administrators to this market has earned us a reputation of leadership, • Investment management • Direct sales force for public sector plans serving nearly 5 million customers with a product • Immediate variable/fixed annuities • Exclusive Nationwide agents • #5 auto insurer6 portfolio of individual annuities, private and public • Nationwide Provident agents pension plans, life insurance and mutual funds. • #7 property and casualty insurer6 Asset Management In the U.K. In the U.S.: • NASD-member firms Nationwide has a diverse asset management history. Our • AlphaGen Capella Fund named Long/Short • Retail mutual funds • Independent broker-dealers U.S.-based asset manager, Gartmore Global Investments, • Alternative investments • Regional and national wirehouses Fund of the Year for 2002 by EuroHedge and our London-based affiliate, Gartmore Investment • Single strategy hedge funds • National financial institutions Management plc, serve the needs of individual investors • Fund of hedge funds • Corporate and pension plan administrators as well as institutions, such as corporate and public • Gartmore European Equities received the • Separate accounts • Independent financial advisors pension plans, insurance companies, endowments, 2002 Global Investor Award for Excellence • Global equity and fixed-income products • Strategic partners foundations and mutual fund companies. Guided by a • Regional portfolios • Discretionary asset managers common investment philosophy and disciplined process, • Currency overlay • Global institutions Gartmore delivers a diversified range of core, specialty • Cash management • Nationwide Financial and alternative investment strategies – all designed to achieve superior results commensurate with a selective In the U.K. and abroad: amount of risk. • Investment trusts • Individual savings accounts • Personal equity plans • Hedge funds • Offshore investment funds • Institutional pooled funds Strategic Investments • Life insurance, long-term savings products, Consumer finance: In addition to our three core businesses – life and mutual funds, and employer-sponsored plans for • Internet retirement savings, domestic property and casualty international markets • Phone insurance, and asset management – we have other • Home mortgages and other selected consumer • Agents important and growing strategic investments. These finance offerings • Alliance partners companies are not presently the size and scale to be • Risk management, state fund services and considered core businesses, but they are nevertheless employee benefits, including total absence Risk management, state fund services, important to our future. They represent ideas for management and short-term and long-term employee benefits: long-term growth, investments to be developed and disability • Direct sales harvested, and opportunities for innovation. • Real estate development • Brokers • Consultants International life and retirement savings: • Agents • Financial institutions • Financial planners 1 DC News, 2003, 2 Pensions & Investments, 2002, 3 Kenneth Kehrer Associates, 2002, 4 Tillinghast-Towers Perrin, 2002, 5 VARDS, 2002, 6 A.M. Best Company, Inc
  9. 9. Combined Income Statement Combined Financial Statement (in thousands of dollars) Statutory (in thousands of dollars) Statutory As of December 31 2002 2001 As of December 31 2002 2001 Assets Revenues Bonds $38,875,379 $30,812,709 Insurance Premiums Stocks 3,134,315 3,781,148 $11,191,887 Property/Casualty $10,410,727 Excess of Market Value 1,033,818 1,913,537 13,543,329 Life, Health and Annuity 15,065,986 Over Equity in Publicly Traded Subsidiary (Note 2) 2,792,055 Net Investment Income 2,630,026 Mortgage Loans and Real Estate 10,269,180 8,590,628 1,893,834 Policy Loans 993,838 599,509 Other 1,430,859 Cash and Short-Term Investments 1,361,348 1,062,075 29,421,105 Total Revenue 29,537,597 Other Invested Assets 1,234,169 509,221 Benefits and Expenses: Total Investments 56,902,048 47,268,826 Insurance Claims Costs and Policyholders’ Benefits: Premiums in Course of Collection 3,313,419 1,783,415 7,974,291 Property/Casualty 8,486,704 Other Assets 4,853,616 3,188,512 16,196,407 Life, Health and Annuity 13,881,413 Assets Held in Separate Accounts 52,861,356 61,222,336 5,792,767 Insurance Operating Expenses 5,262,476 Total Assets 117,930,439 113,463,089 (1,349,909) Net Transfers to Separate Accounts 2,030,567 Liabilities 28,613,557 Total Benefits and Expenses 29,661,161 Insurance Reserves: 807,548 Operating Income (Loss) (123,563) Losses and Loss Adjustment Expenses 10,222,004 9,518,321 Future Policy Benefits 35,854,772 26,432,246 (56,018) Other Income (Expense) (12,342) Unearned Premiums 4,225,372 3,717,146 (49,939) Dividends to Policyholders (52,229) Policyholders’ Dividend Accumulation 4,057 2,307 Long-Term Debt 1,438,793 728,171 Income Before Income Taxes, Realized Capital Gains Accounts Payable and Other Liabilities 6,223,166 4,084,220 and Minority Interest 701,591 (188,134) Liabilities Related to Separate Accounts 52,207,206 60,881,591 (310,668) Realized Capital Gains (Losses) (115,281) Total Liabilities 110,175,370 105,364,003 10,159 Minority Interest in (Income) Loss of Subsidiaries 1,675 Minority Interest in Subsidiary 636,467 290,644 128,497 Income Taxes (10,218) Preferred Securities of Subsidiary Trusts 300,000 300,000 252,266 Net Income (Loss) (294,871) Surplus for Policyholders’ Protection 6,818,603 7,508,443 (724,783) Net Unrealized Capital Gains (Losses) (768,798) 117,930,439 113,463,089 Total Liabilities & Policyholders’ Surplus Unrealized Capital Gain (Loss) in Publicly Traded Subsidiary (Note 2) (874,143) (460,842) Notes to Combined Financial Statements Other Surplus Changes (Note 3) 656,811 1,059,862 1) The combined financial statements include the accounts of Nationwide Mutual Insurance Company, Nationwide Mutual Fire Increase (Decrease) in Surplus for Policyholders’ Protection (689,849) (464,649) Insurance Company, Farmland Mutual Insurance Company and their subsidiaries. All material intercompany accounts have been Surplus for Policyholders’ Protection – Jan. 1 7,508,443 7,973,092 eliminated in consolidation. This financial information is not intended to supersede, or be as comprehensive as, the statutory Surplus for Policyholders’ Protection – Dec. 31 6,818,594 7,508,443 annual statement filed for each company with the appropriate state insurance departments. The financial statements of the indi- vidual companies within Nationwide have been audited by KPMG LLP. 2) Nationwide, concurrent with the initial public offering of Nationwide Financial Services, Inc. (NFS), elected to change its carrying value in NFS from statutory equity to market value discounted by 24 percent in accordance with prescribed statutory accounting practices. This discount from market value is a result of Nationwide retaining control and ownership of more than 63 percent of the outstanding common stock of NFS. The statutory equity of NFS and the corresponding equity investment in subsidiary were eliminated in preparing these combined financial statements. However, the increased value of $1,033,818 ($1,913,537 in 2001) from carrying Nationwide’s share of NFS at discounted market value remains as an asset on the balance sheet, and the change in this asset from year to year is reflected as an unrealized capital gain (loss) in the Surplus for Policyholders’ Protection. 3) Other surplus changes include the change in deferred taxes and surplus note issuance.
  10. 10. Nationwide Board of Directors Lewis J. Alphin Keith W. Eckel David O. Miller Galen R. Barnes Willard J. Engel Ralph M. Paige A. I. Bell Fred C. Finney James F. Patterson Timothy J. Corcoran W. G. Jurgensen Arden L. Shisler Yvonne M. Curl Lydia M. Marshall Robert L. Stewart Kenneth D. Davis Nationwide Office of the CEO W. G. Jurgensen Michael C. Keller Chief Executive Officer Executive Vice President Chief Information Officer Galen R. Barnes President and Chief Operating Officer Steve S. Rasmussen Nationwide Insurance President and Chief Operating Officer Allied Insurance Joseph J. Gasper President and Chief Operating Officer Douglas C. Robinette Nationwide Financial Executive Vice President Chief Strategic Officer Patricia R. Hatler Executive Vice President Robert A. Rosholt General Counsel and Secretary Executive Vice President Chief Financial Officer Richard D. Headley Chief Investment Officer President and Managing Director Nationwide Global Holdings R. Max Williamson President and Chief Operating Officer Paul J. Hondros Scottsdale Insurance President and Chief Executive Officer Gartmore Donna A. James Executive Vice President Chief Administrative Officer
  11. 11. International Headquarters One Nationwide Plaza Columbus, Ohio 43215-2220 An equal opportunity and affirmative action employer Nationwide Is On Your Side.® G-9240-E